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Tankless Water Heaters vs. Storage Tank Water Heaters

Grainger Editorial Staff

It takes only one surprise cold-water blast from your shower to appreciate the luxury that is on-demand hot water. A failing water heater can not only make for rude awakenings at home, it can also slow facility operations that require hot water for cooking, cleaning and sanitizing, among other things.

When it’s time to replace your legacy water heater or install one in new construction, the first question you may consider is whether to stay with the traditional storage tank water heater or move to a tankless heater. As with any major equipment decision, there are pros and cons to each choice.

Tankless Water Heater

While storage tank water heaters remain the majority of new installations in the U.S., according to the U.S. Department of Energy (DOE), tankless water heaters are gaining popularity. They are not new – patent applications for “continuous flow” water heaters were filed in the U.S. in the late 1920s – but with heightened awareness of energy consumption and sustainability, they are receiving more attention.

Tankless heaters do not hold water; cold water flows into the unit and is heated only when needed. This can save energy two ways:

  • No need to heat gallons of water that aren’t being used
  • No “standby heat loss,” in which a tank loses heat to a surrounding environment

Tankless heaters, which can be either gas or electric, also can’t run out of hot water because of the continual flow feature. A shower, followed by two more showers, followed by dishwashing, won’t exhaust the supply.

Storage Tank Water Heaters

Storage tank heaters come in a range of sizes, from small point-of-use heaters of about 6 gallons to commercial heaters that hold 100 to 120 gallons. Understanding your water usage and patterns can help guide you to purchase just the size you need. Like tankless heaters, they come in gas and electric models

Water is held in the tank and kept at a consistent heat, making delivery of hot water almost immediate compared to tankless heaters, which feed cooler water through the pipes and past the heating element, sometimes causing a delay before the continuous feed of hot water arrives.

Considerations When Deciding

Energy efficiency: The DOE estimates that tankless water heaters improve energy efficiency between 8-34% over storage tank heaters, depending on the amount of water usage. This difference can be mitigated somewhat by insulating a storage tank heater. Some models come with extra insulation, or you could purchase an insulation blanket to wrap your water heater. Be sure to check that the blanket is applicable to your type of storage tank heater – gas or electric.

Up-front costs: Storage tank heaters and full-size tankless heaters are comparably priced, though gas heaters of both types are more expensive than electric. However, installation could be more expensive for a tankless heater. Consumer Reports notes that changing from a storage tank to a tankless water heater could require an upgrade to gas or electric service, as well as a plumbing retrofit.

Long-term costs: The cost savings associated with tankless heaters will vary from one case to the next, but the reduced energy use will lead to noticeably cheaper utility bills.

Tankless heaters also have a longer life expectancy than storage tank heaters – more than 20 years, according to the DOE, compared to 10-15 years for storage tank heaters.

Comfort and convenience: If you’re dealing with an emergency replacement of a failed water heater – a survey by the Northwest Energy Efficiency Alliance found 37% of residents replacing a heater did so because of sudden failure – the change could be quicker by keeping the same type of heater.

When it comes to usage, hot water delivery can be more uneven with a tankless heater and multiple, simultaneous hot water demands can stretch their capability, notes the DOE. Tankless heaters have a “temperature rise” component that shows how many degrees the tank can heat the water based on a particular flow rate, represented as gallons per minute (GPM).

Tankless heaters are smaller than storage tank heaters. Full-facility tankless heaters typically fit on a wall and are less than 2 feet wide and 3 feet high, compared to storage tank heaters that can be at least 5 feet high. Undersink electric tankless models are even smaller and can deliver hot water to smaller areas, such as an eye and face wash station.

Finally, know that a power outage is likely to leave tankless heater users without hot water. Even gas-powered tankless heaters need an electronic control panel.

The information contained in this article is intended for general information purposes only and is based on information available as of the initial date of publication. No representation is made that the information or references are complete or remain current. This article is not a substitute for review of current applicable government regulations, industry standards, or other standards specific to your business and/or activities and should not be construed as legal advice or opinion. Readers with specific questions should refer to the applicable standards or consult with an attorney.


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