Electric Tankless Vs. Storage Tank Water Heaters

Manufacturers of tankless hot water heaters claim that their products save you money by saving water and the money it costs to heat it. Learn what you need to know to decide which type is for you.


Storage tank hot water heaters use energy keeping the water in the tank hot all the time. So, that energy is being used even if you are asleep or away from home and no one is using hot water. You can limit this cost by putting a timer on your hot water heater, but this is inconvenient if you break routine and want to wash dishes during the day or need a shower in the middle of the night. You also waste water running it to get it hot before you step into the shower. Tankless models eliminate these wastes by providing hot water on demand and heating it as needed.

New Home or Upgrade?

Your choice may be different if you are building a new home, adding onto or remodelling an existing home, or just considering replacing your existing storage tank hot water heater. Consider the overall system and locations where you will use the most hot water when choosing tankless models. Tankless models work best when located close to where the hot water will be used. Consider a smaller unit for a bathroom that is located far away from the rest of the house. Tankless models are available that are designed for one bathroom or one faucet and can be installed right in the bathroom, as they don't take up a lot of space compared to traditional storage tank models.

Individual Usage Varies

Tankless models may be best for families where several individuals take showers one at a time, right after one another. Since water is heated as it is used, this type of water heater will keep heating it as long as needed. A storage tank may be better for houses where two individuals often take showers at the same time. The storage tank keeps a fixed number of gallons hot and ready to dispense, until it runs out. If your existing tank is able to handle the load of two simultaneous showers without running out, this may be the best choice for you, since tankless models have a harder time producing double the flow per minute.


Hot water heaters have a number of ratings. First-hour rate (FHR) tells you how much hot water the heater can produce during one hour in addition to whatever's already in the tank. This will help you know how many people can take showers on a busy morning. Energy Factor (EF) is a rating overseen by the federal government telling you how energy efficient the model is. Ratings range between 0.50 and 1, with the higher numbers meaning better energy efficiency.

Look at the number of degrees the water can be heated and the flow rate in gallons per minute. Consider your location and the temperature of your tap water, since this is the starting temperature. Cold water coming from a deep well in the middle of winter has to be heated more to arrive at optimal shower temperature than city water on a summer's day.


The installation cost of a tankless hot water heater is higher than for a storage tank model. This is partly due to the higher cost of the tankless unit, but also due to the need to find a contractor experienced in installing a tankless water heater. You need someone who can anticipate problems from having experience with what can go wrong. If you decide you want to install a tankless model yourself, do some research, not only on installation but on usage and maintenance and problems that people experience. A well-maintained tankless water heater will last longer than a storage tank model, plus you will save money in energy and water costs over the length of time you have it, offsetting the initial cost.

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