Storage tank water heaters vs. tankless water heaters

A water heater is considered a long-term investment and a necessity in every American home. When the time comes to replace the current water heater, do you plan to purchase a storage tank water heater or the more energy-conscious tankless water heater?

While the storage water heater is more affordable initially, the cost savings can add up. According to the US Department of Energy, homes with tankless water heaters using less than 41 gallons of hot water per day can see energy savings of up to 34%. Higher usage homes averaging around 86 gallons daily can still see up to 14 percent in energy efficiency compared to storage tank water heaters.

However, that’s not to say tankless water heaters are the best solution for everyone. Storage tank water heaters have a lower initial cost, and purchasing one that’s insulated can reduce standby heat loss and operating costs. Depending on the household’s usage of hot water, storage tank models could be a more cost effective option. 

Read on below as we compare storage tank water heaters to tankless water heaters, including initial cost, things to consider and how to size a water heater for your home’s needs.

Storage tank water heater

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The storage tank water heater is the one most renters and homeowners are familiar with. A conventional storage water heater ranges from 20 to 80 gallons in capacity. 

The tank is filled to capacity and heated in the reservoir using whichever fuel source your home has — electricity, gas, oil or propane. When the hot water tap is turned on, hot water is released from the top of the tank. Cold water is then filled from the bottom of the tank until it’s full, so there is always hot water available.

This process of constantly heating water in the tank contributes to standby heat loss. Standby heat loss is the amount of heat lost when the water heater isn’t being used. The older the hot water heater gets, the more standby losses can drive up energy costs.
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