GBA Logo horizontal Facebook LinkedIn Email Pinterest Twitter X Instagram YouTube Icon Navigation Search Icon Main Search Icon Video Play Icon Plus Icon Minus Icon Picture icon Hamburger Icon Close Icon Sorted
Energy Solutions

Storage vs. Tankless Water Heaters

Image Credit: Paddy Morrissey, Code Check Building 2nd Edition

Last week I suggested some ways to reduce your hot water use. This is almost always the easiest way to save energy with water heating—it’s the “low-hanging fruit” to be sure. Over the next few weeks, I’ll get into water heating options. To start, let’s look at the differences between “storage” and “tankless” water heaters.

The vast majority of homes have storage-type water heaters. There’s an insulated tank and either a gas burner or electric heating element (often two elements) to heat the water. An advantage of storage water heaters is that you don’t need a very large gas burner or a really high electric current flow to heat the water. The gas burner or element can chug along for hours, gradually warming up water in the tank. The water remains “thermally stratified” so that water drawn off from the top is always the hottest and even after 90% of the hot water is used up, the delivered water is still at full temperature. Storage electric water heaters also allow “off-peak” electricity to be used—more about this in a future column.

While storage water heaters are the most common, there’s a lot of interest in tankless models—sometimes referred to as “on-demand” or “instantaneous” water heaters. The advantage of these is that you don’t have water sitting all the time, losing energy through the tank walls. (Even with insulation, heat loss occurs.)

As with storage water heaters, tankless models can be either gas-fired or electric. For very small loads, such as with a remote lavatory that has only a sink (with a low-flow aerator), an electric tankless water heater can make a lot of sense since it obviates the need for running a gas line. But for whole-house needs—where a central water heater serves one or more bathrooms with showers, the kitchen sink, dishwasher, and clothes washer—a gas-fired tankless water heater is almost always a better choice than electric.

Providing enough electric current to instantaneously heat 4-5 gallons per minute (gpm), boosting the temperature more than 60 degrees F (as might be necessary if two showers are being used at the same time, or if a dishwasher or clothes washer is being used while someone is showering) would take a huge amount of electric current—on the order of 40 to 60 amps. Providing so much electricity would require special wiring and special circuit breakers, which are expensive. And from a big-picture standpoint, if a lot of people used these tankless electric water heaters, utility companies would have to build more power plants to have adequate electricity available during periods of time with high use of hot water, such as during the morning shower period. Utility companies love storage water heaters, because they spread out the demand.

If you decide to go with a whole-house, gas-fired (natural gas or propane) tankless water heater, be aware that because the burners on tankless water heaters are so large—150,000 to 200,000 Btu/hour, vs. 40,000 Btu/hour for a typical gas-fired storage water heater—larger-diameter gas lines are required (usually 3/4-inch instead of 5/8-inch). And to burn that much gas, a lot of air flow is required, which necessitates a large flue, and there is potential for significant air leakage if not properly installed.

Another issue with tankless gas water heaters is pilot vs. pilotless ignition. Tankless water heaters used to all have pilot lights, which burned gas all the time. The wasted energy from these pilot lights (about 5,000 Btu/hour) was about the same as the heat loss through the insulated walls of a storage water heater, so you didn’t end up with much energy savings.

Most new tankless water heaters have electronic ignition, and if you’re thinking of a tankless water heater I’d go with this option. The gas burner is ignited using an electrical spark. With pilotless ignition, today’s gas-fired tankless water heaters offer the highest efficiency of any water heater, except heat-pump models, which I’ll cover in a future column.

A few gas-fired tankless water heaters made by the Korean companies Takagi and Navien have “condensing technology” with an Energy Factor of up to 0.98 (Energy Factor is a measure of efficiency). Non-condensing, pilotless tankless water heaters have Energy Factors of .82 to .87, while conventional storage water heaters have energy factors of .58 to about .67 (up to .80 for condensing models).

So which is better: a storage or a tankless water heater? Despite the potential for higher efficiency with tankless technology, it will surprise a lot of my readers to learn that I’m partial to storage water heaters for most situations. They are less expensive, less prone to mechanical problems, and, with electric models, offer the potential for using off-peak electricity—which is significantly less expensive than propane. Storage water heaters also encourage thrift when showering, since there’s a finite amount of hot water.


  1. homedesign | | #1

    Super insulated storage tanks
    Alex, I have noticed some electric wh tanks that are extremely well insulated.. but not gas?
    Any thoughts?

  2. LukeInClimateZone7 | | #2

    another couple of advantages/disadvantages
    Last time I checked with some tankless folks at a trade show, their products didn't play nice with solar preheated water.

    For my clients who have chosen tankless, the value statement is less cost and efficiency, and more space savings. Lastly, I advise those with tankless of the greater importance of maintenance to prevent excessive scaling.

  3. GBA Editor
    Martin Holladay | | #3

    Tankless heaters for solar backup
    Among the tankless water heaters designed for use with solar hot water systems is the Bosch AquaStar Model 1600PS. According to Bosch marketing materials, "This heater is specifically designed as a backup to preheated water produced by solar based systems or from woodstoves." The gas burner will not fire if the incoming water is hot enough.

  4. Alex Wilson | | #4

    Insulating storage tanks - electric vs. gas
    Responding to John's question: It's a lot easier to insulate electric storage water heaters than gas-fired models--because of the requirement for air flow into gas water heaters (for combustion). This may be why it's easier to find very-well-insulated electric water heaters. This same issue comes into play with retrofit water heater blankets.

  5. Patrick D. Bunn | | #5

    tankless water heaters
    Last year before being laid off from my job as a director of construction for an active adult homebuilder, we were struggling with this issue. We were using high efficiency direct vent gas water heaters stored in a semi-conditioned attic above the garage. However, since our homes met the criteria of extraordinary tight construction, we had to provide combustion air from an outside source. This seemed to undermine the purpose of tight construction and make the water lines more vulnerable to freeze-up. So we switched to a very expensive dual pipe water heater that drew combustion air directly into the unit. We were considering the possibility of switching to an electric tankless water heater to be placed in the laundry room, thereby overcoming the combustion air issue without giving up valuable floor space in the conditioned portion of the home. We also saw it as a way to move the water heater closer to the Manabloc water distribution point, as it should be. What would your solution have been?

  6. Alex Wilson | | #6

    Off-peak electric or heat-pump water heater
    Given your description of your situation, my first question would be whether your utility company offers off-peak pricing for electricity use. I'd also want to know what your electricity and gas prices are. Depending on the answers to these questions, large (80-gallon), electric, storage-type water heaters might be a good option. In our area, where natural gas isn't available and expensive propane is required for gas-fired equipment, off-peak electricity is a lot less expensive. Alternately (if time-of-day electricity pricing is not available), I'd consider the AirTap heat pump water heating module made by AirGenerate added onto standard electric storage-type water heaters. I'll be addressing these options in more detail in upcoming blogs over the next several weeks. -Alex

  7. Stephen Thwaites | | #7

    Consider Simplicity
    I think we are too often guilty of over complicating and over sizing our mechanical systems, especially over sizing.

    Back in my early bachelor days, a couple of houses and a couple of decades ago, i survived quite nicely with a natural gas water heater that was switched off. The pilot light did all the work for showers and manual dishwashing. Laundry was done w/ cold water.

    Now married, my wife and i survive summer weekends at the cottage with a 5 imperial gallon 1500W (6 US gallons) electric water heater. It is enough for showers (some planning required when there are alot of guests) and a beat-up dishwasher (run in the late evening).

    At our current home, the 60 imperial gallon (72 US gallons) electric water heater it came with has sprung a leak and i'm at a decision point. Based on past experience, it seems silly to re-install such an oversized heater. But i agree with Alex on using off-peak electric rates - coming to Ontario soon. So based on that i'll replace it w/ the same size heater. However, thinking about our weekend experience i'll be disconnecting the bottom element. This will give us options for either a Solar Water Heater, or future off-peak rates.

    By re-installing the ?R-4?insulating blanket on the new R-10ish tank and using only the top 1/3 of the tank, the standby losses should be pretty darn small.

    In my view, with such a small load and low standby losses its really hard to justify the expense and complication of an instanteous water heater.

    I think too often we get too fascinated by technology and don't really think about the load and the simplicity that can come w/ load reduction.

  8. Stephen Thwaites | | #8

    Consider Simplicity - clarification
    Just because i used a pilot light to heat my water heater doesn't mean you should.

    I didn't check the temperature produced by such an arrangement, but it could've easily been below 115F (46C). This means i could've been exposed to legionalla bacteria. This is generally not a concern for a healthy 20 something year old, as i was at the time.

    Nevertheless, with the benefit of hindsight i should've made sure i wasn't potentially exposing others to legionella.

  9. beelbeebub | | #9

    Euro view
    Without wishing to get involved in any "Yank bashing" I'm a bit shocked at the level of inefficiency implied by this article. Over here in the UK the "tankless" systems are called "Combis" (combination boilers). They provide the hot water for the heating and on demand for the hot water. They are almost always condensing boilers (in fact I think it's a legal requirement, at least they have to hit efficiencies that can only be achieved by condensing). Almost all new houses, flats (apartments) and renovations use them, primarily because of the space saving (your entire heating system including pumps fits in a kitchen cupboard) in our crowded isle. The downside is that combi's are a good deal more complex than the tanked systems and it's not uncommon for them to need replacement after 10years, so the comment about simplicity is very valid. The replacement interval is getting longer as the technology improves. The tanked system is only found in legacy buildings from the post war period and earlier. They are almost always well insulated as a result of concerted government campaigns (and subsidies) in the 80's. Ironically the tank storage systems are making a comeback (, I'm not involved with them) in new "eco houses" where their ability to integrate a number of heat sources, plus allow for highly efficient boiler cycles offsets the greater bulk and initial cost.
    As I said, I'm not bashing anyone, just pointing out the differences, we appear to be a bit further along the curve when it comes to energy efficency, you guys are ahead in customer service and dentistry ;-).

  10. Anonymous | | #10

    Ways to help pay for a tankless water heater
    Note that tankless water heaters may be a good alternative for businesses as well as homes. Pubs, Restaurants, Hotels, Motels, and more, all use TWH's for the very large cost savings, being able to expense or depreciate the up-front costs. So if you have an in-home business, or you just want to make points with your boss by cutting expenses, keep that in mind.

  11. Robert Riversong | | #11

    The weblink posted by
    The weblink posted by "anonymous" seems to be a useful one, which also lists the Top 10 Reasons Not to Buy a Tankless Heater. But, just as the link came from an unknown entity, the website does not indicate who has created or funded it (trade association?) and what its bias might be.

    An email sent to the admin address given on the "contact" page bounced "no such user". There's no way to judge the credibility of an anonymous comment or an anonymous website.

  12. Alex Wilson | | #12

    Anonymous postings and sources
    Robert, I agree totally. It would be great if commenters gave their names and even better if you could click on names to learn more about those people. Then we would have some basis to judge the credibility of the source and the objectivity of the comments. We don't want to make it onerous to post a comment, but it would be great to be able to see here a comment is coming from. I'll bring this up with the IT folks.

  13. MICHAEL CHANDLER | | #13

    A small correction
    Just a small point, but most of these demand water heaters bring the coldest water in furthest from the flame and take it out closest to the flame so the arrows are pointing the wrong direction in the illustration. This way the cooler exhaust gasses can still impart energy effectively because they are exposed to the coldest water. It becomes an issue esp with condensing water heaters.

    Also the Navien brand condensing demand water heater is getting a lot of buzz lately as a Rinnai-killer But it's got a serious flow restriction issue in it's heat exchanger design. My data shows a pressure drop for the Navien of 15 PSI (approx 40 feet of head) at 5 gallons per minute. The Rinnai has a pressure drop of 12 PSI (28 ft) at 8 gpm and the Quietside (ODW-180) has a pressure drop of 6 PSI (12 ft) at 5 gpm and doesn't hit 15 PSI (40 ft) until it gets to 8 gpm. I've found the Bosch products to be generally not competitive with the Rinnai, Tagaki, and Quietside units.

    Since the Quietside is priced similar to the Rinnai but is a condensing unit that uses regular PVC pipe for a flue and fresh air intake with a 40 exhaust offset allowance while meeting the pump head curves of readily available pumps such as the Taco 009 or Wilo 32 I've been using it as a boiler with a side-arm tank for domestic hot water and radiant floor heat in conjunction to drain-back solar and radiant floor.

    I just bring this up because I don't see the Quietside getting the attention I think it deserves as compared to the Rinnai and Tagaki that are the more commonly known and respected brands out there. I'm a certified Rinnai installer and they are well made but I've switched to Quietside for everything these days. (orders well in advance, they are having trouble keeping up with the demand, 30 day lead times are standard for Quietside and LP conversion is 20 minute kit, Rinnai I get next day and LP is a standard option.)

  14. Alex Wilson | | #14

    Rinnai's new condensing tankless water heater
    To add to the discussion, Rinnai just introduced a 95% efficient (EF .93) tankless water heater at the Greenbuild Conference in Phoenix. It looks pretty good on quick scan. One of the nice features is that it will come on with a flow rate as low as 0.4 gpm--some tankless water heaters won't kick on with the lowest-flow faucets. The RC98HPi is designed for interior mounting, delivers 9.8 gpm at a 35°F temperature rise and 3.8 gpm at a 100°F temperature rise, using natural gas or propane at an input rate of 10,000 to 199,000 Btu/hour. I'm not sure about cost.

  15. MICHAEL CHANDLER | | #15

    Rinnai Price and spec
    The Rinnai Nat Gas model that most folks will be looking at is the RC98HPi-N (for nat gas) $1,300 to $1,500 range and the RC98AHi-P (propane) $1,500 to $1,700 range. Really great product for sure, very nice that they sell the Propane conversion pre-installed and only a couple of hundred dollars more than the similar Quietside. If you can vent straight through the wall you've got it made and Rinnai has a really really great support network. (note: Call waiting at Rinnai tech support plays an endless loop of an old Paul Harvey show where he talks about "rippin' a big ol' hole in his roof to drop in a coal furnace in his basement Just To Piss Al Gore Off" If I have to listen to that thing one more time I'm going to puke.)

    The cost to vent a Rinnai through the roof or for any distance horizontally is an issue however, it uses a gasketed concentric venting system (three manufacturers are approved), the 19" straight is $51, the 39" straight is $60 and the roof kit is $150 so popping up through the roof is pricey but elegant. It's a really well thought-out system and it's worth the extra money.

    The Quietside lacks the support network but the equivalent heater, the ODW 180 is $1,100 and vents with two 4" PVC pipes. The conversion kit to propane is more than a little intimidating but simple enough if you go slow and read the dang manual. The roof terminal is just plain ugly so if that is visible from the ground go for the Rinnai but the wall terminal is easy, flash two pipes through the wall and install bug guards.

    I like having the flexibility to easily and economically mount the Quietside in the center of the home rather than feeling constrained to locate it near a good place for the vents. If you have the ability in your plan to mount the equipment on an exterior wall with good venting options then go for the Rinnai for a few hundred bucks extra and know that you'll always have that great support just a phone call and an annoying Paul Harvey tape away.

  16. kim serrano | | #16

    GE hybrid heatpump water heater
    I'm considering purchasing the GE hybrid water heater but I'm not sure that it would be efficient enough in New England. They say it uses less than 1900 killowatts annually but was their ambient room temperature for their claims? Did they base it on a temperature of 70 or 80 degrees? My basement will be between 55 and 60 for about 6 months out of the year. I know they say it will work as low as 45 degrees but this will change the efficiency I'm sure.

  17. Alex Wilson | | #17

    Heat pump water heater in New England
    The performance of any heat-pump water heater, such as the GE Hybrid, will drop during the winter months as the ambient temperature in your basement drops. I'm not sure what ambient temperature the performance claims are based on. Note that operating the heat pump in the basement will also cool the basement somewhat, further reducing its performance. On the other hand, you can get a 30% tax credit for the heat-pump water heater, which will bring the cost down closer to that of a high-quality standard electric-resistance water heater--and at very worst, the heat-pump water heater would function like an electric-resistance water heater during the winter. Especially if you're able to benefit from the tax credit, I think a heat-pump water heater would be a good choice.

  18. R. J. Huttlinger, ACRH Mechanical | | #18

    Solar DHW with Rannai backup
    The problem with any fossil fuel or electric fired water heater (tank) is stand-by heat loss. This cost of wasted energy can be substantial. Our solar DHW systems produce hot water 8 -9 months out the year without any backup. During overcast periods, electric 3-way valve diverts low temp stored water through a Rannai tankless unit. The diverter valve allows the Rannai unit to operate without conflict with the solar system. During normal solar operation, no water flows through the Rannai unit extending its service life.

  19. kim serrano | | #19

    heat pump
    I live in western New England , and was wondering if a heat pump would be effiecient enough for my area? I would be placing the unit in my cellar which has an ambient room temp. of 55 to 60 degrees for about 5 to 6 months out of the year. I'm currently heating my whole house with a pellet stove but I'm trying to find a cheaper way to heat my domestic hot water other than useing my oil fired furnace, which is very costly for just hot water.

  20. Anonymous | | #20

    Noritz Gas Tankless
    Noritz Gas Tankless works well with preheated water from solar applications, they have a thicker heat exchanger than other brands, and have gone thru thier approvals, AirGenerate Heat pump water Heaters have the advantage of being installed to your exsisting tank heater, electric or Gas.

  21. Anonymous | | #21

    Hot Water Recirculation
    One problem with tankless water heaters is that there is no tank to circulate hot water from. The 2012 IRC will require hot water recirculation.

  22. Mike O'Brien | | #22

    On-off Pattern in Tankless?
    I've noticed a couple of brands of tankless heaters have similarly on-off patterns at low water flows. They seem to require a minimum flow to turn on, that is higher (or on the borderline) of showering with a low-flow head, or hand washing. Is that a common characteristic?

  23. GBA Editor
    Martin Holladay | | #23


  24. Alex Wilson | | #24

    Low-flow and tankless water heaters
    There are a couple models that will come on at flow rates as low as 0.4 gpm, including Rinnai's new condensing model, but low-flow operation is a drawback with most.

  25. Water heaters | | #25

    Last time I checked with some tankless folks at a trade show, their products didn't play nice with solar preheated water but I am read your blog and i learned something new today...thanks !

  26. Rich Franz-Under | | #26

    Actual Energy Savings and a Systems Approach?
    Based on my research, in any location where you can effectively make hot water from the sun, the question is moot. The energy savings are not as much as commonly predicted based on the only research I have found, and cost premimuim is about the cost of a solar system after rebates and taxes. The research says the energy savings is between 8% and 20%, depending on your use, over a tank system. Do you want to pay the premium back with 8% savings or solar hot water.

  27. Ken Dupuis | | #27

    Tankless vs. Solar
    We've used a tankless hwh for about 6 years now. We had an electric tank that needed replacement. We pay over $0.18 per kwh so the switch to tankless saved us some money even with high propane prices. After 5 years I ran the numbers for installing a solar hw system and it would take 20 years to recoup the initial cost compared to sticking with our tankless setup. And that includes state and federal rebates and incentives. I checked my numbers with a company that sells and installs solar hw systems and claims that they will pay for themselves in 5 years on average. They agreed with me that it would a 20 year payback period and advised against going solar. They couldn't find a way that it made financial sense to instal solar in my circumstance.

  28. GBA Editor
    Martin Holladay | | #28

    Solar hot water system payback
    The payback period for solar hot water systems is usually measured in decades. "A 2006 study by Steven Winter Associates calculated a 58-year payback period for a system installed in Massachusetts, while a Wisconsin system had a payback period of 76 years. The longer payback period in Wisconsin was due in large part to the system’s AC pump, a significant parasitic energy load. Because the Massachusetts system had a PV-powered pump, it had a quicker payback."

    Read more here: Solar Hot Water.

  29. DRw968FtPr | | #29

    thankless and energy saving
    After reading the article on Tankless Water Heaters I realized that this is not a straightforward approach.
    The first thing to do is to stop considering European technology as superior or European choices as being better. They have reasons for doing it there way and it often doesn't apply to North America. Tankless water heater are popular in Europe because of the abundance of old building where no plumbing was initially provided. Using a tank base either would mean taking down walls and redoing the plumbing to add hot water pipes. In North America the plumbing is basically hot and cold pipes all over the place. Where technology is from should not be a consideration for the choice of hot water system.
    You must also understand that the house is a system and each component must be considered to be part of it. We must establish the impact of a change of component at the house level. Here are two examples:
    Living up north in Québec this Canadian decided to replace the hot water system in order to save 50 KWH of power per year. Yet he saw no difference on the energy bill and here is why. His older system was leaking 50 KWH into the house and doing so was part of the heating system when he replaced the old system for the new one is furnance had to make up for the missing 50 KWH of heat.
    In Texas this gentleman decided to do the same change as in the example above and to save 50 KWH of power per year. In this case the heating system almost never fires. However his air conditioning system now has 50 KWH of power per year less to evacuate and therefore he sees double saving on his energy bill.

    This would apply to any type of energy-saving component you want to use whether it is a new fridge or an energy-efficient light bulb. You must establish the impact on your situation in view of your geographical location. In addition some of those energy-efficient device will have an impact on pollution (like mercury in the energy-efficient lightbulb) you may also want to think about this in your selection. So is if thy are not saving energy don't use them.

  30. richardrines | | #30

    Need to run up to 6 showers at once. What do I need to achieve this using tankless water heaters? This is for a Disaster Relief Shower Trailer using propane.

  31. Expert Member
    Dana Dorsett | | #31

    With 1.5 gpm low flow showerheads you can just barely squeak by with 55,000 BTU/hr of condensing burner per shower, even if the disaster is a blizzard in Maine.

    55K x 6 = 330, 000 BTU/hr. So with a PAIR of condensing 199K (total 398KBTU/hr of burner) tankless propane water heaters you'd be good to go, even at somewhat higher flow rates (but still less than 2 gpm per shower.)

    If there's room to install an EcoDrain B1000 (or A1000, second-best) horizontal drainwater heat exchanger you might be able to get there with just one tankless, and it would use dramatically less propane.

Log in or create an account to post a comment.



Recent Questions and Replies

  • |
  • |
  • |
  • |