Water Heaters: Tankless vs Tank Storage

February 12, 2021
Water Heaters: Tankless vs Tank Storage

When it is time to replace or equip your new home with a water heater, it’s important to consider the cost, efficiency, and longevity of your new water heater. Water Heaters can be a costly investment that you will be living with for over a decade. We’ve gathered pros and cons of tankless and traditional water heaters, to help homeowners and contractors make an informed decision on what type of water heater best meets their needs.

What Is a Tankless Water Heater?

On-demand water heaters, also known as tankless water heaters, use high-powered burners to quickly heat water as it runs through the heat exchanger. Water is then delivered directly to the faucets or shower without being stored in a tank. Most tankless water heaters are powered by electricity or gas. Tests conducted by Consumer reports found that these types of water heaters are on average more energy efficient than “traditional” storage tank models.

How are “Traditional” Water Heaters Different?

“Traditional” storage tank water heaters are commonly found in most homes. They consist of an insulated tank to heat and store water until it is needed. As needed, water is then diverted through a pipe to its destination, whether to the kitchen, bathroom, or other sinks within the household. These types of water heaters also feature a temperature and pressure-release valve, which opens when either pressure or temperature exceed preset levels. Both natural gas and electric water heaters are available. Initial cost of natural gas storage tank water heaters is higher than the electric models. However with nearly 50% lower energy usage, natural gas storage tank water heaters also utilize less energy than electric storage tank water heaters.

Tankless Water Heater Energy Efficiency

Homeowners with tankless water heaters that use less than 41 gallons of hot water per day, enjoy between 24-34% more energy efficiency than they would with storage tank water heaters. Usage above or around 86 gallons of water per day with a tankless water heater saves around 8-14%. Purchasing a tankless water heater will cost you a little more upfront than a “traditional” storage tank water heater, but tankless models last longer than conventional water heaters. This translates to a 20+ year useful life, as compared to storage tank types, which last only 10-15 years before failures begin to occur.

Pros & Cons of Tankless Water Heaters

Tankless Water Heater Advantages:

  • Lower risk of leaks and water damage.
  • Long term savings.
  • Energy efficient.
  • Longer lifespan; last up to 20-30 years.
  • Takes up less space than a tank/storage water heater.

Drawbacks of Tankless Water Heaters:

  • Higher purchasing cost than a tank/storage water heater.
  • Installation can be costly if a tank/storage water heater is being replaced.
  • Inconsistent water temperature when multiple outlets are in use.
  • No access to hot water during power outage.

Pros & Cons of Storage Tank Water Heaters

(Tank) Water Heater Advantages:

  • Lower initial cost.
  • Easy installation.
  • Consistent hot water supply when multiple outlets are in use.
  • Easier and therefore less costly to maintain.

Drawbacks of Storage (Tank) Water Heaters:

  • Higher energy usage increases utility cost.
  • Occupy more space.
  • Shorter lifespan.
  • Higher risk of leaks and water damage.


There are a few factors to consider when deciding on which water heater best suits your needs. First off, your budget. While tankless water heaters run more efficiently than storage tank water heaters, replacing a tank water heater with a tankless can be expensive. On the other hand, households that run more than one hot water application at a time, storage tank water heaters are typically recommended for comfort of immediate use.

Another consideration when deciding what suits your needs best, is the amount of space you have in your home or garage. Tankless water heaters require significantly less storage space than conventional storage tank water heaters when installed.

When it’s time to replace your water heater, learn more about your options, and receive a free estimate, contact American Service Company RVA. We serve as your partners in home safety and comfort, delivering expert, experienced, professional and affordable services.