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Tank vs. Tankless Water Heaters

Posted on October 14, 2013 by

Your hot water heater is not something most homeowners think about — until something goes wrong with it. Anyone who has experienced a water heater failure knows it is not a pretty picture. Almost three out of four water heaters fail due to a tank bursting or leaking rusty water in your basement or garage. Today’s new technologies and energy-efficient, certified Energy Star water heaters can reduce household water-heating costs by as much as 55 percent.

Here is a helpful infographic from Noritz that compares the differences between tank- and tankless- water heaters.

Tank vs. Tankless Water Heaters

Image by Noritz America Corporation

Time to replace your water heat? Now what?

Average Water-Heating for Americans

Each year, American homeowners pay $400 to $600, on average, to heat water for their washing, bathing and cleaning. That comes to 64 gallons every day, 365 days a year, or more than 23,000 gallons annually

 Problems with hot water?

  • I keep running out of hot water.
  • I have a big family.
  • My current water heater takes up too much space.
  • My current water heater is 10 or more years old.
  • I prefer appliances that are energy-efficient.
  • My home uses gas fuel.

If you agree with any of the statements above, a tankless water heater might be right for you.

There are two basic ways to heat water:

  • Tank
    Continuously heated. 24/7/365

    A conventional storage-tank water heater is always on.

    • Inside it’s storage tank, ranging from 30 to 80 gallons, water is continuously heated, using energy 24-7-365. Turn on the “Hot” faucet and the heated water flows from the storage tank to the outlet. If you use all the water in the tank, you must wait for the tank to reheat its contents.


  • Tankless
    Heated only when on-demand.

    A tankless water heater operates only when hot water is needed (“on demand”).

    • As the name indicates, there is no storage of hot water. As soon as demand arises, cold water flows through the tankless unit, where it is flash-heated to the called-for temperature and sent to the open outlet. As soon as demand stops, the burner turns off, so no more energy is consumed.

Tankless is a relatively new technology for most Americans, but widely used for decades around the world.


Tank-type water heaters last 10 to 12 years on average. Over time, minerals from water allow sediment to build up at the bottom of the tank, shortening its life span and reducing efficiency. When certain parts break, you will likely need to replace the entire unit. A typical 50-gallon tank system carries a six year warranty.

Tankless water heaters last 20 years or longer. Current technology can prevent scale buildup. And, all parts are modular and easily replaceable, which can extend the unit’s life span and energy efficiency. A typical tankless system carries a 12-year warranty.

And when a tank fails…

When a tank unit fails, it may be a slow leak or a massive flood. Weakened by rust and corrosion over time, a burst storage tank can dump 30 to 80 gallons of rusty water in your home. 


Seven out of 10 water heater failures are due to a tank bursting or failing.

How much do they cost?

  • tank unit typically costs less than a tankless water heater. When replacing a tank unit, no changes are needed for the gas and vent lines


  • Besides a higher cost, a tankless unit may require larger gas and vent lines, therefore increasing the expense.


  • New tankless technology

    • Newer, smaller tankless models cost significantly less, and they typically do not require larger gas lines — all of which helps narrow the cost gap with tank units.
  • Tax credit and rebates

    • You can qualify to earn a federal tax credit by buying a gas or oil water heater with an energy factor of at least 0.82, which effectively covers all tankless units. Local tax credits and utility rebates may new more savings when going tankless.
  • Payback

    • The higher cost for tankless units can be returned over time through energy savings. Replacing a standard 50-gallon electric water heater with a gas-fired condensing tankless water heater can reduce annual energy costs by more than 60%, or $318 on the average.

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