Which one is better?

There are varying opinions on this topic depending on who you talk to.  Tankless water heaters are known for being much more efficient and smaller in terms of their size.  Many people think tankless is a better choice. But, in some cases, tankless may not be the best way to go and a tank water heater is a more prudent choice.  Here’s a closer look at everything you need to know regarding tank versus tankless water heaters.

tank versus tankless

Tank Storage Water Heaters

Pricing varies widely depending on the type, size, and the specifics of your home. The average industry cost for a 40 to 50 gallon tank at about $900. Tank water heaters (also known as traditional water heaters) are relatively easy to install and the installation typically only takes a few hours. You generally have to install a tank water heater indoors as they cannot tolerate harsh weather conditions. The tanks come in electric, natural gas, and propane models. The gas models will still work during a power outage.

Tank water heaters typically hold between 20 and 80 gallons of hot water in a storage tank. They are fairly large and require some space within your home. But, if you manage to deplete what is in the tank, you have to wait until your water heater produces more hot water.

The average lifespan of a tank water heater is between 10 and 15 years.


  • More affordable upfront cost
  • Easy installation
  • Tried and true system
  • In an emergency, you have a fresh water supply in the tank
  • You can often install an electric tank water heater without making major changes to your home’s electrical system or purchasing expensive additional equipment


  • Energy waste — the energy you waste on keeping a tank full of hot water at all times.
  • Shorter lifespan
  • If the heater malfunctions, gallons of water could leak or escape from the tank
  • If you empty the tank, you have to wait for more hot water

Is a tank water heater right for you?

If you have a timeline or budget constraints that prevent you from getting a tankless system, a tank heater may be the way to go. If your home runs strictly on electricity, you have to carefully consider whether going tankless is really worth it. The average household capacity is around 200 amps, which may not be enough to support a tankless electric heater. If you have gas, you have to factor in the costs of venting systems and additional gas lines.

According to Energystar.gov, a tankless water heater is going to save you approximately $1,800 over the life of the system. If the extra costs of installing a tankless system are going to outweigh your potential savings, you may want to consider a tank system.

The data in the chart below from Energystar.gov compares the energy and cost savings on the various types of water heaters.


Type of Water Heater Energy Savings vs. Minimum Standards Expected Energy Savings Over Equipment Lifetime
Tank Systems 10 to 20 percent up to $500
Tankless (Gas or Electric) 45 to 60 percent up to $1,800
Heat Pump 65 percent (compared to electric resistance) up to $900
Solar With Electric Backup 70 to 90 percent up to $2,200

Tankless Water Heaters

Pricing varies dramatically depending on the type, brand, your home, and whether you are installing a new heater or replacing an old one. The average cost of a tankless water heater is about $3,000.

Tankless water heaters are smaller so they require less space in your home. However, the installation can be more difficult for a tankless water heater.  You may need to upgrade your home’s electrical system to support an electric tankless unit or run a dedicated gas line to your gas-powered unit.  Depending on the type of unit, you may also need to install other equipment like new exhaust vents or new pipes.

Tankless systems heat your water on demand using gas or electric coils. Although tankless water heaters heat water on demand, they do have output limits on their flow rate. This means if you’re running the dishwasher, doing the laundry, and taking a shower simultaneously, your heater may not be able to produce hot water fast enough. The flow rate for tankless water heaters is measured in gallons per minute of hot water the machine can produce. Gas units typically heat water faster than electric ones.

The average lifespan of a tankless water heater is 20 or more years.


  • Efficiency — no need to pay to constantly keep a tank full of hot water
  • Longer lifespan
  • Space saving
  • Tankless heaters typically offer longer warranties


  • Expensive upfront equipment and installation costs
  • May need to make major changes to your home to accommodate a tankless unit
  • In some cases, the increased upfront cost may be larger than your long-term savings

Is a tankless water heater right for you?

If you have gas available in your home and you can install an optimal tankless unit without too much additional cost, a tankless unit can be a great money saver.  Point-of-use tankless heaters that go under sinks, near showers, or near washing machines can also be great options for those who live in smaller homes.

A couple last things to remember… Be sure to check with your tankless manufacturer on the water quality requirements for the system.  According to e-tankless.com, hard water minerals (primarily calcium and magnesium) rob your water heater of its energy efficiency by building up on its heating elements and heat exchanger surfaces. They effectively provide a layer of insulation between the heating surface and the water, thereby reducing heat transfer and putting extra stress on the heating element. Over time, the accumulation of minerals will also reduce water flow and lead to “hot spots”. These “hot spots” cause premature failure of the heat exchanger which results in costly repairs not covered under manufacturer warranties. For this reason, many water heater manufacturers require or recommend the treatment of hard water for the customer’s warranty coverage to remain valid. Thanks to aquatell.ca, you can peruse an online database here that shows the water hardness values for most city water supplies in Canada.

Also, beware of installing your tankless system on lead pipe supplied homes and septic systems as the water quality may have a direct impact on the system.  Lastly, if you live in an area that experiences many power outages, a tankless system may not be the right choice for you.

In summary, both water heating systems provide great benefits to the homeowner.  It all comes down to your budget, space, location and household consumption.