Are you really saving any money?

Many people believe that tankless water heaters are more energy-efficient than tank-type heaters.  Usually, they’ve heard about how much better they are than tank heaters since they heat water only when it’s needed and thus, there should be no standby energy losses.

tank vs tankless

Consumers are seduced by claims of greater efficiency, greater savings, and perhaps a chance to be ‘really green’.  This warms many hearts until their owners realize that they paid a lot more money up front, that their utility bills aren’t lower than before, that they face expensive service bills and that almost anything, including skipping such service, will void their tankless warranty.

There are no standards by which to compare the efficiency of tankless heaters to that of tank heaters. The sad fact is, it’s hard to cheat the law of physics. If you heat water, gas is going to be burned or electricity is going to be used and it’s going to cost the same to heat a given amount of water, no  matter whether you do it with a tankless device or in a water heater.  Tankless heaters typically are priced several times higher than old-fashioned water heaters.  Condensing heaters, both tank and tankless, are significantly more efficient, but also so expensive that you’d have to use a lot of hot water to come out ahead.

Installation Cost

Installed costs are on average $600 for tank heaters vs $2,500 for tankless and even more if you are retrofitting. This must definitely be taken into consideration because it’s going to take a very long time to save enough on energy bills — if that’s even possible — to make up the premium you pay right at the outset.  And your tankless heater, being rather complex, may well break long before then.

There’s another issue…A typical tank-type heater is about 40,000 Btu.  To get the equivalent, it’s often necessary to use a 160,000 Btu tankless.  That might require a bigger gas line, and will need a bigger vent, and the added expense to have it installed. If your setup is electric, you might need heavier-duty wiring to accommodate a tankless heater, with the same issues.

Upkeep Costs

Maintenance costs must be factored into the tank vs tankless equation as well.  Tankless heaters are essentially mini boilers and need attention more than tanks do.  If you are not prepared to religiously service your tankless heater by a qualified technician, stick with traditional tank heaters — they are cheaper, simpler and far less likely to cause you grief.

tankless heater


With a tank water heater, it’s possible to wash the dishes and take a shower at the same time.  Or do two or three other tasks simultaneously.  With tankless heaters, that is usually difficult or impossible.  Special attention has to be given to flow rate and the amount of heating done.  If you want only a trickle of hot water, a tankless heater probably won’t even turn on.  Beyond that, there can also be temperature fluctuations that can make taking a shower an ordeal.  The temperature can cycle five degrees too cold, then just right, then five degrees too hot.

Then there’s the ‘cold-water sandwich’, which occurs when the tankless heater shuts off after a task.  There is still hot water in the piping and if you turn on hot a few minutes after the first task, that will start to flow out, followed by the sandwich — cold water flowing past the tankless heater before it is triggered into coming back on.

Instant Hot Water? Probably Not.

With a tank heater, since water has already been heated and is simply sitting in storage, it begins flowing immediately. If your tap is some distance from the tank, this says nothing about how long you wait before you feel the heat.  That’s a different issue that also applies to tankless devices.  On average, they take 15 seconds (for gas-fired tankless) before they start sending hot water your way.  A flow sensor “wakes up”. Then a fan turns on, then the burner fires up.  Only then does the water start to heat.  Tank heaters are truly the “on demand” product.  Tankless heaters must be able to raise the temperature of 20 litres of water by 50C in one minute.  That’ a huge energy transfer, and it’s the Achilles’ heel of electric tankless heaters.

How much hot water can a tankless system actually provide? For most models, the water temperature would likely drop to lukewarm whenever more than a couple of hot water taps were turned on at the same time or having the dishwasher run while you are showering.

hot shower

Are they reliable?

Tankless water heaters have many parts and intricate controls.  The more complicated the device, the more to go wrong. In colder climates, care has to be taken to completely drain them if they’ll be out of use or they will get damaged by freezing.  In hard water areas, they are prone to lime up and that seriously lowers their efficiency.  With tank heaters, the minerals in hard water settle in the bottom, where they can be more easily flushed or vacuumed out.

Energy Savings

Unless the pilot light in the tankless heater is kept off when the heater is not in use, it does not perform much better than a well-insulated tank-type heater. The real place you’ll lose heat with both types of heaters is from the pipes.  Every time you use hot water, it heats all the metal plumbing between the heater and the faucet and then all that heat radiates away.

Additionally, sediment at the bottom of a tank type heater has been shown to have little effect on performance. Even with heavy sediment buildup, efficiency is seldom reduced more than five percent because most of the heat exchange happens in the flue, not in the tank bottom.