Tankless vs. Traditional Water Heaters: Which is Best for Your Home?
If you’re tired of dealing with cold showers and high energy bills, it might be time to upgrade your hot water heater.
But should you go with a traditional or tankless system? It can be a tough choice when you have so many options. Still, taking time to get it right can make a big difference in your energy costs and how comfortable your home is.
In this guide, we’ll help you compare options by breaking down the cost, installation, and performance differences so you can make the best choice for your home. If you need a trusted, reliable, and local expert to help with your heating needs, we’re at your service.
An Overview of Traditional and Tankless Water Heaters
The two most common types of water heaters are traditional water heaters and tankless water heaters.
A traditional water heater, also known as a storage tank water heater, heats and stores water in a large, insulated tank. It operates using either an electric heating element or a gas burner to maintain the water at a set temperature. A built-in thermostat automatically monitors the temperature and turns the heat on or off as needed. Hot water gets stored in the tank and delivered through pipes to your faucets as needed.
Features and Components:
- Tank size – typically range from 30 to 80 gallons.
- Thermostat – controls temperature settings.
- Heating element or gas burner – maintains water warmth at a specific temperature.
- Insulation – improves efficiency by reducing heat loss.
A tankless water heater (also known as on-demand or point of use water heaters), doesn’t store water. Instead, water is heated instantly as it flows through the unit by high-powered gas burners or electric elements when needed, reducing standby energy loss.
Features and Components:
- Flow sensor – detects that a faucet is turned on when water starts flowing into the water heater.
- Compact design – saves space when compared to a traditional water.
- Reduced risk of leaks – water is not stored in a large tank, so this component can’t fail and cause water damage to your home.
- Higher energy efficiency – water is only heated when in use.
Installation Process: Traditional vs. Tankless Water Heaters
Traditional Water Heater Installation
Installing a traditional water heater involves placing a large storage tank in a designated space, usually a utility room, basement, or garage. Professionals will connect the unit to the home’s water supply and either a gas line or electrical connection. If the water heater is a gas-powered model, it will be connected to a venting system. Since traditional water heaters require more space, they are less suitable for compact homes. The process typically takes 2-3 hours, depending on complexity.
Tankless Water Heater Installation
Like a traditional water heater, a tankless water heater requires connection to the home’s water and power (usually gas or electrical). Tankless water heaters are wall-mounted and need less space than tank models. These units use more power than traditional heaters, so it might be necessary to upgrade to your home’s gas supply or electrical panel. Installation can take 4-5 hours, depending on the specifics of your home.
Comparing Installation Ease and Costs
Traditional water heaters are easier and cheaper to install, costing approximately $500-$1,500 for installation. Tankless models involve higher initial installation costs ($1,000-$3,000). This is due to the complexity of tankless water heaters, and electrical and plumbing upgrades.
Energy Efficiency of Traditional vs. Tankless Water Heaters
Traditional water heaters store heated water in a tank, maintaining a constant temperature. This process leads to standby heat loss, where energy is wasted keeping water hot even when it’s not in use.
The yearly cost of a gas-powered traditional water heater is $245 (based on a rate of $10.86/1,000 cubic feet of natural gas). Electrical models cost $580 per year to operate (based on an average rate of $0.132 per KWh).
Tankless water heaters are more energy-efficient because they heat water on demand. There is no standby heat loss.
Using the same energy rates in the above example, the annual cost for a gas tankless model is $195, and an electric system is $535.
Which Is More Energy-Efficient?
Tankless water heaters consume less energy overall, especially for homes with lower daily hot water usage.
To determine how energy-efficient your hot water heater will be, look for the Uniform Energy Factor (UEF). This number typically falls between 0.63 and 0.95. For example, a tankless gas water heater unit with a UEF of 0.94 would convert 94% of its energy into usable heat, with just 6% lost in heating and distributing water. The higher the UEF, the more efficient the model.
Cost Analysis of Traditional vs. Tankless Water Heaters
| Traditional Water Heater | Tankless Water Heater | |
| Initial Purchase Cost | $300 – $1,500 | $500 – $2,500 |
| Installation Costs | $500 – $1,500 | $1,000 – $3,000 (may require gas/electrical upgrades) |
| Maintenance Costs |
|
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| Energy Efficiency Impact | Higher energy bills due to standby heat loss | More energy-efficient, but less for very high-demand households |
| Lifespan | 10 – 15 years | Around 20 years |
Comparing The Performance of Traditional Vs. Tankless Water Heaters
| Traditional Water Heater | Tankless Water Heater | |
| Hot Water Availability | Stores 30-80 gallons; may run out and need reheating | Heats water on demand; continuous supply of hot water supply but limited flow rate |
| Handling Multiple Demands | Can struggle when multiple appliances use hot water simultaneously | May experience reduced pressure with high simultaneous demand |
| Reliability & Maintenance | Requires regular draining to prevent rust and sediment buildup (maintenance tips) | Needs periodic descaling to prevent mineral buildup |
| Lifespan | 10-15 years with proper care | 20+ years; higher upfront cost but lasts longer |
Pros & Cons of Different Water Heater Types
Traditional Water Heaters
- Pros: Lower upfront cost, reliable hot water storage
- Cons: Higher energy use, bulky size, limited water supply
Tankless Water Heaters
- Pros: Energy efficient, unlimited supply of heated water, space-saving, long-term savings
- Cons: Higher initial cost, may need system upgrades, limited flow rate
Which Water Heater Is Right for Your Home?
Now that you understand the difference between traditional and tankless water heaters, let’s answer the most important question of all:
Which water heater is best for your home?
At a high level, you should consider the following:
- Household size & water use
- Available Space
- Budget
When a Traditional Water Heater Is Best
- Homes with low to moderate hot water use.
- Homes that have the space for a large water storage tank.
- Budget-conscious people who need a lower upfront cost and don’t mind higher energy bills.
When a Tankless Water Heater Is Best
- Larger homes that need hot water all the time.
- Small spaces where a water tank won’t fit.
- Consumers who want to save energy and lower bills in the long run.
Choose The Right Water Heater With Anderson Air Corps
Finding and installing the right water heater doesn’t have to be overwhelming. We encourage you to take control of your hot water needs with a system that works for you.
Looking for a more professional opinion? As your local HVAC experts, we can help guide you through the process and make the best choice.
Contact Anderson Air Corps today to find the perfect water heater for your home.