Tankless Water Heater vs. Storage Tank Water Heater – Which is Better?

When it comes to water heaters, there are two main types to choose from – the modern tankless models and the traditional storage tank heaters. Choosing the right one isn’t an easy decision to make as both have their pros and cons, with significant price differences between the two.

Considering that this is a decision you’ll have to live with for a long time, it’s wise to carefully weigh the benefits of the type of water heaters against your requirements. Here’s a closer look at tankless water heaters vs tank water heaters.

Tankless Water Heater vs. Tank Storage Heaters

Tankless vs storage water heater side by side

Tankless water heaters are on-demand systems that uses a gas burner or electric elements to heat the water as it runs through the unit. It only heats the amount of water you need to use and sends it through the pipelines and out your faucets and showerheads. Because of the way they operate, these units are more economical, extremely space-saving and offer a continuous supply of hot water.

How does this compare to the traditional system?

Tank storage heaters are much simpler units and are found in most homes. They operate by heating up a large tankful of water at a time and keeping it hot until you have to use it.  The insulated tank typically holds around 30 to 50 gallons of water, which is equivalent to about 3 showers. While they’re not as energy efficient as tankless heaters, they cost a lot less to install and maintain.

Tankless Water Heaters – Pros and Cons

Tankless water heater closeup

Compared to traditional water heating methods, a tankless water heater has many benefits. But as with all things, there are also downsides to this. Here’s a look at the pros and cons of tankless water heaters.


  1. Tankless heaters are extremely energy efficient compared to traditional water heaters. According to Energy.gov, tankless water heaters can be up to 34% more energy efficient for households that use less than 41 gallons of water, and up to 14% more for larger households that use around 86% gallons of water per day. These units avoid standby heat as they don’t require reheating. This translates to lower utility bills and savings in the long-term.
  2. Tankless heaters have a long lifespan and can last significantly longer than a storage tank heater. A high-quality tankless heater has a lifespan of around 20 to 30 years, depending on the water quality and maintenance given to it. Note that hard water can reduce the lifespan of a tankless water heater but in general, one of these models should last you at least 2- years.
  3. Unlike storage water heaters, a tankless heater is the size of a briefcase and can easily be mounted on the wall. It’s space-saving design means you won’t even notice you have one at home. This makes tankless heaters an attractive option for small apartments with limited space as the unit can go into any tight quarter.  
  4. Although they work on-demand, tankless heaters have a very fast hot water flow rate, with a typical system heating up to 2 or 3 gallons per minute. There’s no fear of the water running out, like with a storage tank heater. What’s more, the water heats up very fast, so you don’t have to wait around for it.
  5. Tankless heaters are much more sustainable in the long rung than storage tanks, because they use up less energy and have longer lifespans.
  6. Tankless heaters can be installed inside or outside, depending on your space and hot water requirements.


Possibly the biggest con with a tankless water heater is the initial cost of the system. While a tank storage water heater costs only around $500, a tankless system can cost around $1000 or more to buy and install. This may not be an option if you’re on a tight budget.

If you’re trying to replace a storage tank heater with a tankless heater, this retro fitting can be costly and labor-intensive. As the plumber or installer will need more time to make the changes, which adds to the cost. It probably isn’t economical to make the switch from storage tank to tankless unless the storage tank has lived out its lifespan.

While tankless water heaters have quick heating capacity, the system can get overwhelmed if you’re using a lot of water at the same time. For example, if you’ve got the laundry going and two showers running simultaneously, one of the showers will likely start running cold water.

Storage Tank Water Heaters – Pros and Cons

Storage tank heaters

Tank water heaters are the traditional type of water heating unit and have been used for decades. They’re the type found in most homes today, especially in larger, older homes.

Here are the pros and cons of tank water heaters.


  1. Purchasing and installing a storage tank water heater is significantly cheaper than tankless heaters. All up, you might have to spend around $500 to $800 and you’ll have your system in and ready to use.
  2. Because the operating process is much simpler, the maintenance required for these units are lower. If something goes wrong with a tank water heater, having it repaired will not put you out of pocket as much as a tankless heater will.
  3. They heat up 30 to 40 gallons of water at a time, so even if you’re using multiple outlets, you’ll have consistent hot water until the entire tank is used up.


  1. Tank water heaters are not as efficient as their tankless counterparts. These units heat up large vats of water and reheat the water to maintain a set temperature. When the weather is colder, these heating and reheating requirements increases, using even more energy. As tank water heaters use up more gas or electricity, you’ll see this translated to higher utility bills.
  2. Although you’ll have 40 gallons or so of hot water at a time, once it’s used up, there’s a significant wait period for the tank to heat up again. We mentioned that an average storage tank heater can only accommodate around 3 showers worth of water at a time, so for large households, this can be problematic. At least with a tankless water heater, you’ll have endless hot water supply as long as you don’t use too many outlets at the same time.
  3. There’s no getting by the fact that storage tank heaters require a lot of space. They’re much larger in size and because they need to be located inside your home, they’re not suitable for smaller homes with restricted space.
  4. Tank water heaters have a much shorter lifespan than tankless heaters. They typically last only around 10 to 15 years. Compare this to tankless which last for at least 20 years. This means that for the lifespan of every tankless heater, you’d typically require two tank heaters.

Tank or Tankless, Which Should I Choose?

Apart from the fact that storage tank heaters are more affordable and cheaper to maintain, tankless water heaters are superior in every way.

In the long run, they are economical, more energy efficient and are more convenient to use. We recommend choosing a tankless water system if your budget allows it. If your budget is more restricted, then a storage water tank can be more attractive.

It’s imporant to add here that choosing the most cost-effective choice for you depends on various factors pertaining to your specific requirements including your household water usage and how long you plan to stay in the house. By calculating these factors, you’ll be able to see whether a tankless or storage tank heater suits you better.

Tankless vs tank water heater infographic

If you’re looking for the best tankless water heaters, read our reviews and buying guide here.

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