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Hot Water Heaters: Pros and Cons of Tankless vs. Conventional Tank

Many current home buyer and owners are interested in a home that is energy efficient. We as consumers want a product that has the Energy Star certification. In a difficult economy it is all about how to save money on our household expenses. According to the DOE’s Office of Energy Efficiency and Renewable Energy, water heating is the third largest expense in most homes, accounting for 14% to 25% of the home’s expense. Currently the most popular energy saving water heating system is the tankless water heater, also known as the on-demand system. Unlike a traditional water heater that heats a reservoir of water 24-hours a day. The tankless or on-demand system only heats up the water as you use it. While tankless technology can save on energy costs versus a standard 40-gallon tank, there are other things we should consider before changing over. As a home buyer or owner we want to make the best decision possible. Below I will outline the pros and cons pf both systems, so that you the consumer can make the best choice.

Conventional Hot Water Heaters

conventional hot water heaterPros:

-Low product cost and low installation cost. For a basic 30-gallon electric tank can be purchased for less than $300. The installation of this type of system is fairly simple.

-Inexpensive to replace. If and when your water heater goes bad, the system can be easily replaced with a similar unit for anywhere from $500-$800.

-Tanks are now Energy Star certified.  As of this year, conventional hot water heaters were certified by the Energy Star program.  So it is possible to save money and energy with a conventional system.


-Conventional tanks are always on. No matter how energy efficient they are, a storage tank cycles on a regular basis to heat and reheat at the preset temperature. Using energy whether you are using or not.

-Big and bulky. Most conventional tanks take up a precious amount of room in either a mechanical or laundry room.

-May be inadequate. Depending on the capacity your hot water heater has it may not be able to meet the needs of your household. If it is not sized correctly to meet the needs during high demand times, the tank water heaters will run out of hot water. Making you wait up to 30 minutes for it to heat up the water inside the tank.

-Less versatile installation. The tank takes up a large amount of space and can not be located outside of the home.

-Less durable. The average life expectancy of a conventional hot water tank is about 12-15 years.

Tankless Water Heaterstankless-hot-water-heater


-Saves Energy. The tankless water heater only operates when there is a demand for the hot water, which can reduce its energy cost by about 25% annually.

-High efficiency. The most efficient storage tank has an energy factor of about .67. However Energy Star states that some tankless units have an energy factor as high as.95.

-Reliable. If a unit is sized properly for the home it is going into, a gas tankless heater can deliver a continuous supply of hot water as the preset temperature, at a rate of 2-5 gallons per minute. The tank may never run of out hot water, but at peak times can have a inadequate flow rate.

-Compact size. The typical size of a tankless system is about the size of a small suitcase. Taking up way less room than a conventional system.

-Durable. The life expectancy is upwards of 20+ years.

-Versatile. The tankless system is easy to zone and go anywhere in the house. Or can even be installed outside the home on a wall.


-Tankless systems cost twice as much as a traditional one. The typical tankless water heater can range from $700 to upwards of $1500.

-Installation is expensive.  Not only is there a high cost to purchase the system itself. The installation and the necessary piping can be pricey. They also need very good venting, which is also expensive.

-Retrofitting a tankless system into you home is expensive. If you were building your home and decided to add a tankless system the pricing would be the same to install as a conventional system. But, if you were to add one to your already existing home it can be difficult and expensive. To convert a home from traditional tanked system to a tankless system can be as high as $3000.

-Best performance from gas units. The gas-fired tankless units are great performers for whole-house use. Whereas the electric ones are inadequate. Electric models are also not Energy Star-rated and require a significant amount of energy to use.


As you have read, both systems have their goods and bad about them. The right choice for each homeowner will be different. Hopefully this article will help to make the decision of switching or staying with what you got, a bit easier for you.








Reliable Solutions Home Inspections

Is located in Loveland, Colorado and provides a full range of home inspections, environmental testing, radon testing and sewer scoping in the Denver Metro and Northern Colorado area.  We pride ourselves on making sure each and every client gets our best work and same day reports.


  1. J.Clark on January 9, 2024 at 12:20 am

    No such thing as a hot water heater. It’s a water heater

  2. Thomas Clarence on January 9, 2024 at 10:43 pm

    It’s great that you mentioned that tankless water heaters only heat up what you need. I would imagine that it would be a good idea to have a tankless water heater if you have a large family. That way warm water is only being made as your family members are needing it instead of it sitting around not being used.

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