Appliance Review: Traditional vs. Tankless Water Heater Comparison


A quarter of the energy your home consumes, according to the U.S. Department of Energy, goes into your water heater. In most homes, heating water is the third-largest use of energy. So while that mundane-looking metal tank in your basement may not come up in everyday conversation, your choice of water heater can make a big difference in your everyday budget.

You can choose a ‘traditional’ storage-tank heater or a tankless heater, also known as a ‘demand’ heater. Neither is superior to the other, but each has its balance of pros and cons that may fit some households and circumstances better than others.

Heating Source

A traditional water heater stores water in a metal drum and brings the water to a desired temperature with a gas or oil burner. Another heating option is an external heat exchanger, which diverts energy to the heater from another source, such as a district heating system or a wood-burning stove.

The tankless water heater, also known as a ‘demand’ heater, uses an electric or gas burner to heat water as it flows through the unit. In modulated tankless heaters, a water flow sensor measures the amount of water that runs through the device when you open a hot water tap, for example, and applies just enough energy from the electric or gas burner to heat that amount of water to the temperature you set. More basic models do not adjust heat levels for water flow and have either a single ‘on’ setting or a few power levels to ch oose from.

The main difference between electric and gas heating has much more to do with utility company rates than with your heater. Electric tends to be far more expensive than gas, and with proper anchoring, the relative safety concerns are minimal.


A warranty reimburses consumers for 1) leaking storage tanks and 2) failure because of poor workmanship. Warranties are not 100% guarantees that heaters will not fail, and are issued with the understanding that the consumer will thoroughly maintain the device.

Heaters typically come with warranties that last between 6 and 12 years and often cover only defective parts, though there are exceptions and optional warranties that do more. General Electric ships heaters with a full warranty in year one and a limited defective parts warranty for the next five, eight or 11 years, according to FurnaceCompare.

Your water heater’s coverage is dictated more by its manufacturer than by its design. While water heaters tend to outlive their warranty periods, warranties are still solid investments in equipment you depend on.


A traditional water heater is a storage tank that takes in fresh, cold water and, with a gas or electric flame at the bottom of the tank, heats the water to the temperature you desire. The tank’s layers of insulation, along with water’s natural ability to store energy, keep the water in the tank consistently hot and ready when you need it and even when you don’t. Keeping the water hot all the time can be costly and unnecessary, but useful if your demand for hot water is always high as well.

One common concern with traditional heaters is water quality. The tank is intended to constantly store large volumes of water at temperature, and unless there’s enough demand to recycle all the tank’s water in a decent amount of time, it will languish in the storage tank. This can gradually rust the tank, encourage bacteria growth, and make the water taste and smell odd compared to the fresh groundwater.

Choosing an ideal thermostat setting for a traditional heater is a critical but sometimes confusing balance between safety, water quality, and energy consumption. According to the blog Treehugger, settings below about 120 degrees Fahrenheit save energy and prevent calcium buildup, but can allow legionella to thrive. A temperature above 140 degrees guards against bacteria but will be scalding hot, can worsen calcium deposits, and will use more energy.

Traditional storage-tank heaters are a better short-term value and their technology is time-tested, but you may miss out on some of the modern conveniences a tankless model can offer.

Tankless heaters attempt to instantly spike the temperature of incoming groundwater to the desired level of warmth. Because they don’t have to bring an entire 50-gallon water tank to the right temperature at once, these models heat faster than traditional ones, but the lack of any hot water reservoir can mean you’ll wait a little while for the water from your tap to get warm enough.

You can reduce this problem by placing the heater as close to all your water fixtures as it can get, in a central location, so there is less cold water to push through the pipes before the warm water arrives at the tap. Another common fix is to use smaller hot water pipes, since larger pipes mean you’ll have to run a greater volume of cold water from the pipes before the running water gets warm.

If you’re a fan of long, hot showers, then tankless heaters have one huge advantage: They never run out. Since they heat on demand, they’ll continue keeping your shower piping hot as long as you like.

Tankless models are unquestionably a more costly upfront investment than traditional ones. They contain more advanced hardware, require electricity for some functions, and may call for basement reconfigurations whose costs can also run high. According to Consumer Reports, the initial cost of a tankless heater is so high that breaking even with energy savings can take longer than the heater’s functional life.

If you can deal with the higher initial cost and the few associated technical quirks, tankless heaters will bring you previously impossible conveniences, and their features can only improve during the next few years.

Drain Valves

Drain valves are often the cheapest the manufacturer can get away with: flimsy and plastic, easily clogged by sediment buildup and possibly sludge from corroded aluminum anodes. Hard water also plays a large part in clogging a valve. A functioning, dependable drain valve can save your life in a disaster that cuts off your water supply, so try to find a heater with one made of brass and during the life of the heater, make sure the valve is still working.

Tank Lining

Storage tanks are typically lined with glass to guard against rust, although production limits prevent the glass from protecting every atom of metal. In order to slow any corrosion of the tank, water heater manufacturers add one or two anode rods, which absorb the punishment of corrosion instead of the tank walls. Once the anodes are fully corroded with time, however, the tank itself will begin to corrode, which is the main factor that limits a heater’s life to about 20 years.

A cheap storage-tank model without a glass tank lining is not even worth considering. If heaters with glass lining and sacrificial anode rods can only last roughly two decades, just imagine a tank without all that protection!


Since they are much more technologically complex than traditional models, tankless heaters often use digital displays to help you control temperature and other settings. Traditional heaters, on the other hand, don’t display much information at all, other than a window for the pilot light and a temperature adjustment knob. Depending on the model, some tankless heaters will have more advanced and detailed displays than others, since higher-end models have more features to manage. In any case, though, a water heater’s display, digital or not, tankless or traditional, will show enough for you to get the job done.

Space Requirements

Naturally, traditional water heaters require much more space than tankless models. Because they are generally anchored to a wall, tankless heaters use no floor space, whereas the storage tank of a traditional water heater can stand as tall as a refrigerator and almost as wide as your front door. Tankless models are clearly more space-efficient, but depending on your situation, that kind of efficiency may not be enough to justify going tankless.

Safety Features

An article by home improvement chain Sutherland’s says it best: “Water heaters rarely explode, but when they do, it’s much like a rocket launch. It’s catastrophic, in fact.”

Thankfully, storage-tank heaters are packed with safety features:
• A temperature/pressure relief valve releases tank pressure when it exceeds a certain limit.
• Mixing valves mix cool groundwater with hot water from the heater to lower its temperature just enough to prevent injury.
• Storage-tank heaters are almost always anchored to a wall to prevent the device from tipping over and breaking gas and water pipes during an earthquake.
• Proper ventilation prevents fumes from entering living areas or corroding the heater and its pipes.
• And the most obvious but easily overlooked safety feature is that what you see in the basement is not the water heater—it’s the water heater’s shell. (While the shell protects you and the heater’s interior, however, it can mask serious internal damage. If the shell is in bad condition, expect the heater’s innards to be in far worse shape.)
• Anode rods prevent aluminum from latching onto water molecules and causing serious health problems. Yet aluminum anodes are dangerous because, in an emergency, you could be using your drain valve to drink from your water heater, and harmful particles from the disintegrating anode fall straight to the bottom of the heater. Magnesium and titanium anodes don’t have this flaw.

Traditional water heaters made in 2003 or later meet the “Flammable Vapor Ignition Resistant” standard, developed to prevent heaters from igniting nearby flammable substances.

While they may still call for safety features like increased ventilation and a mixing valve, tankless heaters tend to be far safer than traditional models. Very rare heater faults are possible, but tankless models can never turn into rockets of boiling water.

Additional Features

Pricier models may include:
•    Electrified titanium anodes that guard against corrosion without being consumed like aluminum or magnesium anodes
•    Ceramic heating element to reduce scale deposits and mitigate heating noise
•    Anti-scale attachments that inhibit deposit buildup

Investing in these higher-end features may or may not be necessary, depending on your situation, but as we’ve mentioned before, the water heater is not a purchase on which you’d be wise to cut corners. Investing extra can improve the quality of your water, the longevity of the device and the safety of your home. While value is always critical, do keep that in mind.


Both types of heater have one very important thing in common: They heat water. Beyond that, choosing to go tankless or traditional is a deeply personal decision that can affect your budget, your safety and even the future sale value of your home. Do you feel that the greater efficiency and technological flair of a tankless model are worth the higher initial investment? Is a storage-tank model reliable and advanced enough for you to feel you’re receiving lasting value, not just a low price?

Either way, technology is improving enough that either option will be increasingly good for you, the environment and your finances.