Review: Tankless vs Traditional Hot Water Heaters | Pros and Cons

This is the third article in a series of three about hot water heaters and water usage. The first one outlined when you would consider replacing your hot water heater. The second focused on how to determine how much hot water you use and what type and size of hot water heater you need. This last one highlights the costs and pro and cons of traditional vs. tankless hot water heaters.

In the market for a new hot water heater? Knowing which appliance is right for you can make the process much, much easier. We’ve compiled these lists of pros and cons to help you decide which heater best meets your needs.

Costs of Tankless vs Traditional Hot Water Heaters

We asked our favorite plumber, Mike from Summit Northwest in Vancouver, WA, to provide us with some general pricing on traditional hot water heaters and tankless ones as well as installation costs. Not surprisingly, tankless water heaters were more expensive to buy and install:

Water Heater Type Unit Price Installation Total Cost
52-gallon electric $285 $250 $535
52-gallon electric EnergyStar $385 $250 $635
50-gallon gas $480 $275 $755
50-gallon gas high efficiency $570 $275 $845
Small tankless electric 18kw $825 $285 $1,110
Large tankless electric 27kw $1,025 $285 $1,310
Small tankless gas 7.5 GPM $1,250 $425 $1,675
Large tankless gas 9.4 GPM $1,450 $425 $1,875

According to mike, these are basic installation costs that you might pay in new construction. In existing homes, you would need to pay extra for piping and venting to units that are installed where no previous unit existed. So if you’re thinking about replacing a water tank with something tankless you will probably pay even more for installation.

Now let’s take a look at the units themselves.

The Tankless Hot Water Heater

Tankless hot water heaters provide instantaneous hot water because they heat the hot water as it is needed, rather than storing and heating a tank full around the clock. They are widely used throughout Europe and are increasingly used here in the US. Popular brands include Bosch, Rinnai, and Noritz (thanks to Noritz for the photo).

Pros

  • Energy Efficient – Tankless heaters operate on demand, eliminating the need to use precious energy to keep a tank warm throughout the day.
  • Compact – These small, wall mounted water heaters can be installed almost anywhere in your home. That means you gain square footage and can place your tankless heater close to where you use the most hot water.
  • Long-Lasting – Tankless water heaters are made from stainless steel, so they are durable and long-lasting. The average life span is 20 years, five to 10 years longer than the average traditional heater.
  • Endless Supply – Imagine taking a 24-hour shower and never running out of hot water. With a tankless water heater, that dream could be a reality since they operate on demand.

Cons

  • Price – Tankless water heaters cost more than traditional hot water storage tanks. Some prices even 3-4 times higher for the unit. On top of that, installation, piping, and venting are pricier as well. If you are doing a renovation for your home, transitioning to this new innovation can be expensive and complicated as well.
  • Performance – Electric units don’t perform as well as the gas ones. They consume a lot of energy to heat the water for your home. Also, while hot water production is endless, it is not generally a large enough quantity to serve two major water uses at once, for example two showers or a shower and dishwasher at the same time.
  • Delivery Delay – With tankless water heaters, heating begins instantaneously, but delivery of hot water does not. Users must let the water run for a while until it reaches the appropriate hot temperature and reaches your faucet. This waste of water can be frustrating for some and downright infuriating for the greenest consumer. On the other hand, this can happen with traditional tanks too when the tank is positioned a distance away from the shower head.
  • Cold Water Sandwich – Since tankless systems heat on demand, the heating mechanism turns off when the faucet turns off. When two people shower back to back, the tankless switches off when the first person turns off the faucet. When the second person showers, they’ll start their shower with the hot water left in the pipes, but will experience a sudden burst of cold water that flowed into the system when the faucet was turned on again. Then the hot water will resume. While not a deal breaker concerning the tankless, the cold water sandwich is an occurrence to be aware off.

Traditional Hot Water Storage Tank

Traditional hot water storage tanks hold and heat a pre-determined amount of water so that water is hot and ready to use whenever you need it. Water can be used for numerous events – showers, dishwashing, laundry, etc. – at the same time until the water is gone. Popular brands include A.O. Smith and Rheem (thanks to Rheem for the photo).

Pros

  • Low Cost – Traditional hot water storage tanks are inexpensive – to buy, to install, and to replace. This low price tag can be a real bonus when you all you really want is a hot shower.
  • Dependable – The technology is proven to work and can often be repaired within the life cycle. For years, this has been the go-to appliance for home hot water needs.
  • Efficient – Hot water storage tanks have come into the 21st century in terms of efficiency. While not necessarily the most efficient way to heat water for the home, these tanks have now been awarded the Energy Star rating. It is easy to find one that is better than your last, and with a little searching, you can find one that rival tankless heaters.
  • Easy to use and replace – If you’re remodeling, you may be considering revamping your hot water heating system. The easiest and least expensive move during a remodel is to replace your current hot water storage tank. Installing tankless can be costly and difficult.

Cons

  • All Day Long – Traditional hot water heaters fill their tanks and then proceed to heat the water 24 hours a day. This continuous energy usage adds up over time and impacts you in terms of dollars and the environment.
  • Spacious – And not in a good way. Tank water heaters are large and cumbersome. They take up valuable square footage in your home and must have secure area dedicated to water heating instead of Wii or closet space.
  • Gone when it’s gone – When your hot water tank runs out, that’s it for hot water usage until it refills and reheats. That means if you’re last on the shower rotation, you may be taking a quick cold one rather than a luxurious hot shower. Think about it.
  • Life span – The average life span of a hot water storage tank is 10-15 years. That means that you could replace your heater a minimum of three times during the time you are paying off your mortgage. Adding the cost and the hassle and multiplying by three may be more than you are up for.

Hopefully this Series on water and water heaters has helped you weigh out your usage and decide what is right for your home. If you’re still undecided or need help with an installation plan, contact me at john@fazzhomes.com.

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26 Comment(s)

  1. John: Thanks for the feasibility info on each system. We have had our gas HWH 15 years and its still going strong. Space is an issue, but I think we have space under the stairs for the HWH. Am inclined to stay with gas at this point, as it is lower cost initially and more efficient over the longer haul. Costs of gas promise to stay low longer, too.

    Thanks,
    Steve

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  1. Apr 21, 2010: from What Size Hot Water Heater Do I Need? | Fazzolari Custom Homes & Renovations
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