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There are two primary types of water heaters: storage and tankless. In this column I’ll try to explain the differences between these two approaches and offer some guidance on choosing between them. (There are also "hybrid" water heaters with features of both that I’ll cover in a future column.)
Storage water heaters
Most water heaters are storage models. These are insulated tanks holding 20 to 120 gallons with either electric heating elements or gas burners. The storage tank stratifies with hot water at the top and cold incoming water at the bottom, so that as you draw off hot water (from the top), you get consistently hot water until the hot water is depleted. The "first-hour rating" tells you how many gallons of hot water the water heater can deliver in an hour.
Storage water heaters constantly lose heat through the tank walls. Even though the tank is insulated, the difference in temperature across that insulated wall is large, so even with a lot of insulation the stand-by heat loss is substantial. Gas-fired storage water heaters that have standing pilot lights replenish some of that lost heat with the pilot, but most of the pilot’s heat is lost up the flue.
Tankless water heaters provide constant hot water and energy savings
To address the issue of standby heat loss and running out of hot water, tankless water heaters (also referred to as demand water heaters) were developed decades
A great feature of tankless water heaters is that they never run out of hot water -- assuming the water heating capacity large enough to supply the needed hot water demands. They also don’t have stand-by losses. Because hot water isn’t stored in a tank, there is no heat loss when the water heater isn’t operating (though there will be some losses through the pipes during use).
A 2008 Consumer Reports article reported that gas-fired tankless water heaters used about 22 percent less energy than their storage-type counterparts. A 2010 study by the Center for Energy and Environment in Minnesota found that gas-fired tankless water heaters save an average of 36 percent over storage water heaters. So far, so good.
The size of heating elements
A key advantage of storage water heaters is that the heating element(s) can be fairly small. Because a significant volume of water is stored and because the tank remains stratified as hot water is drawn off, a properly sized storage-type water heater can provide a family’s hot water needs without requiring a very large flow of gas or electricity to heat the water.
Most gas-fired storage-type water heaters have relatively small burners, typically 30,000 to 50,000 Btu/hour (not much larger than the larger burner on a gas range). This means that a half-inch-diameter gas line can be used to supply the water heater. It also means that the air intake (supply of combustion air) can be fairly modest in size.
Gas-fired tankless water heaters, on the other hand, often have much larger burners. A typical whole-house model, sized to allow two people to take showers at the same time or for someone to shower while the clothes washer or dishwasher is operating, will have a burner producing as much as 180,000 Btu/hour; the largest tankless water heaters have burners over 300,000 Btu/hour. Supplying the natural gas or propane to such a large burner requires a larger gas-supply line (typically 3/4-inch) than needed for storage water heaters--not an insignificant consideration.
Along with the large gas line, these tankless water heaters require a lot of combustion air. A small, 125,000 Btu/hour model operated at full capacity requires about 30 cubic feet per minute (cfm) of air for complete combustion, and a large, 180,000 Btu/hour model requires up to 45 cfm of air at full capacity. Such large airflow requirements can limit the options for placement.
Bigger challenges with electric tankless water heaters
An electric tankless water heater large enough to serve a whole house requires a huge current draw. A Seisco Model RA-28 that supplies 2.5 gallons per minute at a 76°F temperature rise draws as much as 116 amps at 240 volts! Most homes have only 200-amp service, and the multiple breakers and wiring required for such large current flows are expensive.
For utility companies, the idea of a lot of customers switching to electric tankless water heaters is downright scary, since hot water loads typically fall during periods of peak morning and early-evening power consumption. Utility companies are required to have capacity available for whatever the demand is, and if a lot of electric tankless water heaters were installed in a service district that would result in a significant increase in those peaks.
Higher cost for tankless water heaters
While tankless water heaters save energy compared with storage water heaters, that doesn’t mean they are cost effective. Both the Consumer Reports and Minnesota studies mentioned above reported that the significantly higher cost of tankless water heaters resulted in payback periods longer than the expected lifetimes of the water heaters. Consumer Reports found the cost of tankless models to range from $800 to $1,150 plus about $1,200 for installation, compared with $300 to $480 for storage water heaters and $300 for installation.
The Minnesota study reported a 20- to 40-year payback for the tankless water heaters.
Increased maintenance
On top of the questionable economics, tankless water heaters have significantly greater maintenance requirements than storage models. Models designed for outdoor installation (where supplying combustion air is not a problem) include sophisticated freeze-protection systems. In places with hard water, scale build-up is a significant problem. If the hardness is above 11 grains per hour, experts recommend installing a water softener, according to Consumer Reports, and special provisions may be needed during installation to allow periodic flushing the heat exchanger coils with a vinegar solution.
Bottom line
The bottom line is that tankless water heaters simply don’t make sense for most whole-house applications. There are situations, such as a commercial building with a lavatory far from the water heater, where a small tankless water heater can be appropriate, but for the vast majority of residential applications, storage water heaters simply make a lot more sense.
Alex Wilson is the founder of BuildingGreen, Inc. in Brattleboro. Send comments or suggestions for future columns to alex@buildinggreen.com.
