Tankless Hot Water Systems vs. Traditional Storage Tank Systems

Last updated on January 15, 2024

Hot water is an essential utility in any home or building. Two main types of hot water systems are used to provide hot water – traditional storage tank water heaters and tankless water heaters.

There are advantages and disadvantages for each system regarding operation, energy efficiency, space requirements, lifespan, maintenance needs, and water supply capacity.

This article provides a detailed comparison of these two hot water systems to help readers understand the key differences and make an informed decision when choosing a system that exactly meets needs.

GOVERNMENT REBATED SMART HEAT PUMP HOT WATER SYSTEM

Efficiency, Savings, Sustainability: Your Rebate-Ready Heat Pump.

Get a heavily subsidised energy saving heat pump through the NSW Energy Savings Scheme. Combat the rising electricity prices today!

Upgrade Your Water Heating: Rebates Await!

1. Operation and Functionality

Traditional Storage Tank Systems

Traditional storage tank water heaters have an insulated tank that holds and stores a set amount of hot water. The tank usually has a size between 40-80 gallons.

Cold water enters the tank, where either gas burners or electric heating elements heat it. The heated water is stored in the tank, ready for use. These units continually heat and reheat water in the tank even when hot water is not being used.

Tankless Hot Water Systems

As the name suggests, tankless water heaters do not have a storage tank. Instead, they employ a heating device that only activates when hot water is needed. Cold water travels through a heat exchanger, rapidly heating on demand. Once the tap is turned off, the unit shuts off heating.

This eliminates the energy wasted by keeping a tank of water hot 24/7. Tankless systems can provide a constant supply of hot water if they are properly sized to meet the hot water demands.

2. Energy Efficiency

Traditional Storage Tank Systems

The energy efficiency of traditional tank water heaters have improved over the last years but in general they lose some heat over time since they constantly need to maintain water at a preset temperature. Older models can have significant standby heat losses through the tank walls and piping.

Tankless models, on the other hand, are at an advantage since they do not store hot water, so they avoid these standby energy losses.

Factors like insulation and tank size impact efficiency since larger tanks and better insulation reduce standby losses. However, oversizing the tank leads to more overall heat loss. Proper installation also has an effect on the efficiency.

Tankless Hot Water Systems

The on-demand operation and the lack of a storage tank give tankless water heaters a clear efficiency advantage. The energy consumed is almost completely used for heating the water needed. Tankless heaters can operate with efficiency ratings over 90%, however, proper sizing is crucial.

Units that are undersized compared to the hot water demand will operate inefficiently, as they will heat cooler incoming water to higher temperatures quickly.

Oversized units that experience frequent start-stop operation could be more efficient. So, maximizing efficiency requires accurate demand calculation during sizing.

3. Space Requirements

Traditional Storage Tank Systems

Traditional tank water heaters are bulky, requiring a significant portion of floor space. Storage tanks can hold between 20 and 80+ gallons of water and their size depends on household size, daily hot water usage, and peak demand.

More family members in the household means a higher hot water demand and therefore a larger tank and larger unit size. These types of heaters are often installed in garages, utility rooms, or basements that can accommodate the space needs.

Tankless Hot Water Systems

One major advantage tankless water heaters have over traditional systems is their compact size since no water storage tank is needed. Most residential tankless heaters take up the size of a small briefcase or carry-on bag.

They can often be mounted directly on walls since they only require simple inlet and outlet pipes and an electrical outlety. This frees up substantial floor space for other uses. Their small size also offers more flexibility to install the units closer to hot water usage points.

4. Lifespan and Maintenance

Traditional Storage Tank Systems

On average, storage tank water heaters last 8-12 years before requiring replacement. Water mineral buildup and sediment that collects in the tanks degrade its efficiency over time. This buildup coats the heating elements and tank walls which reduces heat transfer.

Over time, the accumulation of this buildup can lead to element failure or tank leaks/corrosion requiring early replacement.

Frequent maintenance is required to prevent this damage. Annual draining and flushing remove some mineral deposits and extend their lifespan, and some heating elements need to be replaced, as well as anodes, and other components.

Tankless Hot Water Systems

High quality tankless heaters are designed to last over 20 years, and some manufacturers offer up to 25 years of warranties. Their long lifetime is mainly due to their simple on-demand design.

Mineral deposits do not accumulate significantly in the heat exchanger to significantly reduce efficiency, and heat exchangers last longer without constantly heating standing water.

Maintenance procedures involve removing small mineral deposits by flushing the heat exchanger occasionally (every 2-3 years). The simple components and absence of leaks from a water tank also result in a longer lifespan compared to traditional systems.

5. Water Supply Capacity

Traditional Storage Tank Systems

Traditional tank water heaters can supply hot water continuously with good recovery rates between hot water draws. Multiple taps can be simultaneously accessed as the entire hot water storage is accessible.

Gas heaters, in particular, can supply a high volume of hot water for longer periods for high-intensity purposes such as filling a tub.

However, tank capacities under 50 gallons may run out of hot water when too many taps are used at once for a long time. Systems sized at over 50 gallons provide adequate hot water, even for larger households, provided the heating elements/burners are adequately sized.

Tankless Hot Water Systems

Tankless water heaters produce unlimited hot water on demand. However, most residential units have maximum flow rates below 10 gallons/minute (depending on model and heating technology).

This is usually sufficient for two taps, like a shower and sink. However, if there are more units drawing hot water at the same time or if there are high-flow appliances like bathtub fillers, the consumption may exceed the heater’s capacity, resulting in decreased water output temperature.

Larger commercial tankless heaters have higher maximum flow rates for managing the hot water demands to accommodate for larger facilities.

For households, tankless electric models can supply more hot water than similarly sized gas models. Appropriately sizing units for the household demand is key to ensure adequate hot water capacity.

Conclusion

Both traditional storage tank systems and tankless water heating systems have a number of advantages and disadvantages. Traditional systems are simple to install and use and are suitable for low to mid-hot water demand spaces.

Tankless heaters are extremely efficient, durable, and compact but require accurate demand calculation and sizing.

Traditional heaters may be the most cost-effective option for households with low hot water usage or single taps running at a time.

Homes with higher demands, simultaneous water draws, or space constraints may benefit more from tankless systems in the long run despite their higher upfront costs. Carefully matching the system’s capabilities to current and future needs is key to making the right choice.