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Tankless Hot Water Systems vs. Traditional Storage Tank Systems

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.

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    1. Operation and Functionality 


    Traditonal storage tank water heater
    Traditonal storage tank water heater

    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


    Tankless water heater
    Tankless water heater

    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.

    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!

      Anything else you would like to ask us regarding our services and offers? Please feel free to get in touch and our friendly staff will assist you.

      HEAT PUMP HOT WATER SUPPLY & INSTALLATION

      From $1,599*
      Energy Saver is an initiative proudly funded by the NSW Government
      e-green electrical logo image

      E-Green Electrical

      E-Green Electrical is a top tier energy efficiency company based in Sydney. We focus on utilising government rebates to help reduce our clients energy consumption by installing energy efficient solutions. E-Green boasts a rich heritage within the realm of energy efficiency, consistently staying up to date with cutting-edge technologies to deliver optimal results for our valued customers.

      We don't just sell products and services; we also provides tips and information on how to help reduce energy consumption. We believe in using energy wisely and teaching others how to do the same. For E-Green, it’s important to share knowledge with the community. That's why we regularly write articles about saving energy, new government rebates available and increasing sustainability.

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