Tank vs Tankless Water Heaters: What’s the Difference in Technology?

Automatic water heater

Most people in the U.S. have only ever had a tank water heater. These storage units keep a supply of hot water ready for when you need it, such as when you take a shower or turn on an appliance like a washing machine.

However, more homeowners are now considering tankless water heaters — for the convenience and energy savings they bring. Although tankless water heaters serve the exact same purpose as tank heaters, the technology behind them is quite different.

How Do Tank Water Heaters Work?

Tank water heaters are quite simple. Basically, cold water enters the large metal drum of the heater through a drip tube that runs from the top to bottom. Then, heating elements heat the water. The exact way these heating elements work depends on whether the tank water heater is gas or electric.

With gas units, water is heated by a gas burner. Gas (either propane or natural gas) reaches the tank by a gas valve and heads to the burner. The burned gas creates extremely hot air, which passes through the middle of the tank and heats the surrounding water. Since the burned gas is toxic, the water heater requires venting to direct this air out of your home, through either the roof or a wall.

With electric models, water is heated by one or two electric heating elements inside the tank. The technology for electric models is much simpler: the tank simply needs to be plugged into a power supply and there is no venting.

To control water temperature, there is an adjustable thermostat connected to the gas burner or electric heating element. In the case of gas water heaters, the thermostat regulates how much gas is allowed to enter the burner to ensure the water is heated to the temperature the user sets. When electric heaters have two elements, each has its own thermostat.

At the top of the tank is a hot water outlet pipe. Since heat rises, hot water naturally moves to the top of the tank. When someone turns on an appliance, therefore, it is hot water that comes out the tank. At the same time, more cold water enters the dip tube to replace the water leaving the tank.

Some final features of tank water heaters are:

  • Insulation – To keep the heated water hot.
  • Drain valve – To allow homeowners to drain the tank. This is necessary twice a year to avoid sediment buildup.
  • Anode rod – Made from magnesium or aluminum, the anode rod uses ionization to reduce corrosion and extend the lifespan of the tank.
  • Temperature and pressure relief valve (or T&P valve) – This is a safety measure. The valve will open if the water temperature inside the tank rises too high to prevent an explosion.

How Do Tankless Water Heaters Work?

Like tank heaters, tankless water heaters are connected to a cold water supply via a pipe and have a hot water outlet pipe (or several pipes) to transport the heated water. Also like tank water heaters, tankless heaters can be powered by gas or electricity. Beyond this, though, there are several differences in the technology.

As the name suggests, tankless water heaters don’t store any water. Instead, they heat water instantaneously. At the moment the user turns on a faucet or appliance, the inlet pipe at the bottom of the tankless heater opens and water flows into the unit. This activates the heat exchanger (or heat exchangers, in some models).

In electric models, the heater exchangers are electric coils. In gas units, they are gas-burning components. When there is more than one heat exchanger in gas heaters, the water is preheated by the first exchanger and the unit captures latent heat before it is able to escape into the vent. The water then continues on to the second heat exchanger.

Once heated, the water travels out of the hot water outlet pipe and reaches the faucet or appliance. The flow of cold water entering through the inlet pipe and the heated water exiting through the outlet pipe continues until the user turns off the faucet or the appliances finishes working. At this point, the heater shuts off and waits until hot water is needed again.

Recirculation Technology

To improve efficiency further, some tankless water heaters feature recirculation technology. This sends hot water that had already left the heater when the faucet or appliance was turned off back to the water heater. When the heater reactivates, the water is reheated to the temperature set on the thermostat.

This system means that users wait even less time for hot water, as there is no need to flush cold water from the pipes. It also reduces water waste.

Point-of-Use and Whole-House Tankless Heaters

Whereas gas-burning components are capable of heating multiple gallons of water per minute, electric heating components are less powerful. For this reason, many electric tankless heaters are point-of-use units — in other words, they provide hot water to just a couple appliances. However, in condos and homes with low hot water needs, they can also be whole-house heaters. Gas water heaters, on the other hand, are almost always whole-house heaters.

Once you understand how hot water heaters work, it is clear that tankless heaters are the much better choice. Why, then, aren’t more people embracing them? In fact, they are. In Europe and some parts of Asia (such as Japan), tankless water heaters are the norm. In the U.S., the green movement is only now gaining traction, but you can expect to see far more homes replacing their outdated tank heaters with tankless models.

In fact, the only disadvantage to tankless water heaters is that the advanced technology means higher upfront costs. However, tankless heaters are a more cost-effective solution in the long term, due to their lower energy costs and life expectancy, which can be more than twice as long.