Quick answer
A tank heater stores and keeps hot water ready. A tankless heater heats water only when you use it. The U.S. Department of Energy says tankless units can be 24 to 34 percent more efficient in homes using 41 gallons or less per day, and 8 to 14 percent in heavier use. They cost more up front and need proper sizing, venting and fuel supply.
How each type works
A storage (tank) water heater keeps heated water in an insulated tank so hot water is ready when you open a tap. The University of Florida's extension service notes these are the most common type. The Department of Energy (DOE) says storage tanks lose some heat even when no water is running, called standby loss.
A tankless (demand) heater has no tank. According to DOE, cold water passes through a heat exchanger and a gas burner or electric element heats it as needed. Flow is typically 2 to 5 gallons per minute, and gas models generally deliver more than electric ones. That means running a shower and a dishwasher at once can exceed what one unit can supply.
Efficiency, according to DOE and ENERGY STAR
DOE says homes using 41 gallons or less of hot water a day can see tankless units be 24 to 34 percent more efficient than storage tank heaters, while homes using about 86 gallons a day may see 8 to 14 percent. Another DOE page gives a wider range, 8 to 34 percent. Tankless units avoid standby losses.
DOE also flags a catch: gas tankless models with a standing pilot light can waste energy and cancel out those savings, and it suggests models with intermittent ignition. ENERGY STAR says its certified gas tankless heaters save a family of four about $95 a year on gas compared with a standard gas storage model, as stated on its website when we reviewed it in October 2026. Your savings depend on your usage and energy rates.
Cost considerations
DOE says tankless units cost more to buy, but lower operating and energy costs may offset the difference. It also notes that serving several fixtures at once may require multiple units or dedicated units, which cost more. We are not listing prices because the sources we reviewed did not give current, dated figures for our region.
DOE's overview of other types adds a third option, the heat pump water heater. It says heat pump units are 2 to 3 times more efficient than conventional electric resistance heaters, but they suit only locations that stay between 40 and 90 degrees Fahrenheit year round and need at least 1,000 cubic feet of surrounding air space. ENERGY STAR lists heat pump models as their own category.
Water quality can matter too. The University of Florida's extension service says tankless units have raised concerns in areas with hard, calcium-rich water and advises checking with the manufacturer. WIN Home Inspection says tankless units need annual flushing, especially where water is hard.
Sizing basics
For a tank, DOE points to the first hour rating, the gallons the heater can deliver in its first hour starting full. You find your peak hour of use, add up the gallons, and choose a model that meets or exceeds it. DOE's example: three showers, one shave and one hand washing total 66 gallons. The University of Florida says to pick a model within 1 to 2 gallons of peak demand, so the two sources give slightly different guidance.
For tankless, DOE says to add the flow of fixtures that may run together and decide on temperature rise. It assumes incoming water at 50 degrees Fahrenheit, so a 120 degree target needs a 70 degree rise. DOE says gas units can often deliver that rise at about 5 gallons per minute, and electric units at about 2.
Installation: venting, gas and electrical
DOE says installation depends on fuel type, climate, local building codes and safety, especially for gas combustion, and recommends a qualified plumbing and heating contractor and checking permit requirements. The University of Florida says fuel-fired units should use sealed combustion or power venting to prevent combustion gases from backdrafting, with provisions for combustion air and a carbon monoxide alarm nearby.
Gas capacity is where sources diverge. A Rinnai technical trainer writing in Contractor magazine notes tankless burners are larger, around 120,000 to 199,000 Btu, versus 40,000 to 80,000 for a typical tank, and says older models needed higher gas pressure but newer ones may not require a gas line upgrade. That is a manufacturer's view, so ask for a written gas load check before you commit. Electrical capacity and gas piping changes are typically separate trades from plumbing, so ask whoever quotes the job who handles each part. If you smell gas, leave and call 911 or your gas utility.
Lifespan: where sources differ
DOE lists storage heaters at 10 to 15 years and tankless at 20 or more, with replaceable parts able to extend tankless life. ENERGY STAR says 20 years for tankless. Other sources are lower. This Old House, citing InterNACHI, lists conventional heaters at 6 to 12 years and tankless at 10. WIN Home Inspection says tank units in hard water areas last about 8 to 12 years, and tankless beyond two decades.
The gap likely reflects water quality, maintenance and who measured it. Treat all of these as ranges, not promises.
Questions to ask before you choose
Whichever type you lean toward, these questions help compare quotes on equal terms:
- How many gallons does my household use in its busiest hour?
- Is there a vent, gas line and electrical supply that fits this model, and who will do each part?
- How hard is my water, and what maintenance does the manufacturer require?
- What is the first hour rating or gallons per minute at my temperature rise?
- What is the written warranty on the heater and the labor?
When to call Pyper Plumbing
A leaking tank, no hot water, or a heater at the end of its life are good reasons to call. Pyper Plumbing handles water heater work and emergency repair for leaks in Snohomish, Skagit, Whatcom and Island counties. Gas line and electrical work are handled by other licensed trades, so ask about scope before you plan a switch to tankless.
Common questions
Is tankless always cheaper to run?
Not always. DOE says savings are largest in homes using little hot water, 24 to 34 percent at 41 gallons a day or less and 8 to 14 percent at about 86 gallons. Standing pilot lights on some gas models can reduce savings.
How long does a tankless heater last?
DOE and ENERGY STAR say about 20 years or more. This Old House, citing InterNACHI, lists 10. Water quality and maintenance affect the real number.
Will I need a bigger gas line or new electrical for tankless?
It depends on the model and the home. Burners are larger than a tank's, and a Rinnai author says newer models may not need a gas line upgrade. Have the gas and electrical trades confirm before buying.
Sources
Facts in this guide come from the following references. Local rules and manufacturer instructions can differ, so follow your utility and your equipment manual.
- U.S. Department of Energy, Tankless or demand-type water heaters
- U.S. Department of Energy, Which water heater is right for you?
- U.S. Department of Energy, Sizing a new water heater
- ENERGY STAR, Save more with ENERGY STAR gas tankless water heaters
- University of Florida IFAS Extension, Energy efficient homes: water heaters (FCS3277)
- Contractor magazine, Tankless truth: installing tankless doesn't mean updating your gas line
- This Old House, How long do appliances and parts of your home last
- WIN Home Inspection, Life expectancy of major home systems
This guide is general information, not a substitute for an on-site inspection. If you smell natural gas, leave the building and call 911 or your gas utility. Pyper does not perform gas line work.
