According to the Department of Energy, the average U.S. household uses 64 gallons of hot water daily. Heating water is the second largest home utility expense — about 14 percent to 18 percent of the total monthly energy bill. 

The workhorse in water heating has been the 40-gallon atmospheric-vent tank-type water heater. In recent years, tankless water heaters have been gaining market share because of their two primary benefits: space savings and the ability to deliver continuous hot water.

There are many cases where replacing a tank water heater with a tankless model makes sense. Yet there are many other applications where the dependable tank-type water heater is still the better choice. Recent advances in water heating technology means there are more options to properly tackle every lifestyle. 

New homes vs. retrofit

Installing a tankless water heater is often easier in new home construction, where contractors can plan for its gas consumption. A tankless water heater typically uses from 120,000 to 199,000 BTUs of natural gas or propane per hour when heating water. While that’s up to five times more gas needed at one time than for a tank water heater (between 30,000 and 40,000 BTUs per hour), tankless units use less gas to heat the same amount, ultimately making them more efficient.

Then there’s the venting. An atmospheric-vent tank water heater lets the heat and exhaust naturally arise to vent out, just like a chimney. In contrast, tankless water heaters pull air through the system and push exhaust out. They can deliver higher efficiency than traditional tank models, plus the convenience of using venting materials like PVC. Contractors typically run PVC venting through a wall or roof penetration, instead of through a chimney or flue with a tank unit.

In retrofit applications, the cost and complexity of installing a tankless unit can be a barrier. In many residential applications, a contractor would need to upsize the gas pipe between the main and water heater to ensure sufficient supply. For retrofits involving electric tankless water heaters, a contractor would likely have to install a larger breaker panel with a new electrical service to the home. While a standard 50-gallon electric tank-type water heater can run off a 30-amp circuit, a whole-home electric tankless water heater might require a 100- or even 140-amp circuit and up to 6-gauge wire.

For these reasons, it’s unlikely that a customer with a 30-year-old home would want to incur the expense of replacing a tank water heater with a tankless model. If the home doesn’t already have access to adequate gas or electric power, it’s probably not worth the switch.

Best prospects for tankless

A tankless water heater is often the right choice for larger families looking to build a new home. The contractor can design the home for the gas/electric supply and venting requirements; and the family members have the reassurance of knowing that there’s a continuous supply of hot water for showers, laundry and cooking. Even in a household of six, family members could take back-to-back showers — and the last one would have just as much hot water as the first.

The other big advantage of tankless is space savings. A tank water heater has a bigger footprint: roughly a 24-inch diameter and 50-inch height. In contrast, a tankless water heater is usually about the size of a carry-on suitcase.

Perhaps the biggest challenge in any tankless installation is making sure to size the unit properly for the application. Since the unit is heating water on demand, the contractor needs to size it for the maximum number of showers, sinks and laundry cycles that could be used at the same time. If a contractor sizes for average use, it’s possible that the tankless will not be able to provide sufficient water for all fixtures or at peak demand periods.

Some customers prefer tank

Many homeowners will still choose to replace a tank water heater with another tank unit. Here are some reasons why: They don’t want to incur the upfront costs to increase either gas or electric supply to the home. According to the Department of Labor, most Americans carry less than $3,500 in their savings accounts, meaning a water heater replacement can quickly put a dent in the reserves.

Traditional tank technology meets their needs. A household of two empty-nesters are unlikely to run out of hot water, even when showering while the washer is running.

Applications with a big draw; if homeowners have a big 80-gallon soaker tub, they don’t want to fill it at four gallons per minute (the typical tankless draw). The stored hot water in a tank unit lets them pull it out as fast as they want.

They’re familiar. Many homeowners still value the comfort of a technology that is tried and true. And while tankless typically receives top marks for efficiency, newer tank units use far less energy now than ever before. A number of tank-type units have qualified for the Energy Star rating.

Simpler maintenance for both types

Scale build-up can shorten the life of any water heater, whether it’s tank-style or tankless. Fortunately, managing scale build-up is a much easier process than it used to be. For example, A. O. Smith’s Product Preservers anti-scale filter works with both types of water heaters. It uses a non-chemical, non-salt scale prevention media — and it causes the calcium and magnesium in the water to bind together in a form that doesn’t stick to the inner surfaces of the tank. With this technology, contractors can simply replace a cartridge in the filter every two years, and their jobs are done. Many other anti-scale solutions require filter replacement every three to six months.

There’s no shortage of factors to consider when installing or replacing a residential water heater. If your recommendation for tank or tankless is grounded in data and experience and supported by proper installation and maintenance, you’re likely to have a growing base of satisfied customers. 

Arthur Smith is product manager, Specialty Residential, and Jeff Ogan is senior manager, Residential New Products at A. O. Smith.