There are typically two main options for home water heaters: tankless water heaters or traditional tank storage water heaters. Both have pros and cons; the best choice depends on your household needs and preferences.

Tankless units, also known as demand or instant water heaters, heat water directly without storing it in a tank. They provide an endless hot water supply and are more energy-efficient than tank models.

However, they tend to be more expensive upfront. Traditional tank water heaters store heated water for future use. They provide ample supplies of hot water and are less costly initially. 

However, tankless systems are less energy efficient than tankless systems and have limited hot water capacities. In this blog post, we will explore the key differences between tankless and tank water heaters in more detail. We will look at factors like installation, maintenance, efficiency, and operating costs to help you determine which type fits your home better.

How Tankless Water Heaters Work

Tankless water heaters, also called on-demand or instant water heaters, heat water as it flows through the system. There is no storage tank involved.


Instead, these systems contain a gas burner or an electric heating element that activates automatically when a hot water tap is opened. This heats the cold water that passes through a heat exchanger coil.

The continuous flow of hot water can last as long as the tap is on. Once turned off, the tankless unit stops producing hot water until needed again, saving energy compared to continuously keeping water hot in a storage tank.

How Traditional Tank Water Heaters Work

Traditional tank water heaters, also known as storage tank water heaters, work differently than tankless systems. They have a large storage tank water heater, usually 30-80 gallons, that continuously keeps water hot and ready to use.

An external power source like natural gas or electricity heats the water inside the tank. Whenever hot water is needed, the preheated water from the top of the tank is released through a cold water supply line.


Once drawn off, additional cold water enters the tank from the bottom, where it is reheated. This allows homeowners to have unlimited hot water on demand from one central source – the hot water tank.

Efficiency: Tankless vs Tank Models

Tankless water heaters are generally more energy-efficient than traditional tank models. Because they only heat water as needed, there is less standby heat loss than storage tanks, which continually reheat cold water entering the bottom of the tank.


Tankless units can be 82% or higher in energy factor (EF), while most tanks range from 0.8 EF. The on-demand style eliminates heating water that may never be used.

However, tank models may still be more efficient for low-use households that need to utilise the total on-demand capacity of a tankless system. The hybrid option combines the benefits of both to offer high efficiency.

Hot Water Capacity

Tank water heaters can deliver an unlimited supply of hot water drawn from the stored reserve in the tank. Their water heater capacity depends on the size of the storage tank.

On the other hand, tankless water heaters have a fixed capacity for a continuous flow of hot water, usually 20-50 gallons per hour, depending on the model. They may run out of hot water with multiple appliances or faucets running simultaneously.


Larger tankless units or combining more than one can increase flow rate capacity but also drive up installation costs. A tank model generally provides a more consistent hot water flow for homes with higher hot water demands than a standard tankless water heater.

Installation and Maintenance Costs

Installation of a tankless water heater is often more expensive than dropping in a replacement tank heater since tankless units require gas lines to be rerun and adequately sized to handle the higher flow rate. Maintenance costs are also higher long-term for tankless heaters, as they have more parts, like a circuit board, that can fail over time.


However, tank water heaters may incur replacement expenses every 8-12 years when the tank rusts out. Due to their longer lifespan, tankless units can be cheaper to own over 15-20 years. Regular flushing is also needed for tanks to clear mineral build-up, while tankless systems require only an annual check and cleaning of the combustion chamber.

Energy Cost Savings Over Time

While tankless water heaters carry a higher upfront cost, their energy savings can offset the price difference over the long run.

Because they only heat water as it’s used rather than continuously keeping a tank hot, tankless units use an average of 24-34% less energy, according to the Department of Energy.


Over a 15-20-year period, the cumulative savings on utility bills will exceed the increased installation cost of a tankless system. Their longevity also means fewer full replacement costs versus tanks needing replacement every 10-13 years.

Size and Space Requirements

The size and space required for a water heater installation are essential, as they may impact the unit’s placement in your home. On average, traditional tank water heaters occupy more floor space than tankless systems. 

Tank models usually range from 40 to 80 gallons of storage capacity, with dimensions of approximately 50-60 inches in height and 20-30 inches in diameter. They typically need to be installed indoors, in a garage or basement, to protect components from freezing.


Tankless water heaters are generally much more compact, with wall-mounted units sometimes only 5-6 inches deep. This allows them to be installed on an exterior wall, taking up less interior room.

However, to match a large tank’s continuous hot water output, multiple tankless units or larger “whole home” tankless models may be required. This can increase the overall footprint compared to a single tank unit. Hybrid heaters offer a compromise with a small storage tank combined with tankless technology for higher efficiency in a more compact package than a conventional tank.

Best Applications for Each Type

Choosing the right type of water heater depends not only on costs and specifications but also on your home and household’s specific hot water needs and usage patterns. Certain situations are generally better suited to tank water heaters, while tankless may have advantages in other applications. Let’s compare the typical best applications for tank, tankless, and hybrid water heaters:

Tank Water Heaters


Tankless Water Heaters

Hybrid Water Heaters

Determine Which Water Heater Fits Your Needs

Both tankless and traditional tank water heaters have pros and cons depending on your specific needs and situation. Tankless options are more energy efficient and offer long-lasting performance, while tank models can provide unlimited hot water if you need a higher capacity. Making the right choice will depend on factors like household size, water usage patterns, installation location, budget and preferred cost savings over time.

If you’re looking to replace an old water heater or install a new one for your home in Brisbane, the experts at The Brisbane Plumbers can help you evaluate your options. As a licensed plumbing company, we can assess your home’s hot water requirements, explain the benefits of each type, and recommend the best system tailored to your needs. Feel free to contact us for a free quote. Speaking to one of our plumbers is the best way to decide which tank water heater is right for you.