Tank and tankless water heaters are two of the most common types of water heaters available.
Tank Water Heaters
Storage tank water heaters constantly hold and heat gallons of water. They’re installed out of sight, often in a garage, basement, or utility closet. Tank water heaters typically use electricity or natural gas.
Storage tank water heaters are easier to install than their tankless counterparts, requiring about three hours of labor. This makes them less expensive, running between $820 and $1,290.
Although a more affordable option, tank heaters are less energy-efficient since they constantly run to maintain the desired tank temperature. This means higher utility bills and a shorter life span. Tank water heaters use 58%–60% of energy to heat your water effectively, and they last for around 8–12 years.
Tankless Water Heaters
Tankless water heaters work by heating water as needed. They use a gas burner or electricity to heat the water pipe, supplying water on demand.
Like hot water storage tanks, tankless units can be stored in a basement or utility closet. They’re smaller than a tank unit, so they can also be mounted to a bathroom or bedroom wall.
Tankless water heaters cost more than tank options, ranging from $1,200–$3,500. This is because they’re more labor-intensive to install, as they require new gas and water lines. Electrical tankless heaters require new electric wiring.
Though priced higher than tank options, tankless heaters generate more energy savings. They have an efficiency factor (EF) of 0.92%–0.94%, meaning they effectively convert 92%–94% of their energy to heated water. Tankless water heaters also last longer, with a typical life span of about 20 years.