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Water Heater Buyers Guide: Which is Right for You

Water Heater Buyers Guide

There are several different types of water heater, each with their own advantages and disadvantages. In addition to the traditional tank-type water heater that most people are familiar with, there are also tankless water heaters that are beginning to gain in popularity. If you are in the market for a new water heater refer to the links below to learn about all the different varieties of water heaters, and find out which style best suits your needs.

Tank-Type Water Heaters

Tank-Type Water HeaterTank-type water heaters (also sometimes referred to as storage water heaters) are the most common type of water heater in use in North America. With this type of water heater, part of the incoming cold water supply is diverted to an insulated cylindrical tank, where it is heated. The water inside this tank is then drawn off to the separate hot water lines. The water inside the tank is kept continuously hot and therefore continuously ready for use. Typical tank sizes for household use range from 20 to 100 gallons (75 to 400 litres).

A tank-type water heater consists of the following parts:

How a Tank-Type Water Heater Works

Cold water from the incoming water line is diverted to the water heater. The cold water enters the tank and is deposited near the bottom of the tank through the dip tube. The water held inside the tank is at all times under the same pressure as the water within the entire water system.

The heating mechanism (either a gas burner or electric heating elements) stays on until the water inside the tank reaches the temperature set by the thermostat. Hotter water rises to the top of the tank, towards the hot water outlet, through a process called convection. Cooler water, since it is denser than hot water, remains near the bottom of the tank, where it can be more efficiently heated.

As a result, the water that leaves the tank is always the hottest water in the tank. As water leaves the tank, more cold water enters and the cycle continues. Once the water near the bottom of the tank (and therefore near the thermostat’s sensor) reaches the set temperature, the water heater automatically powers down.

Advantages of the Tank-Type Water Heater

The initial cost of a tank-type water heater, including installation costs, can be up to three times less than that of a tankless-type water heater. The tank-type water heater also has the advantage of using energy (either gas or electricity) at a relatively slow rate, since it in effect stores heat for later use.


Over time, if not utilized, the water inside a tank will cool down. This temperature decrease will signal the thermostat to turn on power to heat the water back up, even if no hot water is being used. Additionally, once the tank’s supply of hot water has been exhausted, there is a significant delay before sufficiently heated water is available again. In the long run, a tank-type water heater will likely use more energy and therefore cost more to operate than a tankless water heater.

Electric vs. Gas Water Heaters

Tank-type water heaters are powered by either electricity or gas. See below to read about the advantages and disadvantages of each power source.

Electric Water Heater (Tank-Type)

Electric water heaters typically have two heating elements (compact models may have only one). They are similar in appearance and operation to the heating elements found on an electric stove, but they heat from within the tank, while immersed in the water. One heating element is located near the top of the tank and the other is near the bottom. Each element has its own thermostat which can be adjusted separately, though they should normally be set to the same temperature at all times.

Typically, only one of the elements is operating at any time. During periods of little or no hot water use, only the bottom element is on. Cold water is introduced near the bottom of the tank as needed, and it is heated by the bottom element. As the water is heated it rises to the top of the tank by means of convection. Since the upper element is surrounded by hot water, it has no call to turn on. When a hot water faucet is opened, hot water will be drawn out of the top of the tank at the hot water outlet, and cold water will again be introduced at the bottom, thus continuing the cycle.

However, if large amounts of hot water are drawn from the water heater the bottom element may not be able to keep up. If the water at the top of the tank becomes too cool, the top element will begin to operate, which in turn will shut off the bottom element. The top element will then heat the water at the top of the tank to quickly prepare for the next hot water demand. Once the top of the tank is heated to the correct temperature, the top element will again shut off and the bottom element will come back on as needed.


The initial cost of an electric water heater is less than that of a gas-powered model. In addition, an electric water heater does not require ventilation, since no combustion gasses are produced, so the homeowner has greater flexibility when it comes to location during installation. An electric water heater also has a longer lifespan (generally 8-10 years, as compared to 6-8 years for a gas water heater).


An electric water heater generally has a much higher operating cost than the gas water heaters. It also is affected by power outages, meaning the house will be without hot water if the electricity goes out.

Gas Water Heater (Tank-Type)

Gas water heaters can be powered by either propane or natural gas. The water inside the tank is heated by means of a burner that is located at the bottom of the water heater. As with any tank-type water heater, the cold water entering the tank is introduced near the bottom via the dip tube, while the hot water rises to the top of the tank by means of convection, and from there the hot water is taken away through the hot water outlet when demand is made. As hot water gets taken away, more cold water gets added to the tank and the cycle continues.

A major difference between gas water heaters and an electric water heaters is that the gas-powered model burns its fuel, which produces combustion gases, which need to be vented. Because of this, gas water heaters have a chimney, called the flue tube, that rises through the center of the tank to the venting flue stack at the top of the water heater, which carries the combustion gases to the outdoors.

A gas water heater will have a gas burner control module that controls the ignition of the pilot light. This is also where the thermostat is located. Connected to this module is the gas line where you’ll find the gas supply valve. You will have to close this valve if you want to shut the power off to your water heater.


Gas water heaters are generally less expensive to operate than their electric counterpart. They’re also not affected by power outages, meaning that they will continue to work even when the electricity is out.


Gas water heaters require a larger initial investment to purchase and install. As stated above, they also need to be vented, meaning there are fewer options when deciding where to locate one. Finally, the life expectancy of a gas water heater is somewhat less than that of an electric water heater (generally 6-8 years, as compared to 8-10 years for electric).

Tankless Water Heater

tankless water heaterThe tankless, or on-demand, water heater is a fairly new product, and one that is gaining in popularity as power costs continue to rise. Unlike the storage tank-type water heater, the tankless water heater does not store hot water. Instead, when a hot water demand is made (a tap is opened or a washing machine is turned on), it quickly heats the water that flows through the unit, thus providing a continuous supply of hot water.

Because tankless water heaters do not continuously heat water, they remain off—in essence in a stand-by mode—most of the time. When a hot water faucet is opened, the cold water that feeds into and through it is rapidly heated through the use of a powerful heat exchanger, a compact device that can transfer heat efficiently and rapidly from one source to another.

There are two types of tankless water heater systems. The point-of-use system utilizes multiple smaller units installed throughout the household or other structure. The advantage of this system is that it cuts down on the amount of time it takes to get hot water to a particular faucet, since the heater servicing it is close by and is dedicated to serving that particular location only.  The whole-house tankless water heater system consists of one central water heater that provides all of the hot water requirements for an entire house or other structure.

A hybrid tankless water heater is also now available. It combines advantages of both the tank-type and the tankless water heater by including a small reservoir of heated (but not hot) water that is available at all times. This reserve has to be heated less before it is delivered, since the water temperature only has to be raised from warm to hot, rather than from cold to hot as in the case of the tankless model.

As with tank-type water heaters, tankless water heaters can be either electric or gas.  Capacity is measured in terms of GPM, or gallons per minute that the unit is capable of delivering.


A tankless water heater will provide significant long-term energy savings, since it only draws power when hot water is being drawn. At night, or during any other periods of non-use, it remains completely idle. Because it heats by means of a heat exchanger and is not limited by the capacity of a storage tank, it is able to deliver more hot water over a much longer period of time. Tankless water heaters are ideal for small spaces, since they take up a lot less space than tank-type water heaters. Finally, since there is no storage tank, there is much less chance of leaks and water damage that can be caused by a tank failure. It is the most maintenance-free water heater.


The initial cost of a tankless water heater is about three times more than that of a tank-type water heater. It takes somewhat longer to actually get hot water from a tankless water heater than it does from a tank-type water heater since the water isn’t already heated and ready for use.

Although very much maintenance-free, the tankless water heater is a sophisticated piece of equipment, so if it malfunctions expert servicing is required. Finally, although tankless water heaters can provide energy savings overall, the amount of energy they use to heat the water during times of use is quite high, so for households on time-of-use metering (where electricity costs more during peak periods such as daytime, and less at night), a tankless water heater may actually increase operating costs if the hot water is used during peak times.

Check our detailed buyers guide on tankless water heaters HERE

Which Water Heater is Right for You?

This really depends on your needs, your budget, and your home. Analyze all the information here and do your own research to determine which kind of water heater suits you best. Good luck! photo credit: Zane Selvans via photopin cc photo credit: JohnE777 via photopin cc