How to choose a hot water heater

Hot water heaters are a long term investment, both in up front cost and energy consumption over the life of the heater. Water heaters are the second largest consumer of energy in the house.

There are a few different heaters on the market, each with their positives and negatives. Here is an overview of systems:

Traditional Tank (30 – 120 gallons, 40 gal average)

These are the cylinder tanks most people think of when they say water heater. They hold water at a hot temperature (around 125F or so). As water is used, cold water enters the tank and a heating element heats the water. They can use gas or electric.

Pros: Lowest upfront cost. Low maintenance.

Cons: Large footprint. Least efficient. Uses energy to keep water hot even when no water is used.

Tankless Water Heater

These systems are like ‘backpacks’ on the wall. They don’t not have a reservoir, but instead heat water on demand. They are slightly less efficient at heating water than a tank, but they only heat the water as it is used, so overall, they are more efficient. These are usually gas, but can be electric.

Pros: Only heat water as you use it, never run out of hot water, small footprint, easily adjust temperature.

Cons: More expensive than tanks, limit on number of fixtures that can run at the same time. Should be maintained regularly to avoid calcium buildup

Point of use heaters (tank and tankless)

These heaters are ideal if you have a long run from the main water heater to a sink, where it takes too long for hot water to reach. They can also serve small homes or workshops.

Some have a small tank, approximately 1 gallon, while others are tankless. These are only electric and usually require 240V.

Pros: inexpensive, don’t wait for hot water, save water

Cons: not generally used for the entire home, requires more maintenance

Heat Pump

These heaters pull heat from the surrounding air and use it to heat water. They cool the surrounding area and reduce moisture, so could act as a dehumidifier in a damp basement. They are very energy efficient, so can pay off the extra cost in about 3 years (saving $300/yr).  These use electric only.

Pros: very energy efficient, keep space cool and dry, acts as A/C in summer.

Cons: larger than regular tank heaters, requires higher heating load from HVAC system in winter.


Solar hot water is a very efficient way to heat water using the sun. Solar systems can pay for themselves in 3 – 5 years. They do require electricity as well, but less than half of a conventional system.

Pros: Very low energy use, green technology

Cons: electricity is needed to heat on cloudy days, need to install panels on roof, more complex