Comparison of Tankless Water Heater to Storage Tank Water Heater

In a hot water storage tank heater, energy is required to heat the water in the storage tank and to keep it hot. In both storage and tankless heaters, the basic efficiencies of initially heating the water are very similar; in fact, the energy consumptions are very similar at this point. This is because the amount of energy required to heat a fixed amount of water is determined by a simple formula as follows:

Flow rate of water in any unit (e.g. gallons per minute) x a constant – called specific heat x the number of degrees the water must be heated by …. Interpreting this in simple terms, it means if you double the flow and want to keep the temperature the same, you must double the energy supplied be it in the form of electricity or gas or any other energy type.

However, here is where the difference in overall energy efficiency exists… a feature of tankless water heaters is that no energy is consumed in overcoming the standby losses or conventional heat losses commonly encountered in a storage water heater tank. To reduce these losses, tank storage water heaters should always be well insulated … insulation does not prevent the heat loss completely but reduces the rate of energy or heat loss dramatically. In most cases, one and a half inches of foam insulation is good.

Important questions for the energy conscious consumer are: “How much energy is lost during standby?” and, of course, the really important question: “How much are the hot water storage tank energy standby losses going to cost me?” The ability to compare cost and energy savings between the alternative tankless and hot water storage tank systems or features is important

To be able to make these feature comparisons meaningful and to understand this site better it is important to define a few terms:

  • Energy Factor: every tankless or storage tank heater must be provided with a certified Energy Factor. This factor, in simple terms, means that if the Energy Factor is high then the annual cost of power to run the tankless hot water heater or the storage heater will be lower than it would be for a low rated Energy Factor. Gas tankless water heaters Energy Factors typically range from 0.64 to 0.82.
  • First Hour Rating: this number refers to the amount of hot water the heater can supply per hour … if a storage tank system is in use, the assumption is that the tank is full of hot water at the start of the first hour.
  • Heating Energy: the energy required just to heat the hot water.
  • Standby Energy: the energy that will be lost based upon a tank full of hot water just standing there unused and, in this state, it will lose some heat depending upon how well insulated the system’s storage tank is. The water will, thus, cool down and more energy will then be required to bring the temperature back to that required point. The average U.S. home will use a 40 gallon gas-fired hot water storage heater. Refer to the GAMA (Gas Appliance Manufacturers Association) guide. These hot water heaters will have Energy Factors ranging from 0.54 to 0.64.
  • Average Gas Energy Cost: it is assumed that the national U.S. average fuel cost of 0.6 $/therm will be used.
  • Electricity Energy Cost: it is assumed that the average national cost is $0.06 per kilowatt Hour.
  • Hot Water usage rate: this can vary a great deal based upon the number of family members and the time of day. The correct heater should be designed on the basis of maximum hot water heating load. In other words, what amount of hot water is required at the busiest time of day.

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