Tank vs tankless: the real cost over ten years

Up-front cost

The tankless range is wide because conversions vary so much. Mounting a new tankless unit where an old one hung is quick. Converting from a tank often means a larger gas line from the meter, new venting through a wall, a condensate drain and moving the water connections. Those extras are where a $3,000 quote becomes a $6,000 one.

Energy cost

A tank heater keeps 40 to 50 gallons hot around the clock, losing some heat through its walls and flue even when no one is using water. That standby loss is the main reason tankless units are more efficient. A gas tankless unit only burns gas while water is flowing.

For a typical household using around 60 gallons a day, federal efficiency estimates put the savings of a gas tankless over a standard gas tank somewhere in the range of 20 to 30 percent on water heating energy. In dollar terms, that is often $80 to $200 a year depending on local gas prices. Households that use less hot water save more in percentage terms but less in dollars.

Heat pump water heaters are the efficiency leaders for homes without gas or with high gas prices. They commonly use about a third of the electricity of a standard electric tank, which can save several hundred dollars a year compared with resistance electric heating.

Maintenance cost

Tank heaters need a flush every year or two and an anode check around year five. Many owners skip both, which shortens tank life but costs nothing in the short run.

Tankless units need descaling once a year in most of the country, more in hard-water regions. Skipping it is not really an option: scale builds inside the heat exchanger until the unit throws errors and shuts down. A professional descale typically costs $150 to $350, or a homeowner with the right pump kit can do it.

Over ten years, that maintenance can add $1,500 or more to a tankless unit's cost in hard-water cities, and much less where water is soft. Our hard water guide explains how to check your local hardness.

Lifespan

A gas tank lasts roughly 8 to 12 years; a gas tankless unit, maintained properly, 15 to 20. That difference matters when comparing costs. Over twenty years, you will likely buy two tank heaters (or more) but one tankless unit.

The catch is that tankless units have more parts that can fail along the way, such as boards, sensors and fans, so the cost of repairs over their life is higher than a tank's. Our tankless repair page lists typical repair costs.

A ten-year comparison

Read the table this way: over ten years the two options often cost roughly the same in cash, but the tankless unit has years of life left at the end while the tank is due for replacement. The longer you stay in the house, the better tankless looks. If you are moving in three years, a tank is usually the better buy.

Which one fits your house?

• Choose a tank if your budget is tight, you plan to move within a few years, your gas line is small, or you have very hard water and no plans to soften it.
• Choose tankless if you run out of hot water regularly, you need the floor space, you plan to stay ten years or more, and your gas service can support it.
• Choose a heat pump tank if you do not have gas, electric rates are moderate, rebates are available, and the heater can sit in a garage or basement with room to breathe.

One more consideration: tankless units do not provide hot water during a power outage, because the fan and controls need electricity. Most standard gas tanks with a standing pilot keep working without power.

Hot water delivery: how each one feels day to day

A tank delivers its stored hot water fast and at full pressure, then slows to its recovery rate once the stored water is used. A 50-gallon gas tank typically recovers around 40 gallons per hour; an electric tank closer to 20. That is why back-to-back showers in a busy household can run a tank dry, especially an electric one.

A tankless unit never runs out, but it has a ceiling on how much it can heat at once. A typical whole-house gas unit delivers 5 to 9 gallons per minute depending on how cold the incoming water is. Two showers and a dishwasher at the same time can exceed that in winter, and the water gets cooler instead of running out. Sizing for your coldest month is the key.

Tankless units also take a few seconds to fire and can deliver a short burst of cold water between uses. A recirculation pump or a small buffer tank solves that for households that find it annoying.

Space and placement

A 50-gallon tank takes up a footprint of roughly two feet by two feet and stands about five feet tall, plus clearance around gas models. A tankless unit hangs on a wall and is about the size of a carry-on suitcase. In condos, small utility closets and garages where a tank blocks a parking space, that difference can decide the question on its own.

Getting a fair quote

Ask any plumber quoting tankless to show the gas sizing they used: the unit's maximum BTU input, the length of the gas run and the pipe size. A quote that skips this is a guess, and an undersized gas line is the most common reason tankless installs disappoint.

For tanks, ask for the first-hour rating of the heater they are proposing and compare it to your current one. Our replacement page has a list of questions to ask before you sign.

Questions people ask