Replacing a water heater is a major home improvement decision, and energy efficiency is often one of the factors homeowners consider. Traditional storage water heaters keep a tank of hot water ready for use, while tankless models heat water as it is needed. That difference in operation can affect how much energy a household uses over time. Understanding the potential savings can help homeowners decide whether switching to a tankless water heater makes sense for their home.
Understanding the Water Heater’s Role in Home Energy Use
Water heating can have a meaningful effect on a household’s overall energy consumption. According to Energy Star, water heaters account for about 20% of the energy used in a home. Because hot water is needed for everyday activities such as bathing, washing dishes, and doing laundry, even relatively small efficiency differences can add up over months and years.
Traditional storage water heaters continuously maintain a supply of heated water in a tank. When the temperature drops, the system turns on to bring the water back to the desired temperature, even when no one is actively using hot water. This process can result in energy being used to maintain the stored water.
Tankless systems operate differently. Instead of keeping a large volume of water hot around the clock, they heat water when a faucet, shower, or appliance calls for it. Eliminating the need to constantly maintain a tank of hot water can reduce some of the energy associated with standby heating.
How Much Energy Can Tankless Systems Save?
The potential difference becomes more apparent when looking at measured energy use. A Minnesota field study conducted by the Center for Energy and Environment found that tankless water heaters saved between 50 and 85 therms of energy per year compared with conventional storage water heaters. The actual amount of energy saved can vary based on household habits, water demand, and system performance.
These figures do not necessarily mean every household will achieve the same savings. A home with relatively modest hot water use may have different results from one with several occupants who frequently use showers, laundry machines, dishwashers, and other hot-water appliances. Still, the field study provides useful context for homeowners considering whether a tankless system could reduce energy consumption.
Energy savings also depend on how efficiently a system operates under a household’s typical demand. Tankless technology can reduce standby losses, but installation, system sizing, incoming water temperature, and patterns of hot water use can all influence actual performance.
Comparing Tankless and Traditional Water Heaters
Another way to evaluate potential savings is to compare the efficiency of the two technologies. According to ServiceTitan, tankless water heaters can be 8% to 34% more energy-efficient than traditional storage heaters, depending on how much hot water a household uses.
That range is important because there is no single efficiency outcome for every home. Households with different hot-water demands may experience different results. The amount of water being heated, the frequency of use, and the home’s overall hot-water habits all play a role in determining how much energy a system consumes.
Homeowners should also consider the practical differences between the systems. A tankless water heater typically takes up less space because it does not require a large storage tank. It can also provide hot water without relying on a continuously heated reservoir. However, the system needs to be properly sized for the home’s demand, particularly when multiple fixtures may require hot water at the same time.
What Should Homeowners Consider Before Switching?
Energy efficiency is only one part of the decision. Homeowners should consider the property’s hot-water demand, available installation space, existing plumbing and electrical or gas infrastructure, and the condition of the current water heater. The home’s household size and daily routines can also influence whether a tankless model is a practical fit.
Initial installation requirements are another consideration. Switching from a storage tank to a tankless system may involve modifications to existing connections or other components. Because those requirements vary by home, evaluating the property and selecting an appropriately sized system are important steps before installation.
It is also worth looking beyond immediate energy use. A water heater is a long-term household investment, so homeowners may want to consider how their hot-water needs could change in the future. A growing household, remodeled bathroom, or increased use of appliances could affect the system’s capacity requirements.
Making a More Informed Water Heater Decision
Tankless water heaters can offer meaningful energy-saving potential, particularly because they heat water when it is needed rather than continually maintaining a stored supply. The Minnesota field study’s reported savings of 50 to 85 therms annually and ServiceTitan’s reported efficiency range of 8% to 34% illustrate why the technology attracts attention from homeowners focused on energy use.
However, the best choice depends on the individual home. Household demand, system sizing, installation requirements, and existing infrastructure all influence performance. For homeowners considering an upgrade, comparing those factors can provide a clearer picture of whether a tankless water heater is the right fit for improving home energy efficiency.
