Types of Water Heaters and How to Choose the Right One for Your Home

When the time comes to replace your old water heater, choosing the right replacement is essential for home comfort, energy efficiency, and long-term cost savings.

With various types of water heaters available, each offering distinct advantages and drawbacks, selecting the best option requires careful consideration. Roto-Rooter’s water heater comparison guide highlights conventional tank water heaters, tankless models, heat pumps, solar options, and condensing models, so you can learn what's out there.

If you need more help, consider chatting with Roto-Rooter water heater experts. They can help you determine which model is right for your home and budget, taking into consideration your family’s water heating needs and energy usage expectations.

What Are the Different Types of Water Heaters?

Water heaters come in various designs, each suited for different household needs. Below are the most common types of hot water heaters.

Conventional Storage Tank Water Heaters

Storage tank water heaters are the most common type found in homes. These units store heated water in a tank, keeping it ready for use at all times. They typically range in size from 30 to 80 gallons.

Benefits: Lower initial cost, simple installation, and widely available
Drawbacks: Higher energy costs due to standby heat loss and requires space for a large tank
Lifespan: 8-12 years

Tankless Water Heaters

Tankless water heaters heat water on demand rather than storing it. When you turn on a hot water tap, cold water flows through a heating element, providing hot water instantly. This reduces standby heat loss and provides continuous hot water when needed.

Benefits: More energy-efficient, compact size saves space, provides endless hot water
Drawbacks: Higher upfront cost, may struggle with high-demand households
Lifespan: 15-20 years

Heat Pump (Hybrid) Water Heaters

Heat pump water heaters use ambient air to warm water, making them extremely energy-efficient. Instead of generating heat directly, they move heat from the surrounding air into the water, similar to how a refrigerator works but in reverse.

Benefits: Lower operating costs, eco-friendly, highly efficient, and can save hundreds of dollars annually on energy bills
Drawbacks: Higher initial cost, requires more space for installation and performs best in warm climates where there is ample surrounding heat
Lifespan: 10-15 years

Solar Water Heaters

Solar water heaters collect energy from the sun to heat water. These systems use solar panels (collectors) to absorb sunlight and transfer the heat to a storage tank. They are most effective in sunny regions but may include backup heating elements for cloudy days.

Benefits: Environmentally friendly, significantly lower operating costs, and reduces reliance on fossil fuels
Drawbacks: High installation costs, performance depends on sunlight availability, and may require a conventional heater as a backup
Lifespan: 15-20 years

Condensing Water Heaters

Condensing water heaters capture exhaust gases from natural gas systems and use them to heat water. These units are ideal for homes already using natural gas for heating. Instead of venting hot gases outside, they redirect them through a coil to preheat incoming water. They are more energy-efficient than conventional gas water heaters.

Benefits: High energy efficiency, ideal for homes using natural gas, and reduces wasted heat
Drawbacks: Requires a gas line, higher upfront cost, and may not be suitable for homes without an existing natural gas setup
Lifespan: 10–15 years

How to Choose the Right Water Heater for Your Home

Selecting the right water heater depends on factors like household size, energy efficiency, and installation costs. Below are key considerations to help you decide between water heater options.

Household Size and Water Usage

Different households have varying hot water demands. For example, one study found that the average daily hot water consumption varies by household size:

Homes with two occupants consumed an average of 44 gallons a day.
Homes with three occupants consumed an average of 56 gallons a day.
Homes with four occupants consumed an average of 68 gallons a day.
Homes with five occupants consumed an average of 72 gallons a day.

With that in mind, a single-person household may only need a 30-gallon tank. Meanwhile, a family of four typically requires a 50-80-gallon tank or a high-flow-rate tankless system.

For tankless systems, you’ll need to calculate the peak usage flow rate to ensure it can handle simultaneous hot water demands. Do this by adding the flow rate — how many gallons per minute (GPMs) you use — for all of the hot water faucets in your house.

Smaller homes can typically get away with a system rated for 4-6 GPMs, but the average household needs a unit with 5-10 GPMs. Larger homes may need even bigger systems.

Energy Efficiency and Operating Costs

Energy-efficient models reduce long-term utility costs. Consider the following factors:

Energy Factor (EF) and Uniform Energy Factor (UEF): These ratings measure a water heater’s efficiency. Higher numbers indicate greater efficiency. The EF rating accounts for overall energy use, while UEF provides a more accurate representation by considering real-world usage patterns. Look for models with ENERGY STAR certification for optimal efficiency.
Fuel type: Gas water heaters typically cost less to operate than electric ones. On average, natural gas models cost around $338-$355 per year to run, while electric models can range from $613-$635. Solar water heaters have the lowest long-term costs but require a high initial investment.
Rebates and incentives: Many federal and state programs offer rebates and tax credits for installing energy-efficient water heaters. For example, the U.S. federal government provides a tax credit of up to 30% of installation costs for ENERGY STAR-certified heat pump water heaters and solar water heating systems. Some utility companies also offer rebates for upgrading to efficient models.

Smart units: A smart hot water heater can help you monitor the tank’s performance so you can save even more energy.

Installation and Maintenance Costs

Operating costs aren’t the only thing to consider. You also need to think about what it will cost to install and maintain your system.

Installation:

Gas heaters generally require venting systems and gas lines, which can increase installation costs.
Tankless water heaters may require upgrades to electrical or gas systems to accommodate their higher demand.
Electric water heaters typically have lower installation costs, especially if you already have an electrical connection.

Routine maintenance:

For traditional tank models, maintenance includes flushing the tank annually to remove sediment buildup, checking the anode rod to prevent corrosion, and inspecting the venting system for any blockages.
Tankless models require descaling to prevent mineral buildup that could obstruct the heating elements, especially in areas with hard water.
Heat pump and solar models may need regular checks of the compressor, filters, and solar panels to ensure optimal performance.

Local Climate and Energy Source

Local climate and available energy sources play a significant role in determining which type of water heater will be most effective and economical.

For example, if you live in a sunny climate like Florida or California, a solar water heater could be an excellent choice. However, this type of hot water heater would not work in cloudy locations like Pennsylvania or Washington.

Heat pump water heaters work best in warmer environments because they use ambient air to heat the water. They also tend to perform well in areas that do not experience freezing temperatures in the winter.

The energy source you have access to plays a crucial role in selecting your water heater. Gas heaters tend to be more affordable to operate. However, if you live in an area where electricity is more cost-effective or if you do not have a gas line, an electric water heater could be the better option.

FAQs

What type of hot water heater is best?

A conventional tank water heater might be the best choice if you have a smaller budget, though it can be less energy-efficient due to standby heat loss. A tankless water heater offers higher energy efficiency and eliminates standby heat loss, but it costs more. On the other hand, a hybrid or heat pump water heater is ideal for warmer climates, offering long-term savings on energy bills.

What are the 3 types of water heaters?

The three main types of water heaters are tank, tankless, and hybrid models. Tank water heaters are the most common and work by storing hot water in a tank for immediate use. Tankless water heaters heat water on demand without the need for a storage tank. Hybrid water heaters extract heat from the surrounding air to warm the water.

Which is better, a tankless or hybrid water heater?

Tankless water heaters are better if you want endless hot water. They’re compact and energy-efficient, although they can struggle to meet high demand if multiple outlets are used simultaneously.

Hybrid water heaters, on the other hand, excel at energy efficiency and are perfect for households in warmer climates. However, they require more installation space and may not perform as well in colder areas.

Why avoid a tankless water heater?

One major drawback is their high upfront cost, which includes not only the price of the unit but also upgrades to plumbing or electrical systems. Additionally, tankless units may not be able to handle multiple hot water demands at the same time in larger households. For example, using a shower while the dishwasher runs might exceed the capacity of a tankless system.