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Tankless Water Heaters vs Storage Tank Water Heaters

Are you thinking about installing a new hot water heater? With advances in technology and such a large and competitive market, choosing the right system for your needs can seem overwhelming at times.

Not only that, but you need to take into account the water consumption of your household, your climate and location.

When making such a difficult and, let’s face it, expensive decision, you need the facts.

Did you know that the cost of heating water can consume 30% of the average Australian’s household’s budget? Getting this choice right may help you save big on future energy bills.

One of the first big decisions you will need to make is between a tankless water heater, more widely known as a continuous flow system, or a storage tank water heater. Each system has its advantages and disadvantages- it is all about what is right for you.

Each of these systems are available in electric, gas and solar. We do a comparison between the different fuel sources here. While the type of fuel source is a very important consideration for energy efficiency, the overall design of the unit should also be factored into any of your decisions.

Let’s take a closer look at the pros and cons of each type of hot water system.

Tankless Water Heaters

The big difference between the two systems is that a tankless system heats water on demand as it passes through the unit while the storage tank system stores and continually heats water in a storage tank. Importantly, the tankless system – also known as continuous flow or instantaneous water heaters – only heats water when a tap is turned on, meaning you are not paying to continually heat water like in a storage tank system.


  • Lower energy costs: According to the US Department of Energy, for homes with low water usage of about 150L per day, tankless water systems can be 24% to 34% more energy efficient than storage tank systems.  Low running costs will appeal to most families, however, this percentage is reduced considerably when daily water usage increases above the 150L.
  • Longer life span: Instantaneous water heaters will, with regular servicing, last an average of 20-30 years. It will deliver areliable hot water supply for almost double the life span of storage systems.
  • Space saving: Without large storage tanks, continuous flow systems are ideal for homes without much space. They can be easily installed outdoors or indoors.
  • Eco-friendly: Due to the energy efficiency, there are less greenhouse gas emissions with these units.


  • High purchase costs: Going tankless will often cost you twice as much compared to storage. The unit’s initial purchase price is offset by the fact that they have a longer life span than storage heaters.
  • High installation costs: When transitioning from a storage unit to a tankless unit, the technician will need to change pipes to make it ready for the new type of system. This increases the costs of installation considerably.
  • Output challenges: A tankless hot water system has difficulty running multiple taps at once. For example, running a tap in the kitchen while someone is in the shower will often result in fluctuations in water temperature and pressure. Unexpected cold water can be a bit of a shock. This can be offset by installing an instantaneous system at your most used water outlets.

Storage Tank Heaters

While storage systems are widely considered to be less energy efficient than other systems, they are still one of the most popular hot water heaters in Australia.


  • Cheaper installation costs: Storage tanks are more easily installed and are cheaper to purchase.
  • Easy repairs: The simplicity of the systems means that, if anything does go wrong, they can be easily and cheaply repaired or replaced.
  • Solar efficiency: While on their own storage systems are considered pretty inefficient, when paired with solar panels, they quickly become one of the most energy efficient water heating systems on the market.


  • Higher energy costs: Because they are constantly needing to keep the water in the storage tank hot, they do tend to run up a higher utility bill. This can be offset by households who regularly use large amounts of water because they are making use of the water being heated and stored in the system’s tank. They will also require less energy to heat water in warmer climates because they do not need to insulate against the cold.
  • They are large: For properties with limited outdoor space, the large size of the storage tank may be a consideration.
  • They can run out of hot water: During periods of high water use, you do not want to be the last person to have a shower. How much hot water do you need? You don’t want a blast of unexpected cold water. Make sure you purchase and install a unit with a storage tank large enough to meet your needs.
  • Need to be replaced more often: Storage systems tend to have a shorter shelf life when compared to tankless systems and will need to be replaced more regularly. However, the life of a storage unit can be easily extended through regular servicing and maintenance by a professional plumber.

What’s the Best Fuel Source – Gas or Electric?

If you’re pondering the choice between a tankless water heater and a storage tank water heater, one important factor to consider is the best fuel source for your needs. The two main options are gas and electric.

Gas-powered water heaters have long been a popular choice due to their efficiency and lower operating costs. Gas water heaters use natural gas or LPG (liquefied petroleum gas) to heat the water, providing a constant supply of hot water whenever you need it. Gas systems also tend to heat water faster than electric ones, which can be a significant advantage for larger households or homes with high hot water demand.

On the other hand, electric water heaters are generally easier to install and maintain. They don’t require a gas line or venting, making them suitable for a wider range of homes.

Electric heaters are also more environmentally friendly since they don’t produce any emissions during operation. While they may have higher operating costs compared to gas heaters, their upfront cost is often lower.

Ultimately, the best fuel source for your water heater depends on your specific needs, budget and the availability of natural gas or electric connections in your home. If you’re in the market for a new hot water system, consider factors such as installation requirements, ongoing expenses and carbon emissions to make an informed decision.

Solar Hot Water Systems

The other major fuel source is, of course, the sun. Solar hot water systems offer an eco-friendly and cost-effective solution. These systems use the power of the sun to heat water, reducing both energy consumption and utility bills.

Solar hot water systems consist of solar collectors, which absorb sunlight and convert it into heat, and a storage tank to store the heated water. They can be either active or passive systems. Active systems use pumps to circulate water, while passive systems rely on natural convection.

The benefits of solar hot water systems are manifold. First and foremost, they harness renewable energy, reducing reliance on fossil fuels and decreasing carbon emissions. Additionally, solar energy is free, so once the system is installed, the operational costs are significantly lower compared to traditional water heaters.

However, there are a few considerations to keep in mind. Solar hot water systems require adequate sunlight exposure, so they may not be suitable for all locations or climates. They also have a higher upfront cost compared to conventional water heaters, although there may be tax incentives or rebates available to offset some of the expenses.

If you’re environmentally conscious and looking to save on energy bills in the long run, a solar hot water system is worth considering. It’s a sustainable choice that allows you to harness the power of the sun to heat your water, reducing your carbon footprint and promoting a greener lifestyle.

So, Which One is Right for You?

Having a good understanding of the differences between tankless or continuous flow water heaters and storage heaters is an important step towards choosing the right system for your needs.

Tankless systems are good for households with less water requirements and who want to save on utility bills but do not mind the slight inconveniences of decreased water pressure and fluctuating water temperatures while running multiple hot water outlets.

On the other hand, storage systems are cheaper to install and easy to repair and work great when paired with solar. They are a good option for people who live in warmer climates and who regularly use their hot water. However, they do come with downsides such as having higher running costs and do need to be replaced more often.

When it comes to choosing the right brand, things get a little more complicated. Examples of good tankless systems including the Rinnai Infinity Enviro, the Rheem Continuous Flow and the AquaMax Gas Continuous Flow. Which size, model and brand will largely depend on where you live and how many people will be using your system.

When you contact an expert plumber at Plumber Near Me while you’re considering a new hot water system, we will guide you through these difficult choices and ensure that you find and install the ideal water heater for your needs.

Please note: This information is provided for advice purposes only. Regulations differ from state to state, so please consult your local authorities or an industry professional before proceeding with any work. See our Terms & Conditions here.