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Tank vs. Tankless Electric Water Heaters: Pros, Cons, and Cost Savings

Electric water heaters play a fundamental role in households nationwide, delivering a reliable and convenient supply of hot water whenever it’s needed. However, as these appliances age, their efficiency can deteriorate, prompting homeowners to consider replacement. A common question that arises is whether to choose a traditional tank-style water heater or opt for the sleeker, more modern tankless electric option.

In this post, we’ll discuss the pros and cons of both styles, as well as cost savings benefits and what to consider when making this important decision.

Tank Electric Water Heaters

A tank-style electric water heater is equipped with a sizable reservoir, typically ranging from 30 to 80 gallons. This reservoir efficiently stores hot water that is consistently heated by an electric element, ensuring it is readily available whenever necessary.


  • Lower initial cost than tankless models
  • Easier installation
  • Ideal for large households with high hot water demands


Hot water tanks consume excessive energy, resulting in higher electricity bills. Moreover, they have a limited supply, take time to refill and reheat, and occupy ample space.

Tankless Electric Water Heaters

Tankless electric water heaters, also known as on-demand water heaters, heat water as it flows through the unit. They do not have a storage tank and will only heat the water when it’s needed.


  • Energy-efficient and can save up to 50% on water heating costs
  • Continuous hot water supply
  • Takes up less space and can be installed in smaller spaces


  • Higher initial cost than tank models
  • Requires a higher electric load, which may require a dedicated circuit
  • Can be overwhelmed in households with high hot water demand

Cost Savings Benefits

Despite the higher upfront cost, tankless electric water heaters offer long-term savings through energy efficiency. Tankless electric water heaters surpass traditional tank water heaters in terms of energy efficiency. As per the U.S. Department of Energy, opting for tankless electric water heaters can lead to up to 34% savings on water heating expenses for homeowners. Opting for this efficient option benefits your wallet and the environment. Actual savings may vary based on factors like family size, usage patterns, and energy costs.

What to Consider When Making This Decision

Before making the decision between a tank or tankless electric water heater, there are a few things to consider.

  • Size of household and hot water demand
  • Cost savings and efficiency
  • Initial purchase and installation costs
  • Available space for installation
  • Electrical requirements

Choosing the Right Electric Water Heater: Factors to Consider for Homeowners

Choosing the right electric water heater is a crucial decision for homeowners. While tank and tankless electric water heaters both have their pros and cons, it ultimately comes down to the specific household’s needs and preferences. Keep in mind cost savings, efficiency, and space when making this important decision.

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Tank vs. Tankless Electric Water Heaters