Conventional Storage Water Heater
Conventional storage water heaters remain the most popular type of residential water heating system and operate by providing a reservoir of between 20 to 80 gallons of hot water. As hot water leaves from the top of the tank, cold water enters the bottom to be heated, ensuring that the tank is always full.
Because water is constantly being heated in the tank, even when there is no direct draw, energy can be wasted using this method of water heating. The associated loss, called a stand-by heat loss, can be minimized by using a heavily insulated tank, but can only be avoided by using a tankless water heater.
Gas and oil water heaters also have venting related energy losses. Two types of high efficiency heaters, a fan assisted gas water heater and an atmospheric sealed combustion water heater, reduce these losses.
Tankless or On-Demand Water Heaters
On-Demand Water heaters heat water directly without the use of a storage tank, thus avoiding the standby heat loss associated with storage water heaters. When a hot water outlet is turned on, cold water enters the unit and either a gas burner or electric element heats the water. As a result, demand water heaters deliver a constant supply of hot water.
Though demand water heaters deliver a constant supply of hot water, units are limited in flow to between 2 – 5 gallons per minute, with gas-fired units producing higher flow rates. This means that proper sizing is necessary to ensure that simultaneous, multiple uses can be accommodated by the demand unit that is installed.