About the Water Heater Savings
The Tankless vs Tank Water Heater Savings Calculator compares the annual energy cost of heating your household's hot water with a storage tank unit versus a tankless, on-demand unit. It is aimed at anyone weighing a tankless water heater purchase and wanting a cost comparison based on their own hot water usage rather than a generic manufacturer claim. The comparison isolates the efficiency difference between the two heater types, captured by their Energy Factor ratings, while holding actual hot water demand constant.
How It Works
You enter daily hot water usage in gallons, the Energy Factor (EF) of a tank heater and of a tankless heater, and an energy cost in dollars per kWh, or kWh equivalent for gas. The calculator first computes the raw energy needed to heat that daily water volume using a fixed 67 degree F temperature rise, then divides that figure by each heater's EF to account for standby and combustion losses, scales to a full year, and multiplies by the energy rate to get annual cost for each heater type.
Formula & Methodology
Start by converting daily gallons to raw heating energy: multiply gallons by 8.34 lb/gal, by the assumed 67F temperature rise, then by 0.00029307 to convert BTU to kWh. Divide that daily energy figure by the heater's Energy Factor, since EF folds in real-world losses like standby heat loss on a tank or combustion losses on a tankless unit, then multiply by 365 for an annual kWh figure. Multiply annual kWh by the energy rate for each heater type separately, and subtract the tankless cost from the tank cost for the yearly savings.
Examples
Default household usage
At 60 gallons of daily hot water use with a tank EF of 0.6, a tankless EF of 0.92, and electricity at $0.16/kWh, the tank costs about $956 a year to run versus about $624 for the tankless unit, a savings of roughly $333 annually.
Smaller household
At 30 gallons daily with a tank EF of 0.55, a tankless EF of 0.85, and a rate of $0.14/kWh, the tank costs about $456 a year against about $295 for the tankless unit, a savings of roughly $161 annually, about half the default case since usage is halved.
Advantages
- Isolates the Energy Factor difference between heater types so the comparison reflects your own hot water usage rather than a manufacturer's generic claim.
- Shows annual cost for both heater types side by side, not just the savings figure, making the comparison easier to sanity-check.
- Works with any fuel type by expressing cost as a kWh-equivalent rate, so gas and electric water heaters can both be modeled.
Common Mistakes
- Entering a gas price per therm directly into the kWh-equivalent cost field without converting units first.
- Using a manufacturer's Energy Factor from an old rating scale without checking that both heaters are being compared on the same scale.
- Assuming the fixed 67F temperature rise built into the calculator matches actual incoming water temperature, which varies by region and season.
Edge Cases to Watch For
- Both Energy Factor inputs are floored at 0.01 to prevent a divide-by-zero error if either field is left at or near 0.
- The 67F temperature rise is a fixed assumption built into the calculator, not a user input, so results are less accurate for households with unusually cold incoming groundwater or unusually warm groundwater.
- The energy cost field is labeled as a dollar-per-kWh equivalent, so gas water heater costs need to be converted to a kWh-equivalent rate before entering them for the comparison to be apples-to-apples.
Common Use Cases
- Homeowners comparing tank and tankless water heater options before a replacement or renovation.
- Renters or homeowners estimating current water heating costs to decide whether an upgrade is worth pursuing.
- Anyone wanting to understand how much of a tank heater's energy cost comes from standby losses versus the water heating itself.