Tankless vs Tank Water Heaters:
Your Guide to Choosing the Right Water Heater

Thinking about replacing your aging water heater? Perhaps you’re building a new home, or maybe you are purchasing an older home and the water heater needs to be replaced before you can move in. Whatever the case, you have a range of choices available to you when it comes to water heater type. One of the most important decisions you will make will be whether to go with a tankless or a standard electric water heater. Which is right for you?

The Need for a Water Heater

We’ll begin with the basics – why do you need a water heater in the first place? It’s pretty simple, actually. Without a water heater, you only have cold water. That means cold showers, cold water for washing dishes, and cold water for everything else. A water heater provides you with the means to heat water to a desired temperature for whatever you might need.

According to Natural Resources Canada, “Canadians use an average of 75 litres of hot water at each home every day – for washing dishes and clothing, cleaning and showering or bathing.” The problem is that not all water heaters are created equal. There are electric systems, natural gas and propane systems, tankless water heaters, and storage tank systems. All of these systems differ in how they work, how reliable they are, and how well they can keep your family supplied with hot water. They also differ in terms of energy consumption. Natural Resources Canada points out that “water heaters account for 19% of the energy used in the average Canadian home,” so that is a significant consideration.

What Is a Tankless Water Heater?

Since tankless technology is the newest, we’ll begin with a closer look at how these systems work, then we’ll compare them to standard electric water heaters.

A tankless water heater is also called an on-demand water heater or point-of-use water heater. They are small, wall mounted, and have no storage tank. There is a single cold-water line running in, and a hot water line exits the water heater. They use a small heating element to warm the cold water as it flows through the unit. That heated water is then made available for your use, whether you’re washing dishes, showering, or running a load of laundry. Until there is a hot water demand on the tankless water heater, there is no electricity consumption.

Ostensibly, the design is supposed to save consumers money by reducing energy consumption.That sounds like a good thing, and it can be. However, Canadian homeowners face significant challenges with most tankless systems. The single most critical issue is climate and its impact on water temperature, but we’ll dig into that shortly. First, we need to look at how conventional electric water heaters work.

How Does a Conventional Water Heater Work?

Conventional water heaters are very different from tankless systems. This is the large, cylindrical unit that most people picture when they think of residential water heaters. They are usually installed in the garage, the basement, or somewhere else out of the way, but within easy reach of the water line.

With a conventional water heater, water is stored in a large tank. As it cools, the heater must warm the water again. This cycle repeats over and over. In a home with little hot water use, energy may be wasted through what’s called continuous standby loss – the consumption of power through continuously reheating water.

Cold water flows into the tank, filling it up with water. Electric heating elements turn on, heating the water to the desired temperature. The hot water tank is well insulated, so heat loss is minimal, and most modern units can maintain water temperature for very long periods of time. Because the tanks are quite large, a single water heater usually holds more than enough water for an entire home’s needs on a daily basis.

As water is used, the tank is refilled with cold water from the main water line, and the unit heats that water to the pre-set temperature, maintaining a constant store of hot water at all times.

Comparing the Two Systems

Now that we’ve looked at both types of systems and how they work, we need to compare the two and see how they stack up to one another.

Tankless Water Heater Pros and Cons

Tankless water heaters have some benefits, but they also have a few drawbacks that should make you think twice about installing one.


  • Energy efficient
  • Does not take up any floor space
  • Can be placed outside (although this significantly impacts performance during Canadian winters)
  • Never runs out of hot water
  • Reduces energy consumption through on-demand heating


  • Not capable of supplying an entire home’s hot water needs – only two to three gallons of heated water per minute can be supplied
  • Retrofitting an existing home can increase installation costs substantially
  • Not capable of heating cold water to high temperatures
  • May require multiple heaters to supply enough hot water for a home, thereby eliminating savings
  • Most units are significantly more expensive than conventional water heaters

Conventional Water Heater Pros and Cons

Conventional electric water heaters also have their pros and cons that should be considered before making a purchase.


  • Able to supply an entire home’s hot water needs
  • Available in different capacities to suit usage needs
  • Available in multiple fuel types
  • Cost less to purchase than tankless models
  • Available in EnergyStar models for improved efficiency


  • Takes up floor space
  • Cannot be installed outside
  • Can run out of hot water if demand is very high
  • Some fuel types are not as efficient as others

The Right Type of Water Heater for You

From the previous discussion, you should be able to see where the conversation is headed – conventional water heaters are better suited for Canadian homes. Tankless water heaters can certainly offer some benefits, but two factors prevent them from being viable options for most homeowners:

  • Average Water Temperature – The average water temperature in Canada is quite cold. In fact, the government mandates that municipal water supplies be maintained at 15 C or below. Due to climate, much of Canada’s water is actually quite a bit colder than this, well water on average is 4-5 C. However, for sanitation, water must be heated to at least 60C to prevent bacteria growth (within a water heater). Because tankless water heaters do not store water, but instead heat only the water which flows through the unit upon demand – bacteria growth is not an issue. No minimum water temperature is required. Hot water tank manufacturers pre-set all electric tank units to 60C.
  •  Cost – Because tankless water heaters have no storage, they are limited in their utility. They are simply not capable of supplying enough hot water for the average family’s daily usage needs. In order to use tankless technology in the average Canadian home, you would need multiple heaters installed, which would increase your costs to the point that you would see no savings due to increased efficiency. Even then, you still run into the issue of these systems being unable to heat cold water effectively.

While tankless water heaters can be viable solutions for those with little demand for hot water, for applications in vacation cottages, or to augment a conventional water heater in a larger home, they are simply not adequate for most homeowner’s needs. Conventional water heaters, on the other hand, have the ability to heat large quantities of water and maintain it at the proper temperature for sanitation and comfort.

However, you still have choices to make. For instance, which fuel type is right for your needs? There are four options to consider – electric, natural gas, oil, and propane.

Fuel Type: Considerations to Make When Buying a Conventional Water Heater

Conventional storage water tanks are superior to tankless water heaters, as we’ve demonstrated. However, there are four different options when it comes to fuel types, and they are not the same. You will need to know a bit about how each works and how they compare to one another before you make a decision on your water-heating needs.


We’ll begin with electric water heaters. They’re probably the most common option used in Canadian homes today, and for good reason. They’re the simplest and easiest to install and do not require any sort of external venting, as there is no combustion taking place.

You will also find that they can be located in many different areas of the home, from the garage to the basement to the attic to the kitchen and just about anywhere else. All you need is access to the main water line. Electric hot water heaters transform electricity into heat, and almost all of that heat is stored in the water because the heating elements are fully immersed.

Oil, natural gas, and propane water heaters suffer from heat loss because not all heat from the flame is captured and stored within the water in the tank. Finally, you’ll find a host of sizes available – you can easily choose a tank size that fits your family’s hot water usage needs. 


Oil-burning water heaters are rarer than other types. They are more costly to operate, and they generally require a vent for exhausting combustion gases, although there are some (more expensive) models on the market that use sealed combustion chambers and do not need venting.

However, all oil-burning water heaters require an additional oil storage tank, which means a larger installation footprint. There are not many models on the market, and you’ll need to plan your oil delivery carefully to ensure that you don’t run out.

Natural Gas

Natural gas is the second most commonly used type of water heater in Canada. They have high input capacity, which means fast water heating. However, they will need venting – either through a chimney or a side wall. Some models are direct vent and do not need house air for combustion, but they are usually more expensive than electric models. Power vented models can be quite noisy, and there is a greater chance of failure, as well.

Of course, you must also install these where you have a natural gas supply line or run a new line to the installation location, which increases costs and inconvenience. If your home is well sealed, it can actually cause problems with combustion air supply, as well. There’s also the fact that natural gas is more expensive than electricity.


Propane-burning water heaters are virtually identical to natural gas-burning units, with a few key differences. Rather than a natural gas supply line, you’ll need a propane tank and a supply line to the water heater. You will also need to make sure that you always have enough propane on hand, or you will run out of hot water. Propane-burning units with power vents are prone to failure. Finally, propane is more expensive than natural gas or electricity.

The Myth of Power Outages

If there is a power outage, your electric water heater will not operate. That’s a fact many companies use to sell propane, oil, and natural gas units. However, the truth is that all water heaters require electricity in order to operate, and if there is a power outage, they will not work. This applies to oil, natural gas, and propane units. If there is no power, you will only have the hot water that is storaged in the hot water tank, until power is restored. As for a tankless unit there is no storage tank, therefore will provide no hot water in the event of a power outage.

In Conclusion

When it is all said and done, electric hot water heaters remain the better option for Canadian homeowners. They are more affordable, available in the widest range of sizes, and are more than capable of supplying all the hot water your home needs. Electric water heaters are also the simplest to install, require no venting for exhaust, have no worries when it comes to airflow for combustion, and are more than capable of heating up cold Canadian tap water to a level that maintains sanitation while ensuring you get a luxurious hot shower and your dishes get sparkling clean.