Tankless vs. Traditional Water Heaters: Guide

traditional tank water heater

Whether traditional or tankless, a water heater is an essential appliance for any Canadian home. It is also one of the hardest-working: from laundry to tackling a sink full of dirty dishes, your family depends on a reliable daily supply of hot water. 

Unfortunately, water heaters do not last forever. And when the time comes to purchase a new one, which style should you choose? After all, traditional water heaters are tried and true and have been the industry standard for decades. However, tankless water heaters are efficient and becoming more popular every day. 

When it comes to replacement, there are several factors to consider before ultimately deciding on which one is right for you. This includes a solid understanding of how each unit works, your usage and family size, the square footage of your home, unit efficiencies, and budget constraints.

How Do Hot Water Heaters Work? 

While traditional water heaters and tankless units ultimately provide the same service, they vary operation and function.

Traditional Water Heater

The current most popular form of water heater, traditional units, consist of an insulated tank that heats water and stores it for future use. When supply goes down, more water is automatically added and heated, keeping levels as steady as possible at all times. 

When you require hot water, it is transported from the tank directly to your faucets through a series of pipes.

Tankless Water Heater

Tankless water heaters, also known as on-demand water heaters, are becoming increasingly popular in Canadian homes, due to their small size and high energy efficiency.

Tankless water heaters are just that: tankless. Because they don’t store water, you only heat the water you use and, therefore, technically have an endless supply.

When you call for hot water by turning on your faucet, cold water travels through a pipe into the tankless heater where it is heated either by a gas burner or electric element. The hot water is then distributed out of our tap. That being said, a downside of a tankless unit is that the unit may not be able to keep up with demand if several people in your home require hot water at the same time.

installed tankless water heater

What to Consider When Choosing a Water Heater

Usage & Family Size

Before you decide on the unit for you, consider your usage habits. For example, if you have a large family, your hot water needs will likely be high. However, if you live alone, or have only a few people living in your household, your hot water needs may be more modest. 

There are other considerations that you should also consider, such as whether you spend a great deal of time away from your home or if your family member’s schedules vary (meaning there’s a low chance of requiring hot water at the same time).

Usage Pros & Cons

Traditional Tankless
Pro: Large tank supply means many users can have hot water at the same time Pro: Instant hot water on demand
Con: It can take a while to replenish the tank after heavy hot water use Con: The system can become strained if too many people require hot water at the same time

Energy Efficiency

When it comes to energy efficiency, tankless units are the clear winner. In fact, it is estimated that tankless water heaters use between 8% and 14% less energy than their traditional counterparts. This is because they heat water on demand. Traditional units, as discussed, consume more energy because they are constantly heating water to a high temperature regardless of whether it’s being used.

Energy Efficiency Pros & Cons

Traditional Tankless
Con: Less energy-efficient, equalling higher monthly energy bills Pro: More energy efficient, saving on monthly costs

Home Size & Installation Footprint

The size of your home and the area where your water heater will be installed may help you decide which unit is better for you.

Tankless water heaters have a smaller footprint and take up considerably less space. This is great for tiny homes, smaller attached homes, and homes with a small confined area in which to install a water heater. By comparison, traditional water heaters are larger and therefore require more space and clearance. 

When it comes to installation, traditional water heaters generally cost less to install than tankless options. This is especially true if you are replacing a traditional unit with a tankless heater - your system will likely need to be retrofitted. 

Home Size & Installation Pros & Cons

Traditional Tankless
Pro: Generally less expensive to install Pro: Smaller footprint
Con: Requires more space and clearance around the unit Con: Installation costs may be more expensive 


Budget is a strong deciding factor for determining which unit is better for you and your family.  However, this is when costs can get tricky: traditional water heaters have a reduced short-term cost (installation is cheaper) but a higher long-term cost (higher monthly energy bills). On the flip side, tankless units have a higher short term cost (installation is more expensive) but a lower long-term cost (reduced monthly energy bills).

Another consideration is the lifespan of the unit. Traditional water heaters for approximately 7 to 15 years, whereas tankless water heaters may last for 20 years and possibly longer. 

Another budgetary consideration is available government rebates. The Ontario government offers cost initiatives for high-efficiency units. Before you decide, review what cost savings this could mean for you.

Budget Pros & Cons

Traditional Tankless
Pro: Typically less expensive to
Pro: More energy efficient, resulting in lower monthly bills
Con: Less energy-efficient, resulting in higher monthly bills Con: Generally more expensive to install
Con: Shorter Lifespan Pro: Longer lifespan

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