When it comes to keeping your showers hot and your dishes clean, your water heater is one of the hardest-working appliances in your home. It’s easy to forget it’s even there, until it stops doing its job. If you’ve ever faced the decision to repair or replace your water heater, you know it’s not a simple choice. And in 2025, energy efficiency is more important than ever.
At Taylor Heating, Cooling, Plumbing & Electrical, we often get asked the same question: “Should I stick with a traditional tank-style water heater or switch to a tankless system?” The answer depends on your household, your budget, and your energy goals. Let’s explore how each type works, what they cost to operate, and which one might save you more energy in the long run.
How Traditional Tank Water Heaters Work
Conventional water heaters, often called storage tank water heaters, heat and store a large volume of water, usually between 30 and 80 gallons, in a cylindrical tank. When you turn on a hot water tap, the system pulls from that tank and replaces it with cold water, which is reheated to maintain a constant temperature.
This design has been the standard for decades because it’s simple and reliable. However, it’s also energy-intensive. The tank continuously reheats the water, even when you’re not using it, which leads to what’s known as standby heat loss. That constant reheating cycle can add up, especially in colder months when the surrounding air temperature drops.
While today’s tank models are more efficient than those from 10 or 15 years ago, they still tend to consume more energy overall than newer alternatives.
How Tankless Water Heaters Work
A tankless water heater, often referred to as an on-demand water heater, heats water only when you need it. Instead of keeping a large tank of water hot around the clock, it uses high-powered burners or electric heating elements to warm water instantly as it flows through the unit.
That means you’ll never “run out” of hot water, and you won’t waste energy maintaining a full tank at temperature all day. Tankless systems are compact, wall-mounted, and designed to provide endless hot water for showers, sinks, and appliances.
Here’s the catch, though: tankless systems work best when properly sized for your household. If several fixtures are drawing hot water at once, say, two showers and a dishwasher, you may need a larger-capacity unit or multiple systems to keep up. Still, for many homeowners in Pierce County, the energy savings and performance benefits make tankless systems an attractive choice.
Comparing Energy Efficiency
When it comes to energy savings, tankless water heaters generally come out on top. According to the U.S. Department of Energy, a tankless system can be 24–34% more efficient than a standard tank model in homes that use less than 41 gallons of hot water per day. For households with higher usage, the savings are still significant—about 8–14% on average.
Why? Because tankless systems eliminate standby heat loss. With a storage tank, energy is constantly being used to maintain water temperature. In contrast, tankless systems only consume energy when water is flowing.
That said, modern storage tank water heaters have improved a lot, too. Many new models feature better insulation, high-efficiency burners, and smart controls that help reduce waste. If you have a larger family or higher water demand, an efficient tank system might still make sense for your home.
Installation and Upfront Costs
When comparing water heaters, upfront cost is often the biggest deciding factor. Traditional tank systems are more affordable to purchase and install, while tankless systems tend to cost more upfront but save money over time.
Here’s a general breakdown:
- Storage tank water heater installation: Usually between $1,000–$2,000, depending on size and fuel type.
- Tankless water heater installation: Typically ranges from $2,500–$4,500, due to the more complex setup.
The installation cost for a tankless system often includes updates to your gas line, venting, or electrical system to handle the unit’s higher energy demand. But once installed, tankless systems can last 20 years or more, compared to about 10–12 years for a traditional tank. Over time, the energy and replacement savings often offset that initial investment.
The Longevity and Maintenance Factor
While tankless water heaters have a higher upfront cost, they tend to last nearly twice as long as traditional units. Their design reduces the risk of tank corrosion and leaks, which are common reasons for tank replacements.
Maintenance is also different for each system:
- Storage tank models need periodic flushing to remove sediment buildup, which can reduce efficiency and cause overheating.
- Tankless units require descaling every year or two, especially in areas with hard water, to prevent mineral buildup in the heat exchanger.
If you stay on top of maintenance, either system can perform well for years. However, tankless systems often come with longer warranties, giving homeowners added peace of mind.
Space, Convenience, and Performance
One of the biggest differences between tank and tankless systems is space. A traditional storage tank can take up several square feet in a basement or utility room. In contrast, tankless units are compact and wall-mounted, freeing up valuable floor space.
In terms of performance, tankless water heaters deliver a steady stream of hot water without running out, which is great for families who use multiple showers or appliances in the morning. However, if the system isn’t sized correctly, you may experience reduced flow rates during high-demand periods.
On the other hand, tank-style systems can deliver high flow rates to multiple fixtures at once, but once the tank runs out, you have to wait for it to reheat, something most of us have learned the hard way on a busy morning.
Environmental Impact and Energy Sources
Energy efficiency isn’t just about saving money; it’s also about reducing your environmental footprint. A tankless water heater produces fewer greenhouse gas emissions because it burns less fuel or uses less electricity over time.
Tankless models are available in both gas and electric versions, though gas tankless water heaters are generally more efficient for larger households. Electric models can pair well with solar systems or renewable energy setups.
Storage tank water heaters have also made strides in eco-friendliness, with high-efficiency and hybrid models that combine heat pump technology with traditional design. However, they still consume more energy overall due to continuous heating cycles.
If sustainability is a top priority for your household in 2025, tankless systems typically have the edge in both performance and long-term efficiency.
Pros and Cons of Each Type
Let’s recap the major pros and cons of both water heater types to help you decide which might work best for your home:
Tank Water Heaters
Pros:
- Lower upfront cost
- Simpler installation and setup
- Handles multiple fixtures simultaneously
- Easier maintenance
Cons:
- Shorter lifespan
- Higher energy consumption (standby heat loss)
- Larger footprint
- Runs out of hot water after the tank empties
Tankless Water Heaters
Pros:
- More energy-efficient and eco-friendly
- Endless hot water on demand
- Compact, space-saving design
- Longer lifespan and lower operating costs
Cons:
- Higher initial cost
- May require plumbing or electrical upgrades
- Slight delay in hot water delivery
- Flow rate limitations during heavy use
Your ideal choice depends on your household size, budget, and how you use hot water daily. Families with consistent, high water demand may lean toward a large tank model, while smaller households or those focused on long-term savings will likely benefit from a tankless setup.
The 2025 Energy Savings Outlook
With advances in technology and stricter energy standards, both types of water heaters have become more efficient in recent years. However, tankless systems still hold the lead when it comes to cutting long-term energy costs.
In 2025, homeowners can expect to save anywhere from $100 to $400 annually on energy bills with a tankless model compared to a standard storage tank, depending on household usage and fuel type. As utility rates continue to rise, those savings will only grow more significant over time.
So, while the initial investment might sting a bit, the return on energy savings, convenience, and longevity makes a tankless water heater an increasingly smart move for many Western Washington homeowners.
Call Taylor Today for Tailored Water Heater Services in Puyallup and Pierce County!
Whether you’re ready to upgrade or just want honest advice, Taylor Heating, Cooling, Plumbing & Electrical is here to help. Our licensed technicians provide expert water heater services, including maintenance, installation, and full water heater replacement for both tank and tankless systems.
We’ve proudly served Puyallup, WA, and surrounding Pierce County homes since 1984, combining small-town service with expert craftsmanship. Call us today or schedule your consultation online; we’ll help you choose the right water heater for your home, your budget, and your family’s comfort for years to come.