One of the biggest things homeowners want out of a new water heater is energy efficiency. This is where there’s the most dramatic difference between the two heaters:
A tank heater operates continuously. That means it’s running even when you’re asleep, and much of that hot water will never even be used. That’s a lot of wasted energy—that you pay for.
A tankless heater only heats water on demand. It’s a smaller, compact system that flash-heats water when you need it, and turns off as soon as you turn off the faucet. Tankless heaters are designed to save energy.