Water Heater Systems Explained: Which Is Right For Your Needs?

It is a cold winter morning, and you are late for work. You missed the alarm and have to get ready as fast as possible. You dash to take a hot shower, only to realize that there is only cold water coming out instead of hot water. Your water heater, which has served you for years, has stopped working. You are now frustrated and do not know where to start.

This is a common occurrence in many households, and you might have experienced or heard about it. Sadly, no alarm will notify you that your water heater system has come to the end of its days. You have to watch out for some signs, which you might miss if you are not careful. Moreover, most people do not know the basics of a water heater system until it breaks down, and it is time to replace it.

There are several types of water heaters in the market, which may be confusing when deciding on one that will suit your needs. However, you should worry not! We have water heater systems explained in detail in the below guide to help you make a well-informed decision.

Types Of Water Heaters

There are five types of water heaters, each coming with its benefits and drawbacks. They also have different technologies and advancements; hence it is vital to understand them to choose the best one. They include:

Conventional Water Heater

This is one of the most popular water heaters in the market. A conventional water heater is a tank that heats the water stored inside it using a burner at the bottom. It does not need a motor to run; hence it is pretty efficient.

The first-ever boiler design was patented in 1897 by a Norwegian immigrant to Pittsburg named Edwin Rudd. He later created his firm, the Rudd Manufacturing Company, which is still running to date. Therefore, it is safe to say that conventional water heaters have been around for more than 100 years, hence why they are pretty popular in homes.

How Does A Conventional Water Heater Work?

All storage water tanks have a ready reservoir of between 20 to 80 gallons of hot water, depending on the size. When the hot water tap is turned on, the tank releases hot water from the tank top. This hot water is then replaced by cold water that enters from the bottom of the tank, ensuring that the tank is always full.

They also have proper insulation that keeps the water warm even after the heater is turned off, and a two-valve feature, one maintaining pressure and the other temperature. The latter opens when the water temperature reaches 120°F, releasing heat and moderating temperature, while the other valve decreases the pressure after it reaches 150 PSI.

Conventional water heaters have various fuel sources: natural gas, electricity, fuel oil, and propane. Since the water is constantly heated in the tank, energy loss happens when the tap is not running. It is referred to as standby heat loss, and it can be resolved by using tankless water heaters, which avoid standby heat loss. Also, oil and gas water heaters experience venting-related energy losses, which can be combated by using fan-assisted gas water heaters and atmospheric sealed-combustion water heaters.

Advantages Of A Conventional Water Heater

  • It is highly efficient: Conventional water heaters are efficient in all climates; hence, wherever you live in the world, they will function to ensure that all your needs are met. Solar heaters, heat pumps, and tankless water heaters require specific conditions for optimal performance, but this is not the case with conventional water heaters. They will offer excellent performance as long as they are regularly maintained.
  • Lower initial cost: You are likely to spend less money on a conventional water heater than the rest unless you go for the ultra-modern model.
  • Lower installation costs: It is inexpensive to install a conventional water heater. However, this will depend on the type of home and if you need electrical configurations and plumbing done.

Disadvantages Of A Conventional Water Heater.

  • Supply problem: One of the disadvantages of a conventional water heater is that the hot water may run out once all the water is used up in the tank. These heaters have a fixed amount that they can store; hence once the water runs out, you have to wait for an hour or more to refill the tank and reheat it.
  • Space hog: These heaters are usually pretty bulky; hence they will occupy lots of space in the home.
  • Increase in energy waste: Conventional water heaters usually have warm water constantly present in the tanks, meaning they have to use energy to maintain that temperature. This increases the energy wasted, as compared to tankless systems.
  • High potential for water damage: Conventional water heaters require regular maintenance. Failure to do so will lead to rust and corrosion, which will compromise the water heater. This could lead to water damage, which will not be good for you.
  • Shorter warranties: These heaters have shorter warranties than tankless heaters because they are irreplaceable when they break. You also have to replace the anode rod every three to four years to prevent corrosion of the tank.

Tankless Water Heaters

As per the name, these water heater systems function without a tank. They have coils that get superheated when filled with water instantly, hence why they are called on-demand water heaters. They are perfect for large families as they can efficiently heat a large amount of water in little time.

When choosing a tankless water heater, size is crucial. For example, if you buy a small heater and have a huge demand, the water will be cold or lukewarm. However, these small units can use gas as a power source. On the other hand, if you choose an extensive system, you will need a gas line to run the heater. Some large systems run on electricity, but these will spike your electricity bill.

How A Tankless Water System Works

Conventional water heaters suffer from standby heat loss as they need lots of energy to keep the water hot. However, in tankless water systems, water is heated only when needed, making them more efficient.

A tankless water heater has a heat exchanger that raises the temperature of the water. It does this by transferring heat generated by the gas-fired burner or electric coils to the water coming out of the faucet. The incoming water activates it; hence when you turn on the tap, the water circulates the heat exchanger, heating the cold water.

You can choose between electric, natural gas, or propane fuel options in tankless water heaters. Gas and propane-powered heaters are used in whole-house systems, while electric models are perfect for point-of-use scenarios such as an outdoor kitchen.

Advantages Of A Tankless Water System

  • It saves space: Tankless water systems are compact; hence they will not need lots of storage space. They are therefore easy to mount on walls or store in compact rooms.
  • Lower costs: Tankless water systems will reduce your monthly costs, hence saving you money in the long run.
  • Instant hot water: Tankless water systems provide instant hot water when you need it, hence no need to wait for cold water to turn warm, then to hot water.

Disadvantages Of A Tankless Water System

  • High initial investment: The initial investment made in purchasing a tankless water heater is higher than that of a conventional one. This is because you may require more prominent gas lines or more power capacity than what your home has.
  • It has a limited hot water supply: If you have a large family, the hot water supply may run out if the demand is too high. For example, if one person is showering, another washing clothes, and another the dishes, the water will become cold.

Solar-powered Water Heater

Solar-powered water heaters depend on the sun as their power source. They are a cost-effective way to heat water in the home.

How Does A Solar Powered Water Heater Work?

These heaters have storage tanks and solar collectors to work efficiently. There are two types of solar water heating systems; active, having circulating pumps and controls, and passive, which do not. In the latter, natural convection moves water from the collectors to the storage tanks.

The sun heats the water flowing in the circuit through the collector. The water that leaves the collector is hotter than the one entering it, carrying heat to the water tank. The water then passes through the heat exchanger inside the tank, giving off its heat. Solar heaters supply 80% of hot water for the home. Therefore, other means will be used, such as electricity or fossil fuel energy, if additional water is needed.

Advantages Of A Solar Powered Heater.

  • It is eco-friendly: Solar-powered heaters are eco-friendly and will help you reduce your carbon footprint. They are the most energy-efficient water heaters in the market, depending on the sun’s rays.
  • Tax credit eligibility: As an incentive to increase the number of people using solar panels, the federal government has offered several tax credits to help with the installation costs.
  • Cost friendly: Over the long run, you will reduce your water and electricity bills by using solar energy.

Disadvantages Of A Solar Powered Heater

  • High installation costs: One of the main disadvantages of solar-powered water heaters is their high installation costs. Also, it will take you around 30 years to get a return on the investment. However, there are some financial programs available to make things easier for you.
  • It can only be used in climates with lots of sunshine: You cannot install solar panels in areas with more rainy days than sunny ones. It is therefore only applicable in places like Southern California.

Heat Pump Water Heater

Also known as the hybrid electric water heater, this heater will help you save on your electricity bills as it doesn’t directly generate heat. It is unique in that it uses heat in the air and ground to heat water. Therefore, instead of electricity being used to create heat, it is only used to move the heat to the water. Therefore, heat pump water heaters use up to 60% less electricity than traditional water heater systems.

How Does The Heat Pump Water Heater Work?

The heat pump absorbs heat in the outdoor air and uses this energy to heat water. The fan inhales the air, transferring the energy to the refrigerant in the evaporator, hence changing from liquid to gas. The gas is then compressed and transfers all its accumulated heat to the tank. As the energy is transferred, it reverses back to liquid.

Most people install geothermal heat pumps to draw heat from the indoor air during summer and from the ground during winter to cool and heat their homes. A desuperheater can be added to the geothermal heat pump for water heating purposes. The desuperheater uses the superheated gases from the compressor to heat water.

Advantages Of A Heat Pump Water Heater

  • It is highly efficient: These water heaters are more efficient than electric, fuel, and oil water heating systems.
  • It is cost-effective: Heat pump water heaters use 60% less energy than conventional heaters; hence they will save you more money.
  • Low maintenance systems: Heat pump water heaters are low maintenance systems, requiring professional checks every 3 to 5 years.

Disadvantages Of A Heat Pump Water Heater

  • Shorter life span: Compared to solar and tankless water systems that last up to 20 years, heat pump water heaters have a life span of up to 10 years.
  • Temperature requirements: This heater does not do well in extremely low temperatures as it depends mainly on drawing heat from the air or ground to work. Therefore, it is not recommended for places that freeze all year round.

Condensing Water Heater

If you are looking for a smart water heater system with high efficiency, this is the option for you. They are similar to conventional heating systems. The major difference is that they work by capturing hot gases that would otherwise escape through the flue and redirect them to a heat exchanger inside the tank. It uses the gas fumes to warm water.

How Does A Condensing Water Heater Work?

Also known as condensing boilers, these systems are perfect for homes that already run on natural gas as their primary power source.

This heater captures the hot exhaust gas expelled through the flue and forces them to the coil placed at its base. The coil is placed at the bottom to heat the cold water. Here, the water is condensed inside the boiler; hence, more energy is extracted than conventional boilers, where the water escapes as vapor, and energy is lost.

Advantages Of A Condensing Water Heater

  • High efficiency: Why would you want to spend thousands of dollars on low-efficiency equipment when there is one that has a higher efficiency? On top of that, it uses modern technology, hence no need to use outdated technology systems. It also comes with a big tank; hence you will not worry about water running out soon.
  • Low operating costs: Due to its high energy efficiency, it will be cheaper to run a condensing boiler, lowering your costs.
  • Environment-friendly: If you buy an ENERGY STAR condensing boiler system, you will cut energy costs by 30%. This will help reduce your carbon footprint as the greenhouse gases emitted will decrease significantly.

Disadvantages Of A Condensing Water Heater

  • Size: These condensing water heater systems can only accommodate 55 gallons of water or more; thus, they are only feasible for heavy-duty usage.
  • Expensive: Condensing boilers are two to three times more expensive than their conventional counterparts. However, the installation costs are cheaper, but this does not make up for the initial cost difference.

Factors To Consider When Choosing A Water Heater System

There are a few crucial factors that you should consider when purchasing a water heater system. They include:

Water Heater Capacity

The capacity of the heater will depend on the number of people in the house. If you want to determine the heater’s capacity that you need, use the first-hour rating (FHR). To get the FHR, count the people in your home and multiply by twelve. So, a family of three people will have an FHR of 36 gallons.

Therefore, you can check the FHR value of the water heater to see if it will be enough for your family. For example, if you have two to three people, a 40-gallon water tank will be efficient. If they are more than five, then a 55-gallon tank or more will suffice, and for eight or more people, you will need two water heaters to supply water efficiently to the home.

Anti-scale devices

Mineral scale buildup can damage the water heater extensively over long periods. Therefore, choose water heaters with anti-scale devices which swirl water at the bottom to prevent mineral deposits. This feature will increase the lifespan of the heater, which will be a plus.

Drain Valves

Drain valves are situated near the bottom of the water heater and are used to drain water before any maintenance work. They are usually of two types: brass and plastic. Brass is more durable, malleable, and is less reactive to temperature changes. Choosing brass valves over plastic will increase the durability of the water heater system.


The warranty of water heater systems should be significantly considered when choosing a heater. The warranty period for these systems varies between three to twelve years. It is crucial to note that the longer the warranty, the more expensive the unit will be. However, they also have thicker insulation to prevent heat loss and large burners to increase their heating rates, which will be great for you.

Energy Source

You should install your water heater next to an energy source or supply line. Whether using electricity, solar, propane, natural gas, or geothermal energy, you should ensure that it is placed in a strategic position next to the energy source.

Digital Displays

When buying a water heater, it is convenient to purchase one with a digital display to adjust the settings easily. You can change the water temperature and output of the heater and use the scheduling feature to shut it when there is no one at home.

Glass-Lined Tanks

Glass-lined water heater tanks have a porcelain enamel and coating that helps protect them against corrosion. This coating also increases the lifespan of the water heater; hence it will last longer. However, glass linings are not a necessity, but they help extend the life of the heater.

Our Top Recommendations

There are many different water heater systems, as seen above. The best water heater for you should meet your needs and that of the home. Below are some of the water heater systems that we love.

Rheem Gladiator Water Heater

If you want a durable and reliable water heater that is not too expensive, Rheem is the brand. It is known for manufacturing durable water heaters, hence quite popular in most homes. This Rheem Gladiator water heater is eco-friendly as it produces low emissions and is Eco-Net enabled so that you can sync it with other home automation systems.

It also has a 12-year warranty and is Energy star rated. It can even send you alerts if there is a leak or other complications. Amazing, right? Moreover, if flammable vapor builds up, the device automatically turns off.

A.O. Smith Signature 50-gallon Water Heater

This heater works best for families with five or more people, without a massive price tag. It delivers up to 89 gallons of hot water in the first hour alone and puts out 50,000 BTUs. It also has an electronic gas valve for temperature control without needing an external power source. It may not be a smart water heater like the Rheem Gladiator, but it has an LED indicator for diagnosis reporting. It also has a six-year warranty and comes in various sizes, ranging from 30-98 gallons.

Rinnai V47IN Indoor Tankless Water Heater

You can never go wrong with Rinnai when it comes to tankless water heaters. With these water heaters, always go for at least 7.5 GPM to ensure that a family of up to 5 people can use it efficiently, without problems.

This water heater comes with a ten-year warranty on the heat exchanger, 12 months labor coverage, and 60 months on its parts, which is a fantastic deal. Also, you can engage its vacation mode while you are away to maintain its efficiency.

If you prefer an outdoor tankless system, then the Rinnai V75EN is the best option for you. It also has a 7.5 GPM flow rate and is excellent for the outdoors.

Bosch Tronic 3000 T ES4 Water Heater

If you are looking for a point-of-use plug-in, then this Bosch Tronic water heater is the perfect one for you. We love it due to its easy installation and the fact that it can be mounted on a wall, floor, or under the sink. It has a six-year warranty on the tank and two years on its parts and has a 98% thermal efficiency.

However, you should note that this mini-tank water heater is designed to provide hot water in one area, so it is not great for a large family. Here, you will only get enough water for the sink or small washing machine, but not at the same time. Therefore, if you have a house with several bathrooms, you will need a bigger heater for the job.


Question: When Should I Replace My Water Heater?

Answer: There are some signs to look out for to know if your water heater needs replacement. These include:
Changes in water quality such as metallic tastes and brown water may indicate rust and corrosion inside the tank.
Water leaking from the water heater may be a sign that something should be tightened. However, it will be better to buy a new one than fixing the leak if it is bad enough.

A sudden decrease in hot water may indicate a bad or old heating element.
Most water heaters will last between 8-10 years. It is advised to replace the heater before this timeline, regardless of whether it is showing symptoms or not.
You may also need to replace your water heater if it no longer fits the community’s building codes. If the regulations have changed, then you will need to replace the water heater also.

Rumbling noises from the tank are a sign that you need a replacement. The noise could be due to sediment buildup, which could be stopped by flushing the heater. However, if this does not help, then it is time to replace the water heater.

Question: Can My Water Heater Increase My Electricity Bill?

Answer: Yes, your water heater could increase your electricity bill. How is this so? You may ask. This may occur due to several reasons. First, the water tank might be leaking. Leaks will contribute to higher water usage and water bill. Signs of leaks include dampness near the water heater, mold growth near the heater, or water pooling under it. However, some leaks are invisible to the naked eye, as the insulation around the tank may hide them. Therefore, if you suspect a leak, call in a plumber to help you out.

Another reason is that the temperatures have been set too high. According to the EPA, you should set your water heater to a temperature of 120 degrees Fahrenheit, even though most manufacturers set their thermostats to 140 degrees. Every 10 degrees that you turn down will save you around 5% of your energy bill.

If your water heater is also old, your electricity bill will spike, as it has lower efficiency. If the heater is older than ten years, then it is time to replace it. Also, if the water heater is not the right size, then you will be wasting energy. For example, a bigger water heater than what you need will only increase your bills. If it is too small, then the water will be less, and you will have to overwork it, which will damage it, leading to several repairs.

Question: Is It Bad To Turn Your Hot Water Heater Completely Up?

Answer: Yes, this is not recommended as it will reduce the heater’s lifespan and increase your electricity bill. It could also cause scalding. For safety purposes, always set your water heater to 120 degrees Fahrenheit.


With the above guide, buying a water heating system will not be as daunting as before. With the information at your fingertips, you will be able to choose the right water heater system for you. We also recommend hiring a professional to help you with the installation, as using DIYs may become your greatest nightmare and set you back financially.

Scroll to Top