Tankless vs Tank Water Heaters for Phoenix-Area Homes

How do the two types work?

A storage tank heats and holds a fixed amount of water, usually 40 to 50 gallons in a typical house, and keeps it hot whether or not anyone is using it. That standing heat loss is the main energy cost of a tank.

A tankless or on-demand heater, as the Department of Energy describes it, heats water only when a tap opens. Cold water runs through a heat exchanger warmed by a gas burner or an electric element. Because nothing is stored, you do not run out the way you do with a tank, but the unit can only heat so many gallons per minute.

How do they compare side by side?

Installed-cost figures are from HomeAdvisor's water heater replacement guide; lifespans and flow rates are from the Department of Energy.

How much energy does a tankless heater really save?

The Department of Energy's numbers are more modest than some marketing. For homes that use 41 gallons of hot water or less per day, a tankless unit is about 24 to 34 percent more efficient than a storage tank. For heavy-use homes around 86 gallons per day, the gain drops to about 8 to 14 percent. HomeAdvisor's tankless guide claims fuel bill reductions of up to 50 percent, but the federal figures are the safer planning number.

In other words, a couple or a small family gains the most. A large household that runs showers, laundry and the dishwasher together saves less, and may need more than one unit to keep up. The DOE also warns that a gas tankless model with a standing pilot light can waste much of its advantage, so look for one with an intermittent ignition device.

Can a tankless unit keep up with your household?

Output is measured in gallons per minute. The DOE puts typical whole-house units at about 2 to 5 gallons per minute, with gas models generally delivering more than electric ones. Two showers and a running dishwasher can exceed that. Your choices are a larger unit, two units in parallel, or a small point-of-use heater dedicated to a far bathroom or an appliance.

Electric whole-house tankless units also have heavy power demands. HomeAdvisor notes they need 240-volt, 80-amp hard-wired service and recommends a home with at least 150-amp service. Many homes need an electrical upgrade before an electric unit is practical, which is why most Valley tankless installs are gas.

What does Phoenix's hard water do to a tankless heater?

This is the biggest local factor. Minerals that would settle harmlessly at the bottom of a tank instead coat the narrow passages of a tankless heat exchanger. As scale builds, flow drops and the unit works harder.

Local water varies, but most of it is hard:

• City of Phoenix: 10 to 17.6 grains per gallon
• Mesa: about 12 grains in the City Zone and about 16 in the Eastern and Southern zones
• Chandler: a citywide average of 16.5 grains per gallon
• EPCOR's Sun City system: 7 to 11 grains per gallon

Green Building Advisor notes the standard advice is to descale a tankless unit once a year, and that annual descaling matters most in very hard water. The author skipped it for seven years and saw his flow drop significantly before he finally descaled. A homeowner with a pump kit and vinegar or a descaling solution can do it, or a plumber can add it to a yearly service. Homes on the softer end, such as many in Sun City, may stretch the interval; homes on harder water should not.

A water softener reduces scale on any heater, and it is worth pricing alongside a new unit. Chandler, with its 16.5-grain average, is a good example of where softener installation in Chandler pairs well with a tankless unit, and our hard water guide for Phoenix homes explains how to size one.

What does switching from tank to tankless cost?

HomeAdvisor puts tank replacement labor at about $150 to $450, while tankless labor runs $600 to $1,850, and converting from tank to tankless can add up to $2,500. Its tankless guide, last updated in 2022, gave a national average of about $2,547 installed, with most jobs between $1,393 and $3,814. The extra work comes from:

• A larger gas line, because a tankless burner needs much more gas at once than a tank burner. A plumber offering gas piping work in Phoenix can size it.
• New venting, since most gas tankless units cannot use the old tank flue.
• Electrical work for the unit's controls, or a major service upgrade for an electric model.
• Permits, which more cities require for a conversion than for a straight swap.

Will you need a permit?

Most likely, for a conversion. Mesa exempts like-for-like tank replacements but requires a permit to convert a gas storage tank to tankless, and the gas utility must be notified before the new appliance goes into service. Anyone planning a tankless conversion in Mesa should expect that step. Buckeye's residential checklist calls for a building permit application on tankless installs, so homeowners in Buckeye should plan for it too. Scottsdale uses a minimum plumbing permit for water heater replacements. In Gilbert, the permit pages we reviewed did not spell out the rule, so a plumber quoting a Gilbert tankless install should confirm it with the One Stop Shop.

What about a heat pump water heater?

A heat pump water heater is a tank that moves heat out of the surrounding air instead of creating it with a resistance element. The Department of Energy says these units can be two to three times as efficient as standard electric tanks. They need room, at least 1,000 cubic feet of surrounding air, and a location that stays between 40 and 90 degrees Fahrenheit. They also cool the space around them and need a condensate drain. If your heater sits in a garage, ask the installer how the model you are considering handles the hottest summer afternoons.

So which should you choose?

• Choose a tank if your current tank just failed and you need hot water fast, if several people shower back to back, or if your budget is tight this year. A like-for-like tank swap is the quickest fix.
• Choose tankless if your household is small, you plan to stay in the home for many years, you already have gas service with room to upsize, and you will keep up with descaling.
• Consider a heat pump tank if your home is all-electric and you have a suitable space for it.

If your current tank is still working but aging, our guide on whether to repair or replace a water heater can help you decide when to make the change. To get quotes on either type, start with tankless water heater service in Phoenix.

A gas safety reminder

Gas tankless installs involve new gas piping. If you ever smell gas, leave the house first, then call 911 and your gas utility from a safe place. In most of metro Phoenix that is Southwest Gas at 877-860-6020. Some homes are all-electric or use propane, and your gas bill shows which utility serves you. Our gas smell checklist covers the rest.