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Types of water heaters

You can choose storage tank style or tankless systems which heat water and store it, so hot water is there when you need it.

There are several types of water heaters you can choose from:

  • storage tank style
  • high-efficiency tank style
  • tankless 
  • combo systems
  • indirect

Storage tank

These are the most commonly used water heaters. They hold 76 to 380 litres (20 to 100 gallons) of hot water – enough for most homes. Today's energy-efficient models feature extra insulation, which reduces heat loss through the tank walls.

How they work

Storage tank water heaters heat water in an insulated cylinders that range in size from 114 to 283 litres (30 to 75 gallons) of water – the average Canadian home uses 227 to 277 litres (60 to 73 gallons) of hot water per day.

A typical tank is steel lined with glass. Some high-end models are lined with stainless steel, and are a good choice if you have acidic water or high mineral content.

Suspended in the tank are anodes - magnesium or aluminum rods formed around a steel core wire to prevent corrosion. The specific materials used, and the number of anodes, often affects the warranty. For more information, see our buying tips section.


  • instant hot water
  • high water pressure lasts longer (depending on tank capacity)
  • life expectancy of 10 to 12 years
  • run multiple appliances concurrently: shower, do laundry and run the dishwasher all at the same time

Note – It is possible to run out of hot water, as tanks have a set storage capacity.

Standard efficiency

Gas-fired home water heaters typically consist of a steel cylinder storage tank. They also have 2.5 to 5 cm (1 to 2 inches) of insulation placed between the tank lining and the outer jacket, a cold water supply and a hot water outlet, a draft hood, and a flue. The gas burner is in a combustion chamber at the bottom of the tank, where a pilot light ignites the main burner. Air for combustion comes in through vents at the bottom of the chamber.

A thermostat and valve unit controls the temperature of the water in the tank and the gas flow. The flue passes vertically through the centre of the tank cylinder to the outside. Its main job is to conduct the combustion products to the vent system.

High efficiency

High-efficiency water heaters are up to 40 per cent more efficient than standard efficiency models. These water heaters often have better insulation, heat exchangers and heat traps to reduce heat losses.  They also have features such as electronic ignition, which means you don't need a continuous pilot light.

There are two types of high-efficiency natural gas water heaters:

  • Direct-vent, or "sealed combustion," water heaters intake and exhaust from outside the home, rather than inside the room. Exhaust gases are vented to the outside, with the aid of a blower. Efficiency is improved by reducing off-cycle losses. These models are also some of the safest because backdraft (though rare and preventable in other models) is impossible.
  • High-efficiency condensing heaters collect condensation to reduce heat loss. Though the extra anti-corrosion materials needed for this system add cost, the high efficiency more than makes up for it.

Tankless water heaters

On demand, or tankless, water heaters "fire" only when you need it rather than storing it at constant heat. They can be your home's only source of water heat, or you can add them to your traditional heating system.


  • limited flow reduces fuel consumption up to 30 per cent, depending on BTU input and AFUE of equipment
  • no floor space required – great for compact spaces
  • energy is saved, as water is not kept constantly heated
  • unlimited capacity straight from groundwater

Considerations for tankless heaters

  • Compact size means you might not be able to run more than one hot water device at a time, such as dishwasher, shower, washing machine, etc.
  • Groundwater in colder climates can take longer to heat and flow lighter.
  • Water may take a few minutes to heat and flow.
  • When retrofitting with an tankless system, extra costs may be necessary for increasing the size of incoming gas pipes and modifying the exhaust system to work with the on-demand equipment.

Note: Although the flow may be limited, smaller tankless heaters can be added to single appliances so you can run many at once.

Combo systems

Combo or integrated heating systems provide domestic hot water and most types of space heating all from a single hot water tank.

Indirect water heaters

This system uses a boiler to heat both your water and living space. While more expensive than average storage tank heaters, they have higher capacity and improved efficiency. They also have an extended lifespan because they are made of stainless steel.

The large capacity is great for large homes and hot tubs, but also for condos as it reduces the number of appliances and saves space.

For more about choosing a water heater, including size, features and venting, see our buying tips section.

Related links


 Safety counts


​Read our advice on safe operation and maintenance of your natural gas appliances.

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 ENERGY STAR® Water Heater Program


Get a rebate up to $1,000 for installing a new ENERGY STAR water heater.

Learn more