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Tank or tankless? How to find your perfect match in a water heater

November 18, 2021

Water heater with a paper heart attached.

When I was a little kid, my father would indulge in a hot bath almost every evening. But the hot water would always run out before he could fill the tub up deep enough. Undeterred, he’d head to the kitchen, fill up a big soup pot with water, and heat it up on the stove so he could use it to warm up the tub water. The rest of us would have to settle for tepid showers. Clearly, our water heater was not adequate for a household of six people!

Nowadays there are lots of options for water heaters—from a good ol’ storage tank with a standing pilot light, typically found in most Canadian homes—to the latest innovation in high-efficiency technology that’ll ensure you never run out. And unless you rent, or live in a condominium with central hot water you pay for through your strata fees, at some point within the next 10 to 20 years you’re going to need to replace your water heater. But with so many options out there, how do you find the perfect match for your household?

Family standing over the sink washing dishes.

Find your perfect match

Do you prefer bubble baths by candlelight? Or maybe you’ve got a houseful of teenagers who each spend 20 minutes a day in the shower. However you use hot water in your home, trust me you won’t be able to go without it—unless cold showers in winter are your kind of thing. If your current water heater is a standard storage tank model and it’s a decade or more old, it could fail at any time. And there’s no fixing a leaky storage tank water heater. So why not avoid having to make a rash decision and plan ahead? To help you decide what type of water heater is right for your household consider the following:

  • Efficiency and energy costs: a standard gas or electric storage tank is the cheapest type of water heater to purchase and install, but your ongoing water heating costs will be higher than with a high-efficiency model. Alternatively, you could spend more money upfront on a high-efficiency water heater and have lower water heating costs.
  • Electric versus gas: do you want your new water heater to run on the same energy source as your current one does?
  • Emissions: with the climate emergency, you might think going electric is the best option. But natural gas water heaters have come a long way in terms of efficiency, (meaning lower greenhouse gas [GHG] emissions) and if you sign up for Renewable Natural Gas, your gas water heater could be carbon neutral!
  • The number of people and bathrooms in the home: this will help determine what size and heating capacity you need in a water heater.
  • Space: if a tankless model would free up some much needed extra space it might be a good option.
  • Venting: if the existing water heater runs on propane or natural gas it will be vented either through the chimney or a vertical vent, but some high-efficiency natural gas models may need to be vented through a side wall which can add to installation costs.
  • Gas piping: if considering a tankless model, and you’re in an older home, you may need to have your gas contractor inspect your existing gas piping from the meter into your home, as a high demand for gas for short periods may require piping with more capacity.

Water heater types

The table below provides a snapshot of the options available. A licensed gas or electrical contractor can also help you choose the perfect match for your home and lifestyle. Note: the water heating costs stated below are average costs based on a four-person home.


Type Efficiency Average lifespan Annual water heating costs1 Pros Cons Rebate2
Natural gas water heaters

Standard storage tank

Note: water heaters manufactured after January 1, 2018 require a minimum Uniform Energy factor (UEF) of 0.67


0.51 to 0.66 UEF

10-12 years

$312 to $404

  • cheaper to purchase and install than more efficient gas water heaters
  • has a standing pilot light and doesn’t require electricity
  • will always have hot water during a power outage
  • would cost more than an electric type to install
  • life expectancy not as long as a tankless water heater
  • higher energy costs than more efficient models
  • may be difficult to find as no longer being manufactured

Not applicable

ENERGY STAR® storage tank


0.67 to 0.82 UEF

10-13 years

$251 to $307

  • a little more efficient and lower GHG emissions than a standard gas storage tank
  • quick recovery means less chance of running out of hot water
  • costs about $300 more than standard natural gas storage tank
  • life expectancy (10-13 years) not as long as higher-efficiency models
  • requires electricity for electronic ignition of pilot light so won’t heat water during a power outage


Condensing storage tank

Even better

0.8 to 0.89 UEF

12-15 years

$212 to $289

  • has benefits of a storage tank with much higher efficiency
  • good for large households as it can handle multiple, simultaneous demands for hot water
  • quick recovery so there’s little chance of running out of hot water
  • requires electricity for electronic ignition of pilot light so won’t heat water during a power outage
  • requires a drain for condensation which adds to installation costs


Non-condensing natural gas tankless

Even better

0.82 to 0.88 UEF

20 years

$234 to $240

  • only heats the water when you need it
  • saves valuable space as it can be hung on a wall
  • more efficient and lower GHG emissions than a standard or ENERGY STAR gas storage tank
  • may last up to 20 years
  • water heating costs would be lower than with standard electric or natural gas tank
  • never run out of hot water
  • doesn’t need a condensation drain
  • costs about $1,000 more than a standard storage tank
  • have to wait for the hot water a few more seconds than with a storage tank
  • most models won’t work during a power outage

Not applicable

Condensing natural gas tankless


0.89 to 0.97 UEF

20 years

$212 to $231

In addition to non-condensing tankless pros:

  • even more efficient and lower GHG emissions than a non-condensing tankless

In addition to non-condensing tankless cons:

  • requires access to a drain for condensation which adds to installation costs
  • costs about $1,000 more than a non-condensing tankless


Combination heating and hot water system


0.92 to 0.97 UEF

18-20 years

$212 to $224 (for water heating costs only)

  • a great option if also wanting to replace a space heating system
  • as the system is tankless it takes up less space than a furnace and water heater
  • requires a drain for condensation which adds to installation costs

up to $1,500

($1,200 rebate plus $300 bonus)

Electric water heaters

Standard storage tank


0.86 to 0.9 EF

10-12 years

$568 to $614

  • cheapest option with lowest installed cost
  • most expensive in terms of annual water heating costs—more than twice as much as high-efficiency natural gas
  • uses valuable space on electrical panel
  • won’t heat water during a power outage

Not available

Heat pump water heater


2.3 to 3 UEF

13 years

$176 to $230

  • the most efficient option for heating water with electricity
  • must be installed in a heated area in the home as it uses surrounding air for heat
  • taller than a standard model so may not fit in areas with low ceilings
  • installed cost could be twice as much as a standard electric storage tank
  • won’t heat water during a power outage
  • doesn’t have as long a life expectancy as a tankless natural gas water heater
  • uses valuable space on electrical panel


What’s the UEF?

Water heater efficiency is measured by an Energy Factor (EF) or Uniform Energy Factor (UEF) ratio. The number means how much energy it can turn into useable heat. The higher the number the better. Most standard natural gas storage tank water heaters currently in homes today have a UEF of about 0.50 to 0.60. New ENERGY STAR storage tank models have a minimum UEF of 0.67. In comparison, condensing tankless models offer UEFs as high as 0.97.

We’ve got rebates

Once you’ve made a decision and had your new water heater installed, it’s time to apply for your FortisBC rebate2 (if applicable). To qualify, you must have your new water heater installed by a Technical Safety BC licensed contractor. Once installed, you have six months to submit your rebate application online.

1 Approximate annual water heating costs for a four occupant home based on October 2021 natural gas rate of $12.57 per gigajoule and a blended electricity rate of 12.85¢ per kWh, not including tax. Your costs may vary. Source: FortisBC home energy calculator.

2 Conditions apply. Rebate amounts listed are per appliance unless otherwise indicated. Terms and conditions are available on the respective program pages. FortisBC may modify or cancel programs at any time without notice.

3 Only for FortisBC electricity customers including Grand Forks, Penticton, Summerland or Nelson Hydro.