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

November 18, 2021

Water heater with a paper heart attached.

Updated September 1, 2023

If your current water heater is a standard storage tank model and it’s 10+ years old, it could fail at any time—and there’s no fixing a leaky storage tank water heater. You don’t want to make a rash decision on this major purchase, so we recommend being proactive and doing some research ASAP. To help you decide which water heater is the best for your household needs, we’re giving you the lowdown on all the options available.

Limited time rebates available on water heaters

If you’re in the market for a new water heater right now, you’re in luck: we’ve got rebates up to $1,000 on eligible gas models, but only until December 31, 2023. To qualify, you must have your new water heater installed by a Technical Safety BC licensed contractor.

Don’t miss this opportunity to save! Learn more about our limited-time gas water heater rebates.

Family standing over the sink washing dishes.

The perfect water heater for your needs

When choosing the right water heater for your home, 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: newer gas water heaters have come a long way in terms of efficiency (meaning lower greenhouse gas emissions), and if you’re connected to the gas system, you can sign up for low-carbon Renewable Natural Gas to reduce your emissions further.1,2
  • 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 space is a concern, a tankless model 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 gas models may need to be vented through a side wall which can add to installation costs.
  • Gas piping: if you’re 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. A high demand for gas for short periods may require piping with more capacity (although tankless models generally use less energy than storage tanks).

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.

Gas water heaters

TypeEfficiencyAverage lifespanAnnual water heating costs3 ProsConsRebate4

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

$200 Only available until December 31, 2023

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

$1,000 Only available until December 31, 2023

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

$1,000 Only available until December 31, 2023

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)
Only available until December 31, 2023

Electric water heaters

TypeEfficiencyAverage lifespanAnnual water heating costs3 ProsConsRebate4

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 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.

1Renewable Natural Gas is produced in a different manner than conventional natural gas. It is derived from biogas, which is produced from decomposing organic waste from landfills, agricultural waste and wastewater from treatment facilities. The biogas is captured and cleaned to create Renewable Natural Gas (also called biomethane).

2FortisBC uses the term renewable and low-carbon gas to refer collectively to the low-carbon gases or fuels that the utility can acquire under the Greenhouse Gas Reduction (Clean Energy) Regulation, which are: Renewable Natural Gas (RNG or biomethane), hydrogen, synthesis gas (from wood waste) and lignin. FortisBC’s renewable and low-carbon portfolio currently includes only Renewable Natural Gas. Other gases and fuels may be added to the program over time. Depending on their source, all of these gases have differing levels of lifecycle carbon intensity. However, all of these gases are low-carbon when compared to the lifecycle carbon intensity of conventional natural gas. The current burner tip carbon intensity of RNG is 0.29gCO2e/MJ and the current RNG portfolio lifecycle emissions are -22gCO2e/MJ. This is below B.C.’s carbon intensity threshold for low-carbon gases of 36.4 gCO2e/MJ set out in the 2021 B.C. Hydrogen Strategy.

3Approximate 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.

4Conditions apply. Rebates available until December 31, 2023. 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.

5Only for FortisBC electricity customers including Grand Forks, Penticton, Summerland or Nelson Hydro.