a grey tank water heater in the middle with wiring and plumbing going to it

Water heaters last, on average, between eight and ten years.

Most manufacturers recommend replacing the unit at ten years, though the need could arise before or after this timeline.

If you’re considering replacing your water heater, know that multiple options are available.

There are five primary types of hot water heating systems, including conventional, tankless, heat pump, solar, and condensing. To achieve the lowest energy bills, the U.S. Department of Energy recommends heat pump or solar water heaters. Despite their high initial cost, they save in the long term.

In this article, we’ll look at the five primary types of water heaters, their energy efficiency, recommended capacities based on household size, and their pros and cons.

Read on to learn more.

1. Conventional Hot Water Heater

a grey tank water heater in the middle with wiring and plumbing going to it
The amount of energy used by a conventional hot water heater is important to bear in mind when considering the alternatives.

Most of us are familiar with conventional hot water heaters, as they come as standard in most modern homes.

These are the large, standard water storage tanks that heat water with gas or electricity.

The heated water sits within the tank, keeping it hot until you’re ready to use it.

Due to the capacity of these tanks, they usually hold enough hot water to carry out the majority of your daily household tasks (i.e., laundry, showering, handwashing, etc.).

Energy Efficiency

ENERGY STAR-rated gas-powered conventional hot water heaters may achieve energy efficiency ratings between .67 to .70.

Electric resistance storage water heaters have efficiencies as high as .95, though they have high operating costs.

Conventional water heaters do not have high energy efficiency ratings compared to other types of water heaters. Because these tanks hold the hot water until you’re ready to use it, it loses heat to the surrounding environment over time, causing significant energy loss.

You can, however, remedy the issue by opting for a heavily insulated water heater with thermal resistance values of R-24 or greater.

For more information about which heaters are ENERGY STAR-rated, check out our article on the topic here.

What Size Conventional Hot Water Heater Do I Need?

When shopping for a conventional hot water heater, consider your household size to determine the optimal tank capacity for your home.

Below is a table featuring a general guideline based on the number of people living at your residence.

Household SizeRecommended Water Tank Capacity (Gallons)
1-2 people26-36 gallons
2-4 people36-46 gallons
4-6 people46-56 gallons
6+ people56+ gallons (+10 per additional person)

Pros and Cons of Conventional Water Heaters


  • They have a low initial cost.
  • These units require less maintenance than other systems.
  • Most homes are already equipped for these units.
  • They deliver an ample supply of hot water.


  • Guests or multiple household tasks may reduce the available hot water.
  • Energy bills may be higher during the colder months.
  • They have a shorter lifespan than tankless heaters.
  • These units require a lot of space.

2. Tankless Hot Water Heaters

The Rinnai V53DeN pictured mounted on a brick home's exterior wall
Tankless hot water heaters are very efficient but might struggle to cope with extreme peaks in demand.

Tankless hot water heaters are innovative and efficient. These units avoid heat losses thanks to the heat-on-demand feature.

Water doesn’t sit in a storage tank, so there is less energy loss to the surrounding environment. Instead, water is heated as needed.

According to the United States Department of Energy, tankless water heaters are best for homes that use up to 41 gallons of water per day.

Energy Efficiency

Because tankless water heaters do not hold water in a storage tank, they can be up to 34 percent more efficient than standard hot water heaters.

Interestingly, electric tankless heaters are more efficient than their gas counterparts. However, gas-fired tankless water heaters tend to cost less to run and last longer than electric versions.

What Size Tankless Water Heater Do I Need?

There are several factors to consider before choosing a tankless water heater. You’ll need to know:

  • The inflow water temperature.
  • The hot water needs of your household.
  • The current capacity of the conventional water heater (if you are replacing it).

Below is a table showing a general estimate of the size of tankless water heater you’ll need based on household size only.

As mentioned above, there are other factors to consider, so use this table as a guide only, not as a definitive answer.

Household SizeGas Tankless (GPM)Electric Tankless (kW)
2-37-9 GPM15-23 kW
3-48-10 GPM20-28 kW
4-59-11 GPM25-34 kW
5-611+ GPM34+ kW

Pros and Cons


  • These units save more money on energy compared to conventional hot water heaters.
  • They provide an unlimited hot water supply.
  • Tankless water heaters take up less space.
  • There is a low risk of leaks.


  • There is a high initial cost for the unit and installation.
  • When using multiple hot water sources at once, the temperature may be inconsistent.
  • You’ll have no hot water during power outages.

3. Heat Pump (Hybrid) Hot Water Heaters

a picture of a heat pump grey water heater in the corner of a garage sitting on a grey garage floor
Heat pump hot water heaters make use of the sun’s energy that is stored in the ground. They are more efficient than conventional heaters because they move heat from the ground instead of generating heat directly.

Heat pump hot water heaters draw heat from the surrounding environment, transferring the hot air to heat water within a storage tank.

If your home is already equipped with a conventional hot water heater, you can easily retrofit a heat pump water heating system. Otherwise, you can purchase individual units with integrated tanks.

Energy Efficiency

These units require electricity to move heat from the surrounding air to heat the water in the storage tank.

Because they do not generate heat directly, you can expect to save up on energy costs. These units are up to three times more efficient than standard water heaters.

What Size Heat Pump Water Heater Do I Need?

You can get a basic idea of the size of heat pump water heater you’ll need by considering your household size and average water usage.

For example, in a two-person household, with each person using an average amount of water (roughly 10 to 20 gallons per day), then you could get away with a 50-gallon tank.

However, if your household uses more than 20 gallons per person per day and/or you have a larger family, you’ll need a tank with a higher capacity.

Below is a table outlining the recommended capacity of a water tank for a heat pump water heater based on family size.

However, this is considering average water usage. If your family uses an above-average amount of water per person, opt for the next size up.

Household SizeRecommended Heat Pump Water Tank Size (Gallons)
1-250 gallons
3-465 gallons
4+80 gallons

Pros and Cons


  • There are air-source heat pump systems that provide heating, cooling, & water heating.
  • ENERGY STAR models can save hundreds of dollars per year.
  • Heat pump water heaters can last 10-15 years with regular maintenance.
  • They’re much more efficient than tankless heating systems.


  • Heat pump water heaters aren’t as efficient in cold climates.
  • These units require at least 1,000 cubic feet (28 m3) of space surrounding the unit.
  • It takes a while to heat up the water.
  • There is a high upfront cost.

4. Solar Water Heaters

two black tube solar hot water collectors on a light grey metal roof
Solar water heating is very efficient, provided you have sufficient sunlight.

Solar water heating systems utilize a storage tank to hold the heated water and solar collectors. There are two types of solar water heaters, active and passive systems.

When opting for solar water heaters, you’ll need an insulated tank. You can get a single-tank system or a dual-tank system.

Dual tanks heat the water using solar energy before it enters the conventional tank. Single-tank systems use a backup heater along with solar storage in a single tank.

Active Solar Water Heating Systems

There are two types of active solar water heating systems, as follows.

  • Direct – Direct systems pump water directly into the home after heating with solar energy. These are utilized in warm climates only.
  • Indirect – Indirect systems use a heat exchanger to heat the water before it enters the home. These systems work best in cold climates.

Passive Solar Water Heating Systems

These systems have a lower upfront cost versus active heating systems but tend to have lower efficiency ratings.

With that said, passive solar water heating systems are more reliable, require less maintenance overall, and last longer.

  • Integrated Collector and Storage Systems – These systems combine the storage tank and collector into a single system, allowing the solar energy to heat the water directly. It is then pumped through the home’s plumbing system.
  • Thermosyphon Systems – These systems use a collector to heat water on the roof of a residence in conjunction with an auxiliary tank at ground level. When the hot faucets are activated, the water flows through the system. Thermosyphon systems usually have a maximum forty-gallon capacity, so they may not be ideal for larger households.

Energy Efficiency

Solar water heaters have come a long way in the past couple of decades. By installing one, you can expect to see up to an 80 percent reduction in water heating costs.

You’ll save even more money in the long run, considering that your energy bills are no longer impacted by fuel costs.

What Size Solar Water Heating System Do I Need?

Solar water heaters require a collector area and a tank. You’ll need approximately 1.5 gallons of capacity per square foot of collector space.

For tank capacity, opt for a tank that provides at least 20 gallons of hot water per person per day.

You’ll need to know the collector size to get an accurate estimate of what size you’ll need.

If you’re using a thermosyphon system, you’ll also need to know the size of your roof to determine the available collector space.

The table below shows the average water tank capacity based on household size alone, so use this only as a general guide.

Household SizeRecommended Water Tank Capacity (Gallons)
1-2 people40+ gallon capacity
3-4 people60-80+ gallon capacity
5-6 people100-120+ gallon capacity
7+ people140+ gallon capacity (+20 gallons per additional person)

Pros and Cons


  • These units lead to massive savings on energy bills.
  • Solar water heaters increase a home’s value.
  • You’ll reduce your home’s carbon footprint.
  • You can get tax credits for investing in solar energy.


  • Solar water heating systems have high maintenance costs.
  • You’ll experience less efficiency when it’s overcast.
  • There is a high initial cost.
  • You’ll need a minimum amount of roof space for the collectors.

5. Condensing

A condensing hot water heater mounted on the floor. The heater has a brushed-steel front and a small control panel set into it.
Condensing water heaters are more efficient than conventional non-condensing models because they conserve more energy by recovering heat from flue gases before they are discharged to the atmosphere.

Condensing hot water heating systems are fueled by gas and use condensing technology to increase their efficiency.

They preheat incoming water with dual heat exchangers, reducing energy loss, and causing flue gas to condense into a liquid.

In standard water heaters, the heat would otherwise be expelled through a venting system. Dual heat exchangers mean that the appliance can have efficiency at or above 83 percent.

Energy Efficiency

Thanks to how condensing systems conserve energy, you can expect to achieve higher efficiency than with a standard, non-condensing tankless, or conventional water heater.

What Size Condensing Water Heater Do I Need?

Consider your household size to determine the condensing tank size that you’ll need. You can get a general estimate of the recommended tank capacity using the table below.

Household SizeRecommended Water Tank Capacity (Gallons)
1-250-60 gallons
3-480 gallons
4-6100+ gallons

In addition to household size, you’ll also need to consider the maximum capacity of BTUs your heater can provide.

Pros and Cons


  • Condensing units retain more heat, reducing heat loss.
  • These units provide increased efficiency.


  • Acidic pH condensation can lead to corrosion of the unit.
  • There is a complicated setup process.
  • You’ll pay a higher upfront cost than basic tankless or conventional water heaters.
  • These are not viable options for homes not using natural gas.

Final Thoughts

Hot water heater technology is always improving, so if your system is over ten years old, the chances are that you can lower your running costs significantly whichever option you go for.

It’s worth considering all the available options to make sure you get the most efficient unit that serves your requirements.

Using a heat pump hot water heater, or a solar heater, can dramatically reduce your hot water bills, and is beneficial for the environment as well.

Whichever option you go for, ensure you have it fitted by a reputable firm who will be able to advise you on the right system for your household.

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