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A storage-type water heater uses a tank to hold your hot water until you need it at a faucet or other location in the building.  The hot water is piped from the top of the tank and is replaced with cold water, which enters at the bottom. Because the cold water is heavier, it generally stays in the bottom of the tank until it warms enough to rise up to where the pipes carry it.  If properly sized and operating well, this system can supply all of the building’s hot water needs.

Because water in the storage tank is maintained at a constant temperature, energy can be wasted even when a hot water tap isn't running.  This is called “standby heat loss.” Newer storage water heater models have heavily insulated tanks, which can significantly reduce standby heat losses.  If your tank is warm to the touch, you should consider analyzing whether adding additional insulation to the outside of it is appropriate.

Storage hot water systems can be direct-fired or indirect-fired.  A direct-fired system has the heat source directly attached to the tank.  An indirect-fired system uses the main boiler to heat a fluid that's circulated through a heat exchanger in the storage tank.  The energy stored by the water tank allows the boiler to turn off once the storage tank is hot, which can save energy.  An indirect water heater, if used with a high-efficiency boiler and well-insulated tank, can be an efficient means of providing hot water, particularly if the boiler is set to "cold start."

To properly size a storage water heater, it helps to use the water heater's “first hour” rating.  This is the number of gallons of hot water the heater can supply per hour, starting with a tank full of hot water. It depends on the tank capacity, source of heat (burner or element), and the size of the burner or element.  The EnergyGuide label lists the first hour rating.  When shopping, you may want to look for water heater models with a first hour rating that matches within 1 or 2 gallons of your peak hour demand.

Some Benefits

  • Typically, a lower upfront cost than other water heating technologies

  • Can use multiple fuel types

  • ENERGY STAR® rated available (except electric resistance)

  • Some systems may be eligible for tax credits and other incentives

  • Combustion-free units may not require exhaust vents or chimneys

  • If sized correctly, can supply enough hot water to meet typical routines

Some Considerations

  • 10-year costs vary widely (installation plus operating and fuel), so be sure to estimate and compare costs

  • Warranties vary

  • Tanks should be insulated properly to avoid standby heat loss

  • Indirect systems require a boiler

Learn More

Visit the pages below to learn more about different types of Hot Water systems: