Function

• The tank type will store a certain amount of hot water and constantly consume energy, while the tankless will heat water only when needed. However, newer tank heaters are more energy efficient due to their higher levels of insulation and one-way tank valves connecting directly to the tank, which reduces standby heat loss.
  
  

Features

• If space is limited, the tankless hot water heater can be wall mounted or stored in a closet, unlike a tank. Additionally, the tankless will provide an endless supply of hot water and reduce energy consumption by 10 to 15 percent. However, the flow rate of hot water (gallons of water per minute) may be limited, according to the American Council for an Energy-Efficient Economy. .
  
  

Costs

• If you want a low upfront cost, the tank heater may be a more affordable option. But over the long run you will save more with the tankless option. For example, a tank heater can costs $1,000 to $1600, while the gas or LP tankless can costs $800 to $2,000. However, the tank type may need to be replaced every five years, while the tankless may not have to be replaced for 20 to 30 years.