Tank vs. Tankless Cost Comparison Calculator
Compare the total cost of ownership between a traditional tank water heater and a tankless (on-demand) water heater, including purchase, installation, operating, and maintenance costs over your chosen time horizon.
Tank Water Heater
Tankless Water Heater
Shared Inputs
Formulas Used
Annual Hot Water Energy Needed (BTU/yr):
BTUneeded = Gallons/day × 365 × 8.34 lb/gal × ΔT°F
where ΔT = 70°F (groundwater 50°F → delivery 120°F)
Annual Energy Input Required:
BTUinput = BTUneeded ÷ UEF
Annual Energy Cost:
Gas: Cost = (BTUinput ÷ 100,000 BTU/therm) × $/therm
Electric: Cost = (BTUinput ÷ 3,412 BTU/kWh) × $/kWh
Propane: Cost = (BTUinput ÷ 91,500 BTU/gal) × $/gal
Net Present Value of Annual Costs:
NPV = AnnualCost × [1 − (1 + r)−N] ÷ r
Replacement Cost NPV:
NPVrepl = Σ (Purchase + Install) ÷ (1 + r)t, for t = lifespan, 2×lifespan, … < N
Residual Value NPV (credit):
Residual = (Purchase + Install) × (RemainingLife ÷ Lifespan) ÷ (1 + r)N
Total NPV Cost of Ownership:
Total = Initial + NPVrepl + NPVenergy + NPVmaint − NPVresidual
Simple Payback:
Payback = (Tankless Initial − Tank Initial) ÷ Annual Savings (energy + maintenance)
Assumptions & References
- Hot water delivery temperature assumed at 120°F; groundwater temperature assumed at 50°F (ΔT = 70°F). Adjust for your climate.
- Average U.S. household uses ~64 gallons/day (U.S. DOE / ENERGY STAR baseline).
- UEF (Uniform Energy Factor) is the DOE standard efficiency metric for water heaters (replaces EF as of 2017).
- Typical tank water heater lifespan: 8–12 years; tankless: 15–20 years (DOE, NAHB).
- Natural gas: 100,000 BTU/therm; Propane: 91,500 BTU/gallon; Electricity: 3,412 BTU/kWh.
- Residual value calculated via straight-line depreciation of the most recently installed unit.
- Discount rate represents the opportunity cost of capital or expected inflation rate.
- Does not include tax credits (e.g., 30% federal tax credit for qualifying heat pump water heaters under IRA 2022).
- References: U.S. DOE Energy Efficiency & Renewable Energy (energy.gov), ENERGY STAR, ASHRAE.