Water heating accounts for a substantial share of household energy use, second only to space heating in most homes. Which type you install determines what that costs for the next decade or more.
Four types dominate: storage tank, tankless, heat pump, and solar thermal. They differ enormously in how efficiently they turn energy into hot water, and that difference is larger than most buyers realise.
This guide compares them, explains what actually determines running cost, and covers how to size a system for a household.
How a Water Heater Works
The principle is straightforward. A heat source raises the temperature of water, which is then delivered through pipework to taps, showers, and appliances.
What differs between types is the heat source and whether water is stored or heated on demand.
One clarification worth making. A water heater does not boil water. Domestic systems typically store water at around 60 to 70°C, well below boiling point. Water actually boiling inside a pressurised vessel is a dangerous failure condition, and it is precisely what the temperature and pressure relief valve exists to prevent. If a thermostat fails and heating continues, temperature and pressure climb together until the relief valve opens.
The Four Types Compared
| Type | Energy conversion | Standby loss | Simultaneous demand | Upfront cost |
|---|---|---|---|---|
| Electric storage tank | 1:1 | Yes, continuous | Good until the tank empties | Lowest |
| Gas storage tank | Combustion, with flue losses | Yes, continuous | Good, faster recovery | Low |
| Tankless | Higher, no storage losses | None | Limited by flow rate | Moderate |
| Heat pump | 3 to 4:1 | Yes, cylinder losses | Good with correct cylinder | Highest |
| Solar thermal | Free when producing | Yes, cylinder losses | Depends on backup | High |
The number that decides most of it. An electric immersion element converts electricity to heat at exactly one to one, and nothing improves on that because it is the physical limit of resistive heating. A heat pump water heater delivers three to four units of heat for the same electricity, because it moves heat that already exists in the air rather than generating it. Over the fifteen-year life of an installation, that ratio outweighs the difference in purchase price by a considerable margin.
Storage Tank Water Heaters
The most common type worldwide. Water is heated by an electric element or gas burner and held in an insulated tank until needed.
Advantages. Lowest upfront cost, simple to install, and capable of supplying several outlets at once until the stored volume is depleted. Gas models recover faster than electric.
The efficiency issue. A storage tank loses heat continuously through its walls, regardless of whether anyone uses hot water. Those standby losses continue every hour of every day, and they are the reason a tank system consumes energy even in a house nobody is home in.
Better insulation reduces this but cannot eliminate it. Tank capacity affects how much hot water is available, not how efficiently it was produced, so a larger tank means more storage and more standby loss rather than better efficiency.
Recovery rate matters as much as capacity. Once the stored volume is used, the heater must reheat, and how quickly determines whether a second shower is possible. Gas models generally recover faster than electric.
Tankless Water Heaters
Also called instantaneous or on-demand heaters. Water passes through a heat exchanger and is heated as it flows, with no storage.
Advantages. No standby losses, since nothing is kept hot. Compact, freeing the space a cylinder would occupy. And hot water supply is theoretically unlimited in duration, since there is no stored volume to exhaust.
The constraint. Output is limited by flow rate rather than by volume. A tankless unit can raise the temperature of a certain number of litres per minute by a certain amount. Exceed that flow, by running two showers simultaneously, and the temperature rise drops accordingly.
This is why tankless units are sized by flow rate and required temperature rise rather than by capacity, and why incoming water temperature matters: raising water from 5°C in winter demands considerably more than raising it from 15°C.
Our guide to tankless water heater technology covers this type in detail.
Heat Pump Water Heaters
The most efficient option available, and the reason deserves explaining because the figures look implausible at first.
A heat pump water heater does not generate heat. It extracts heat from the surrounding air using a refrigeration cycle and transfers it into water. Because it moves existing energy rather than creating it, it delivers three to four units of heat for every unit of electricity consumed.
That is not a marginal improvement over an electric element. It is a difference of three to four times, every year, for the life of the system.
How it fits into a heating system
Two arrangements exist.
A dedicated heat pump water heater is a self-contained unit combining a heat pump with a storage cylinder, serving hot water only.
An air-to-water heat pump supplying both space heating and domestic hot water is the more common arrangement in European installations. One unit covers underfloor heating or radiators in winter and hot water year-round, paired with a cylinder.
Legom air-to-water heat pumps deliver hot water across the range:
| Unit | DHW capacity | Water yield | COP |
|---|---|---|---|
| 5 kW | 6 kW | 129 L/h | 4.4 |
| 6 kW | 8 kW | 172 L/h | 4.3 |
| 9 kW | 10 kW | 215 L/h | 4.32 |
| 16 kW | 18 kW | 387 L/h | 4.35 |
A COP above 4 means each unit of electricity produces more than four units of heat into the water, against exactly one for an immersion element.
The considerations
Higher upfront cost than a conventional heater, recovered through running cost over the system’s life.
Hot water needs higher temperature than space heating, typically 50 to 60°C for storage against 35 to 45°C for underfloor heating. The unit therefore runs at lower efficiency during hot water production than during space heating. This is normal rather than a fault.
A cylinder is required. If you currently have a combi boiler producing hot water on demand, there is no cylinder in the property and space must be found for one. This occasionally decides feasibility in a small flat.
Solar Thermal Water Heating
Solar collectors heat water directly using sunlight, storing it in a cylinder for later use. Where sunshine is available, the energy is free.
The considerations are output variability and safety. Output depends on the weather rather than on demand, so a backup heat source is required for cloudy periods and winter.
And collectors can drive storage temperatures far above what any thermostatically controlled heater produces, unpredictably. This makes temperature control at the outlet essential rather than optional. Solar installations typically require a thermostatic mixing valve rated for high inlet temperatures, and often an independent scald protection device as well.
See our guide to the solar water heater mixing valve.
Choosing a Type
Four questions settle most decisions.
1. What energy is available?
A gas connection makes gas storage or tankless viable. Its absence, or a policy direction away from gas, points toward electric options, and among those a heat pump is substantially more efficient than resistive heating.
2. How long will you hold the property?
Heat pump water heating costs more upfront and considerably less to run. Over fifteen years the arithmetic strongly favours it. Over three years it may not, and a household planning to move soon may reasonably weight purchase price higher.
3. What is your simultaneous demand?
Two showers at once is the usual test. Storage systems handle it until the tank empties, so capacity and recovery rate matter. Tankless systems are limited by flow rate, so the unit must be sized for peak simultaneous draw rather than daily volume.
4. What space is available?
Tankless units are compact. Storage and heat pump systems need cylinder space. In a small flat this can decide the matter regardless of the efficiency comparison.
Sizing a System
Undersizing produces cold showers; oversizing wastes money and, in storage systems, increases standby losses.
For storage systems, size by peak demand rather than daily total. A household where several people shower within an hour needs enough stored volume for that period, plus a recovery rate that restores it before the next demand.
For tankless systems, size by flow rate and temperature rise. Establish the peak simultaneous flow in litres per minute, then the temperature rise required from incoming cold to delivery temperature, and select a unit rated for both together.
For heat pump systems, both the unit’s hot water capacity and the cylinder volume matter, since the cylinder stores what the unit produces. The figures in the table above show capacity ranging from 129 to 387 litres per hour across the Legom range.
Incoming water temperature affects all of them and varies seasonally. A system sized on summer conditions may underperform in winter, when incoming water is considerably colder and the required temperature rise correspondingly greater.
Safety Components Every System Needs
Whatever the type, several components are not optional.
Temperature and pressure relief valve. Opens if temperature or pressure inside the vessel reaches a dangerous level, preventing rupture. Test it annually, and never cap the discharge pipe to stop a drip. See our guide to the temperature and pressure relief valve.
Thermostatic mixing valve. This resolves a genuine conflict in system design. Legionella bacteria multiply in stored water roughly between 20°C and 45°C, so the cylinder should be held above 60°C. But water at that temperature scalds within seconds. The mixing valve allows the tank to stay hot while the outlet delivers 43 to 48°C. Store hot, deliver safe.
Expansion vessel. Required where a non-return or pressure limiting valve makes the system closed. Without one, thermal expansion has nowhere to go and pressure rises until the relief valve discharges on every heating cycle, wearing it out prematurely.
Anode rod in storage systems, a sacrificial component that corrodes preferentially so the tank does not. Once depleted the tank begins corroding, and a corroded tank cannot be repaired.
A Short History
Water heating is old. The Romans used the hypocaust to heat public baths and private houses, with fire heating water in cauldrons and pipework distributing it, a principle recognisable in modern systems.
In the late 19th century, Edwin Ruud, a Norwegian mechanical engineer, invented the first automatic storage tank gas water heater, which laid the groundwork for the domestic systems that followed and made hot water widely accessible.
What has changed since is not the principle but the efficiency with which energy is converted. The heat pump water heater represents the most significant shift, because it is the first approach that stopped generating heat and started moving it, breaking through the one to one limit that constrained every earlier design.
“The comparison people should make is the conversion ratio, and it rarely appears in a showroom conversation. An immersion element gives you one unit of heat for one unit of electricity, and no product improvement changes that, because it is the physical limit. A heat pump gives you four. Everything else in the comparison, the tank size, the recovery rate, the brand, matters less than that number over fifteen years. The reasonable objection is upfront cost, and that is fair. But it should be weighed against the running cost rather than treated as the whole decision.”
— Maggie Shen, Director of Legom
Components from Legom
Legom manufactures air-to-water heat pumps from 5 kW to 16 kW, delivering domestic hot water at 129 to 387 litres per hour with COP figures above 4, alongside the safety and control valves that hot water systems require.
The HVAC valve range covers temperature and pressure relief valves, thermostatic mixing valves, scald protection valves, and pressure limiting valves, all produced at our facility in Jiaxing, Zhejiang Province and supplied to partners in more than 90 countries.
Because we also produce the wax thermostatic elements inside these valves, switching characteristics are specified at the source, with every element tested and rated for 100,000 operating cycles. OEM and ODM services are available across the range.
Frequently Asked Questions
What are the main types of water heater?
Four. Storage tank heaters hold heated water in an insulated cylinder, using an electric element or gas burner. Tankless heaters warm water as it flows, with no storage. Heat pump water heaters extract heat from surrounding air and transfer it into water, delivering three to four units of heat per unit of electricity. Solar thermal systems heat water directly using sunlight, requiring a backup for cloudy periods. They differ enormously in running cost.
Which type of water heater is most efficient?
Heat pump water heaters, by a wide margin. They deliver three to four units of heat per unit of electricity because they move existing heat rather than generating it, while an electric immersion element is limited to exactly one to one. Tankless systems avoid the standby losses of storage tanks, which makes them more efficient than storage systems using the same fuel, but they do not approach the multiplication a heat pump achieves.
Does a bigger tank mean better efficiency?
No, and this is a common misunderstanding. Tank capacity determines how much hot water is available before the heater must reheat, not how efficiently it was produced. A larger tank actually loses more heat through standby losses, since there is more surface area kept hot continuously. Size the tank to your peak demand rather than assuming larger is better, and consider recovery rate alongside capacity, since that determines how quickly hot water is restored.
Do water heaters boil water?
No. Domestic systems typically store water at around 60 to 70°C, well below boiling point. Water actually boiling inside a pressurised vessel is a dangerous failure condition, and preventing it is exactly what the temperature and pressure relief valve exists for. If a thermostat fails and heating continues, temperature and pressure climb together until the relief valve opens to release them before the vessel can rupture.
Can a heat pump supply my hot water?
Yes, either as a dedicated heat pump water heater or as part of an air-to-water heat pump serving space heating as well. The latter is the more common European arrangement: one unit covers heating in winter and hot water year-round, paired with a cylinder. Note that hot water requires higher temperatures than space heating, typically 50 to 60°C against 35 to 45°C, so efficiency during hot water production is lower than during space heating.
How do I size a tankless water heater?
By flow rate and temperature rise together, not by capacity, since there is no storage. Establish the peak simultaneous flow your household needs in litres per minute, then the temperature rise required from incoming cold water to delivery temperature. A unit must handle both at once. Incoming water temperature matters and varies seasonally, so a system sized on summer conditions may underperform in winter when the required temperature rise is greater.
What safety components does a water heater need?
A temperature and pressure relief valve is essential, opening if either reaches a dangerous level to prevent the vessel rupturing. A thermostatic mixing valve resolves the conflict between storing water above 60°C to suppress Legionella and delivering it at a safe 43 to 48°C. An expansion vessel is needed in closed systems, otherwise thermal expansion forces the relief valve to discharge on every heating cycle. Storage systems also have a sacrificial anode rod protecting the tank from corrosion.
Is a tankless water heater better than a tank?
It depends on your demand pattern. Tankless avoids standby losses entirely and supplies hot water indefinitely, but output is limited by flow rate, so two showers at once may reduce the temperature. A storage tank handles simultaneous demand well until the volume is exhausted, then depends on recovery rate. Neither approaches a heat pump on efficiency. Choose tankless where space is limited and simultaneous demand is modest, storage where several outlets are used at once.
Reviewed by Maggie Shen, Director at Legom, on September 30, 2026. This guide to water heater types was reviewed for technical accuracy, including storage temperature ranges, the relationship between tank capacity and efficiency, and verified heat pump domestic hot water performance figures.