When your water heater needs to be replaced, you have two main choices: a storage tank model or a tankless (on-demand) model. Both can serve a Minnesota home well. The right choice depends on how much hot water your household uses at once, what your utility setup looks like, and how long you plan to stay in the house.
How each type works
A storage tank water heater keeps a set volume of water hot at all times. A gas burner or electric elements reheat the water as you use it and as it cools.
A tankless water heater has no storage tank. When you open a hot water tap, cold water flows through a heat exchanger and a gas burner or electric element heats it on the spot. When you close the tap, the unit shuts off.
Because a tank holds hot water around the clock, it loses some heat to the room even when no one is using water. The U.S. Department of Energy calls these standby heat losses and notes that only tankless models avoid them entirely. You can read more in the Department of Energy guide to storage water heaters.
Efficiency: what the numbers say
The Department of Energy reports these figures for tankless units compared with conventional storage tanks:
- Homes that use about 41 gallons of hot water a day or less: tankless units can be 24% to 34% more energy efficient.
- Homes that use a lot of hot water (about 86 gallons a day): tankless units can be 8% to 14% more energy efficient.
The gap shrinks as hot water use goes up. A gas tankless unit with a standing pilot light can also waste some of the energy it saves. DOE recommends choosing a model with an intermittent ignition device instead. Source: Department of Energy guide to tankless water heaters.
Hot water supply: volume vs. flow rate
The two types run out of hot water in different ways.
- Tank: You get a fixed amount of hot water. Once the stored water is used, you wait while the tank reheats. Back-to-back showers in the morning are the common problem.
- Tankless: You never run out, but the unit can only heat so many gallons per minute. DOE says tankless units typically deliver 2 to 5 gallons per minute, with gas models generally providing higher flow rates than electric models. Run a shower, the dishwasher and the washing machine at the same time, and a small unit may not keep up.
Minnesota adds one more factor. A tankless unit has to raise the temperature of the incoming water to your set point in a single pass. The colder the water entering your home, the harder the unit works and the lower its usable flow rate. A tankless unit should be sized for the coldest incoming water your home sees, not an average day.
Lifespan and maintenance
According to DOE, most tankless water heaters have a life expectancy of more than 20 years, while storage water heaters last 10 to 15 years. Both types need maintenance to reach those numbers:
- Tanks need periodic flushing to remove sediment and an anode rod check every few years.
- Tankless units need their heat exchanger descaled, especially with hard water, and inlet screens cleaned.
Skipping maintenance shortens the life of either type.
Installation and cost factors
The price of the unit itself is only part of the decision. These factors affect what a replacement will involve in your home:
- Gas supply: A gas tankless unit uses a lot of gas while it runs. Your existing gas line may need to be upsized to supply it.
- Venting: Many tank water heaters vent into a chimney or shared flue. Gas tankless units often need their own dedicated vent, which may mean new piping through a wall or roof.
- Electrical service: Whole-house electric tankless units draw high current. Some homes do not have the panel capacity for them.
- Water quality: Hard water speeds up scale buildup in tankless heat exchangers. A water softener or regular descaling may be needed.
- Space: A tankless unit mounts on a wall and frees up floor space in the basement or utility room.
A note on tax credits: the federal Energy Efficient Home Improvement Credit (Section 25C) no longer applies to equipment placed in service after December 31, 2025, according to the IRS FAQ on changes to energy tax credits. Check with your gas or electric utility for any current rebates before you buy.
Which type fits your household?
A tank water heater often makes sense if:
- Your household runs several hot water fixtures at the same time.
- You want to reuse your existing venting, gas line and electrical service.
- You want the simplest replacement with the least change to your home.
A tankless water heater often makes sense if:
- Your household uses a moderate amount of hot water and rarely runs many fixtures at once.
- You plan to stay in the home long enough to benefit from the longer service life.
- You need floor space, or you want an endless supply for long showers or a large tub.
When to call a professional
Book an assessment before you buy if your current water heater is near the end of its life, if you are considering a switch from tank to tankless, or if you are unsure whether your gas line, venting or electrical panel can support a new unit. A technician can measure your incoming water temperature, review your household's peak hot water use and check your gas and venting so the unit you choose fits your home. Learn more about water heater installation and replacement at Krinkie's.
Common questions
Is a tankless water heater more efficient than a tank?
Usually, yes. The U.S. Department of Energy reports tankless units can be 24% to 34% more efficient for homes using about 41 gallons of hot water a day or less, and 8% to 14% more efficient for homes using about 86 gallons a day.
Can a tankless water heater keep up in a Minnesota winter?
It can if it is sized correctly. Colder incoming water lowers a tankless unit's usable flow rate, so it should be sized for the coldest water your home receives and the number of fixtures you run at once.
Can I switch from a tank to a tankless water heater?
In most homes, yes, but the switch may require a larger gas line, new venting or added electrical capacity. A technician should check these before you choose a unit.