Water heaters provide hot water for cooking, cleaning, and bathing, and these devices work by using energy to heat cold water and store it until you need it.
A typical tank-style water heater uses gas or electricity to warm the water inside an insulated storage tank. When the hot water tap is turned on, the heated water is pushed out of the tank by incoming cold water. The heating element or burner then activates to warm the new water.
There are also tankless water heatersthat heat water on demand. These units only turn on when a hot water tap is opened, heating the water as it flows through the device. This can save energy by not keeping a large tank of water constantly hot.
In this article, we’ll break down how different water heaters operate, the components involved, and tips to keep your system efficient and safe.
Here’s what you need to know:
- What is a water heater and how does it work?
- How water heaters operate: tank vs. tankless and energy sources
- Choosing the right water heater for your home
- How to maintain your water heater and reduce energy use
- When to replace your water heater
- Water heater installation steps and key safety tips
Whether you’re a homeowner or simply curious, this guide will help you understand the full heating process, from ignition to the tap.
What is a water heater and how does it work?
Water heaters areessential appliances that provide hot water for our daily needs. They come in different types and use various mechanisms to heat water efficiently.
Types of water heaters and how they heat your water
There are several types of water heaters available:
- Electric water heaters use heating elements to warm the water.
- Gas water heaters burn natural gas or propane to heat water.
- Solar water heaters use the sun’s energy to heat water, which can save on energy costs.
- Heat pump water heaters move heat from the air to the water, making them very efficient.
Some water heaters use a storage tank, while others heat water as it flows through (tankless). Tankless water heaters are more compact and energy-efficient than traditional models. However, each type has its benefits and drawbacks.
Heat pump water heaters are among the most energy-efficient options available today. According to theU.S. Environmental Protection Agency, they can reduce electricity use by up to 60% compared to standard electric models
Essential components of a water heater system
The main parts of a water heater work together to heat and store water. The heating element or burner is the primary heat source, warming the water to the set temperature. A thermostat controls the temperature of the water. It turns the heating element on and off as needed.
In tank-style heaters, a dip tube brings cold water into the tank, and the hot water outlet pipe sends heated water to the taps. Many water heaters have safety features like pressure relief valves. These prevent too much pressure from building up inside the tank.
Understanding these parts can help you use your water heater more effectively and spot issues early.
How water heaters operate: tank vs. tankless and energy sources
Water heaters use different methods to heat and regulate water temperature. The process varies between tank and tankless models, as well as electric and gas types.
Water heating is no small part of your home’s energy bill. In fact, the U.S. Department of Energy estimates that water heating accounts for roughly 18% of a home’s total energy consumption, making efficiency upgrades and maintenance more than just optional, they’re essential.
The heating process
In tank water heaters, cold water enters through the bottom. Electric models use heating elements to warm the water, and these elements turn on when the water temperature drops. Gas water heaters have a burner at the bottom, heating the tank and warming the water inside.
Tankless heaters only heat water as it’s needed, using powerful burners or electric elements to quickly heat water as it flows through.
Temperature regulation
Thermostats control water temperature in tank heaters. Most have two – one at the top and one at the bottom. They turn the heating elements or gas burners on and off. When hot water is used, cold water enters the tank, triggering the bottom thermostat. It turns on the heating element or burner. The top thermostat then takes over if a lot of hot water is used. This ensures the top of the tank stays hot.
Tankless heaters adjust their heat output based on water flow and temperature, aiming to deliver a steady stream of hot water at the set temperature.
Choosing the right water heater for your home
Selecting the ideal water heater isn’t just about energy sources—it’s about matching technology to your daily habits, household size, climate, and long-term savings. This section will help you evaluate which system best meets your practical and financial needs.
Gas, electric, or tankless? Real-world pros and cons
- Gas modelsheat water quickly and are ideal for larger households with high demand. However, they require a gas line, proper venting, and regular safety checks for carbon monoxide.
- Electric heatersare easier to install and maintain, often better for smaller homes or apartments. But they tend to recover slower and cost more over time in areas with high electricity rates.
- Tankless unitssave space and offer unlimited hot water—ideal for tech-savvy homeowners. Yet, they can struggle to serve multiple fixtures at once and require high initial investment plus electrical or gas upgrades.
How to size your water heater properly
Choosing the wrong size is one of the most common mistakes. A tank that’s too small won’t meet peak usage, while one that’s too large wastes energy.
- For tank models, a household of 1–2 people usually needs 30–40 gallons, 3–4 people need 40–50, and 5+ may require 50–80 gallons.
- Tankless unitsare rated by flow rate (gallons per minute, or GPM). You’ll need to calculate how many fixtures you’ll use simultaneously—showers, washing machines, etc.—and match the GPM to your peak demand.
How to maintain your water heater and reduce energy use
Keeping your water heater in top shape andcutting energy costs are key. Let’s look at how to maintain your unit and boost its efficiency.
Regular maintenance
Check your water heater annually, inspecting for leaksaround the base and connections. Next, flush the tank to remove sediment buildup, as this helps your heater work better and last longer. Test the pressure relief valve yearly, too. It’s a safety feature that releases excess pressure. If it doesn’t work right, get it fixed fast.
Check the anode rod every few years. This rod stops rust inside the tank. Replace it when it’s mostly worn away. For gas heaters, clean the burner and check the pilot light, while electric heaters need their heating elements checked.
6 Energy efficiency tips
- Insulate your water heater tank tocut standby heat loss. Use a special blanket made for water heaters, but don’t cover the top of gas heaters or any controls.
- Set the temperature to 120°F (49°C)as this saves energy and prevents scalding.
- Fix leaky faucets promptly, as even small drips waste hot water and energy.
- Install low-flow shower-heads and faucet aerators. They cut hot water use without affecting comfort.
- Consider upgrading to an energy-efficient model. Newer heaters use less energy and can lower your bills.
- Use cold water for laundry when possible. It saves energy and works well for most loads.
When to replace your water heater
Most people don’t think about replacing their water heater until it stops working, but recognizing the early signs can prevent sudden breakdowns and expensive water damage. Let’s explore when it’s smarter to replace than repair.
How to spot performance decline before it fails
If your water smells metallic, has rust color, or the tank makes banging noises, these are signs of internal corrosion or sediment buildup. Increasing recovery time, fluctuating water temperatures, or rising utility bills also suggest declining efficiency. These signs are subtle but important—catching them early can save you money and prevent emergencies.
Evaluating cost-effectiveness of repair vs. replacement
If a repairis over 50% of the cost of a new heater and your unit is over 8 years old, replacement is often the smarter financial decision.
New energy-efficient models (especially Energy Star certified) can reduce operating costs by 10–30%. Don’t just consider price, evaluate total lifecycle costs, warranty coverage, and installation requirements when deciding between repair and upgrade.
For homeowners looking to upgrade, the Energy Star programoffers a helpful guide to selecting high-efficiency water heaters that meet federal standards
Water heater installation steps and key safety tips
Installing a water heater requires careful planning and attention to safety. Proper setup ensures efficient operation and prevents accidents.
Installation guidelines
We recommend following these steps for water heater installation:
- Choose the right location – near plumbingand power sources
- Turn off utilities – water, gas, or electricity
- Remove the old unit if replacing
- Install new unit level on a stable base
- Connect water lines – cold inlet and hot outlet
- Install temperature and pressure relief valve
- Connect power source – gas line or electrical wiring
- Fill the tank and check for leaks
For tankless units, venting is crucial. Point-of-use water heaters need less space and simpler connections, but always check local codes before starting.
Safety measures
Safety is key when dealing with water heaters. Here are important precautions:
- Install a shut-off valve for quick access
- Set temperature to 120°F (49°C) to prevent scalding
- Secure the unit to the wall to prevent tipping
- Keep the area around the heater clear of flammables
- Test pressure relief valve yearly
- Check for gas leaks in gas models
- Install carbon monoxide detectors nearby
- Flush the tank annually to remove sediment
Inspect your water heater regularly for signs of wear or damage, and if you notice any issues, call a professional plumber for help.
Conclusion
Understanding how your water heater works isn’t just helpful, it’s empowering. Whether you use a traditional tank model or a sleek tankless unit, knowing the components, heating process, and basic maintenance tips can extend your system’s lifespan, improve efficiency, and prevent costly breakdowns.
As one of the most energy-intensive appliances in your home, a well-maintained water heater also plays a key role in lowering utility bills. If you notice signs of wear or performance decline, don’t wait.
Reach out to a licensed plumber, like Splash Plumbing, to assess and restore your hot water system. Staying proactive now prevents big problems later.
