Hybrid Water Heaters vs. Tankless – Which one is Better?

Buying a new water heater shouldn't be hard. But it is. 

Since there are many options out there, we will focus here on comparing hybrid water heaters vs. tankless, two of the most efficient and popular heating devices.

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Why?

Water heating is the second-largest energy consumer in most North American households. It accounts for 14-18% of your utility bills (US Department of Energy).

So, when the time comes to buy a new water and/or replace an old one, you want to make sure to get the most energy-efficient, durable, reliable, and cost-effective option.

How they work

Tankless and hybrids are different. 

Tankless are small and tank-less, heating water on demand, while hybrids, which look like regular water heaters, use large water storage tanks to store, heat, and reheat the water.

How hybrid water heaters work

Rheem Prestige heat pumpRheem Prestige heat pump

Hybrid water heaters, also known as heat pump water heaters, use two methods to heat water; electric heating elements and a heat pump. They are similar to regular electric water heaters with storage tanks but are taller and wider, occupying more floor space.

The heat pump, which contains the compressor, evaporator/condenser coils, fan, and refrigerant, is installed on the top of the electric water heater, and instead of generating the heat, it moves the heat energy from surrounding air to water. It actually works as the refrigerator but in reverse.

Hybrids run on electricity utilizing either a heat pump, heating elements, or both, delivering more power and increasing performance.

Hybrids often come with several heating modes, so, for example, the unit can heat water in the most efficient way or with the highest recovery rate. The mode selection depends on the household needs.

How tankless water heaters work

Tankless water heaterTankless water heater

Tankless water heaters are designed to heat water only when need it and deliver hot water in endless supply. They operate on natural gas, propane, and electricity. If you have natural gas, installing a tankless makes more sense because the fuel is cheaper and will cost you less to run the unit.

Gas tankless uses a modulating gas burner to heat water passing through the heat exchanger, using just enough heat energy.

Today's tankless units utilize many sensors and controllers, including a computer chip for accurate, safe, and enhanced control, providing better comfort and savings.

Hybrids vs. tankless – Comparing costs

When compared to regular water heaters, both hybrids and tankless have higher initial costs and lower operating costs.

Hybrids

According to homedepot.com, Rheem hybrid waters can cost you from $1600 for the 40-gal model to approximately $2800 for the 80-gal model.

The prices of Stiebel Eltron hybrid water heaters are in the range from $2500 to $2600 for the 60-gal and 80-gal, respectively.

In addition to the purchase price, hybrid water heater installation can cost you between $1500 and $4400 for labor and materials.

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Tankless

The purchase price of a tankless water heater, powered by gas, goes from $600 to $2400, excluding installation costs. The price varies by brand, type, and model.

If you want to buy a Rinnai model, for example, it will cost you between $600 and $2400, Rheem from $800 to $1500, and to buy Noritz, from $1400 to $2200.

According to homeadvisor.com, expect to pay around $2300 for professional installation, on average, where the labor rates can go up to $150 per hour.

Selecting a water heater – Things to consider

Determining the size of your water heater is very important. An undersized water heater won't provide enough hot water for all your needs while having a unit that is too large can lead to unnecessary costs and premature malfunction.

Hybrids

Before you buy a hybrid water heater, check the following:

  • First-hour rating
  • Energy factor
  • Warranty
  • Price

Tankless

In order to accommodate your household, make sure to choose the right tankless size. Here are a few things to consider:

  • How many devices will use hot water at the same time?
  • Flow rate in GPM (this one is interrelated with the above). List the total number of appliances and fixtures that will use hot water simultaneously during peak demand and add up each individual flow rate to calculate the total flow rate.
  • Temperature rise. Use this map to see the groundwater temperature for your region.

Comparing hybrid water heater vs. tankless benefits

Hybrid water heaters

  • Hybrids can heat water very efficiently, which can often be over three-four times the efficiency of the electric or gas tank-type water heaters.
  • Except water heating, hybrids can cool and dehumidify the surrounding air.
  • Since they look almost the same as electric water heaters and have similar connections, they are also easy to install, service, and maintain.
  • Cheaper to install.
  • They perform very well in warmer climates, reducing the amount of energy and money you spend to heat water.
  • Fast return on the investment, which can go as little as three years.
  • Hybrids come with tax incentives and rebates.

Tankless water heaters

  • Tankless heat water on demand saving homeowners a lot of energy and water.
  • Due to their powerful gas burners, tankless heat water very fast.
  • They deliver hot water continuously and in an endless supply.
  • Some models utilize recirculation systems for instantaneous hot water delivery.
  • They are small, making them easy to handle and install.
  • Advanced electronics and diagnostics provide better comfort, accuracy, and control.
  • Tankless can be installed indoors or outdoors.
  • Every component can be replaced.
  • They often come with long warranties of 15 years.
  • Tankless can operate for over 20 years.
  • Tax incentives and rebates are available for the energy-efficient models.

Disadvantages of hybrids and tankless

Hybrids

  • Since hybrids utilize storage tanks with limited capacities, they can always run out of hot water.
  • Hybrids are big, requiring a dedicated room and floor space.
  • If they develop a tank leak, the whole unit must be replaced.
  • Hybrids are still subjected to sediment build-up and rotten egg smell as any regular water heater.
  • Not performing well in cold climates.
  • Hybrids require a certain amount of surrounding air to operate correctly.

Tankless

  • Expensive to buy and install.
  • Tankless costs more to install than hybrids.
  • Safety issues due to potential gas and exhaust leak.
  • Tankless are prone to hot water temperature fluctuation or "cold water sandwich."
  • Due to their powerful gas burners and electric blower, tankless can be noisy.

So, should I buy a hybrid water heater or tankless?

Buy a tankless water heater if the demand for hot water in your house is high. With the on-demand heating and endless supply of hot water, there is no chance that you will run out of hot water, which is not the case with tank-type heaters such as hybrids.

As explained before, hybrids use heat from surrounding air to heat water, and because of that, you will have lower operating costs and maximized savings. They perform great in warmer climates because they use very little energy. If you only have access to electricity, live in a warmer region, and have enough room for the installation and air, get a hybrid water heater.

Both hybrids and tankless are environment-friendly as they heat water with ultra-high efficiency and produce less exhaust gases. Due to the high efficiency, both types can bring you additional savings through rebates and grants.

If safety is the most important thing, a gas tankless water heater might not be the best choice for you due to potential carbon monoxide and gas leaks.

The best way to find out which one will suit you the most is to contact a water heater expert.

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