It is easy to see why. Tankless units heat and deliver water on demand. Cold water is circulated through a series of burners or electric coils that heat the water as it passes through. Tankless units cost more than storage heaters, but because you are not heating a big tank of water 24 hours a day, they cost less to operate.

Not surprisingly, having abundant hot water is important to homeowners. A nationwide survey of 800 homeowners by Public Opinion Strategies of Washington, D.C., found that 90 percent of respondents considered hot water the one convenience they could not do without.

By comparison, 52 percent said they could live without a TV. Heating water accounts for 20 percent or more of a typical household’s annual energy expenditures, according to the Department of Energy. The yearly operating cost for conventional storage-tank water heaters averages $200 for gas units or $450 for electric ones.

Storage-tank water heaters raise the water temperature to the setting on the tank, usually between 120 and 140 degrees, and maintain it there. Even if no hot water is drawn from the tank (and cold water enters the tank), the heater will operate periodically to maintain the temperature.

This is the result of what are called “standby losses,” the heat conducted and radiated from the walls of the tank and, in gas-fired water heaters, through the flue pipe. Standby losses represent 10 to 20 percent of a household’s annual water heating costs.

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