Summary:

• Tank-based and tankless water heaters both heat the water in your home, but the way they function is very different. Tank-based units store water in a tank and maintain it at a consistent temperature, while tankless units heat it on demand.
• Tankless water heaters are more energy-efficient, have a longer lifespan, and need less maintenance. Making the switch saves you money over time and gives you nearly unlimited access to hot water when you need it most.
• To tell if tankless is right for you, think about factors like the size of your household, the physical size of your home, and your capacity needs. You can roughly estimate this by calculating your flow rate and local temperature rise.
• When you’re shopping for tankless water heaters, look for units with a high UEF rating and an ENERGY STAR® label. Products that meet these standards offer the best energy efficiency. 
• Stiebel’s Eltron Tempra 36 Plus, Rheem’s RTEX-18, EcoSmart’s ECO 27, Titan’s SCR-4 18, and Optimal’s Plus 208/220/240-Volt 27 get consistently positive reviews. They also offer some of the best features, efficiency, and performance on the market.

Tankless water heaters work by heating water on demand as you use your fixtures and appliances. There’s no need to store water in a bulky tank and constantly keep it warm, so they’re much more energy-efficient. 

Going tankless when it’s time for a new water heater doesn’t just give you a steady supply of hot water. It will also help you save money on energy, future-proof your home, and stay on the right side of changing regulations here in California.

Below, you’ll find everything you need to know about these systems to decide if they’re right for you, including how they work and why you should consider going tankless. We’ll also tell you how to pick the right tankless water heater and share the top picks for 2025.

The Difference Between Tank & Tankless Water Heaters

Tank-based water heaters and tankless water heaters both serve the same purpose: they heat the water in your home to a set temperature. What sets them apart is how they function, so let’s break down what’s going on under the hood.

How Tank-Based Water Heaters Work

Tank-based water heaters work by storing water in a large, well-insulated tank that usually holds somewhere between 40 and 120 gallons of water. The total amount of hot water you have access to at any given time depends on the size of your tank and your usage.

This is what’s happening inside the unit:

• Cold water enters the tank from your home’s plumbing system through an intake pipe.
• In electric units, an internal heating element makes direct contact with the water in the tank. As it heats up, the water around it warms.
• Gas water heaters burn fuel in a combustion chamber that has a pilot light, an igniter, and a burner. Heat from the flame rises into the tank via a baffle or flue.
• An adjustable thermostat monitors the temperature of the water inside the tank. When it drops below a set point, it sends a signal telling the element or burner to activate.
• Hot water exits the tank through an outlet pipe, then moves through your plumbing system to your fixtures and appliances.
• The tank automatically refills with cold water as you use your hot water for dishes, showers, and other daily tasks.

Tanks are internally insulated and can also be wrapped in an insulating blanket externally, but heat loss will occur as time passes. This means the system needs to kick on and off constantly throughout the day and night to keep the water hot, which is inefficient.

How Tankless Water Heaters Work

Tankless systems don’t store water at all. Instead, they heat the cold water that comes into your home as you use it throughout the day and night. That’s why they’re often referred to as “on-demand water heaters”.

Here’s a closer look at how they work:

• The water heater itself sits on your cold water supply line, but stays inactive until the flow sensor detects water flowing through the unit.
• A sensor inside the unit automatically detects the flow of water and sends a signal telling a powerful electric heating element to turn on.
• Water heats up to a set temperature in seconds as it passes through a heat exchanger inside the unit.
• It takes about 30 seconds for the water to reach the set temperature, then it exits the water heater and moves toward your faucets, showers, and appliances.
• Tankless water heaters will continue to produce hot water until the flow of water stops or the appliance in use shuts off.

Whole-home tankless water heaters supply hot water to your entire home, while point-of-use units only supply hot water to a specific fixture or area of your home. Point-of-use units are often a better choice for very large homes where fixtures are far away from the water heater itself.

Why You Should Consider Going Tankless

If you’re thinking about replacing your water heater, going tankless is one of the best choices you can make for your home. These modern, on-demand systems have advantages you just won’t find in standard tank-based systems.

By making the switch, you get:

• Better energy efficiency. According to Energy.gov, on-demand water heaters are up to 34% more efficient, and that means big savings on your energy bill.
• Access to unlimited hot water. As long as you choose the right size for your needs, you’ll always have access to hot water on demand.
• A longer lifespan. You can expect most tankless water heaters to last up to or more than 20 years with proper care. Tank-based systems last around 8-12 years, if that.
• A lower risk of costly repairs. Tankless water heaters are less likely to corrode, rupture, or fill up with sediment. They also require less maintenance over time.
• Steady, safe water temperatures. On-demand heating lowers the risk of temperature fluctuations. That means no more suffering through cold showers.
• More installation options. Plumbing code is much more forgiving for tankless water heaters than it is for tank-based systems. We can install them indoors, outdoors, on a wall, or in tight spaces, and they don’t need to be strapped down like tanks.

On-demand water heating also just generally creates a better experience for everyone in your home. There’s no need to wait around to do chores, have a relaxing bath or do the dishes, because everyone will still have access to hot water either way.

How to Tell if Tankless Is Right for You

The best way to be sure if going tankless is right for you is to send us a message. One of our technicians can come out and assess your home and factors like these:

• The size of your household. More people mean more hot water gets used, especially during peak periods like mornings and evenings.
• The physical size of your home. Tankless may not be the right choice for very large homes with multiple outbuildings, or you might just need more than one unit.
• Your total capacity/needs. This is the maximum amount of hot water your household can use at any given time. Calculating this can get a bit complicated, so check out the info in the next section for guidance.
• Your overall usage patterns. Tank-based water heaters often struggle to keep up with frequent or back-to-back hot water use. Tankless water heaters don’t suffer from this issue as long as they’re sized right for your home.
• Your current budget. You’ll pay less upfront for a traditional tank-based water heater, but this isn’t much of an advantage long-term. Tankless models pay for themselves.

Your personal goals also matter. If you’re aiming to future-proof your home, make it more eco-friendly, or reduce the amount of energy you use, tankless is the way to go.

How to Calculate Your Capacity/Needs

When we talk about choosing the right size in a tankless system, we’re really talking about whether the water heater is powerful enough to keep up with your needs. To calculate capacity, you need to nail down two main factors:

1. The flow rate. This is the total amount of hot water your household could use at any given time. It’s typically measured in gallons per minute (GPM).
2. Temperature rise. Think of this as the difference between the temperature of the groundwater coming into your home and how hot you want it at the tap.

Ready to do a little math? Don’t worry—we’ll make it as painless as possible for you.

Step 1: Estimate Your Flow Rate (GPM)

Add up the gallons per minute (GPM) for all the fixtures or appliances in your home. You’ll find this in the manual for each product, but if you don’t have them anymore—or don’t want to bother looking for them—use the estimates below instead.

Average GPM (per unit):

• Shower: 2.5 GPM
• Faucet: 1 GPM
• Dishwasher: 1.5 GPM
• Washing machine: 2 GPM

Next, count the maximum number of fixtures you’d typically use at once. Think about how your household uses water during busy times and give it your best guess—it doesn’t need to be exact. For example, if you usually wash clothes while someone showers in the evening, your total would be 4 GPM.

If you want to be safe, add 1 or 2 GPM to your total. This will ensure that you have plenty of wiggle room for extra hot water use if your needs change.

Step 2: Estimate Your Temperature Rise

Here in the Bay Area, groundwater and city supply lines typically sit somewhere between 60°F, and we recommend setting your water heater to 120°F. So, the total temperature rise would be calculated as 120°F – 60°F, or 60°F.

Step 3: Find a Unit That Matches or Exceeds Both Numbers

Look for a unit that can deliver the total GPM you need as well as the expected temperature rise. Most manufacturers provide charts or specs showing what each model can handle.

This will give you a great place to start comparison shopping, but we strongly recommend speaking with one of our experts before you spend any money. We can help make sure you’re investing in the best possible option for your needs.

About Energy Efficiency Ratings

Uniform Energy Factor (UEF) and ENERGY STAR® certifications are the two most important factors you need to consider after flow rate and temperature rise. Both reflect the overall energy efficiency of a particular unit, but they do it from slightly different perspectives:

• UEF measures how effectively a tankless or tank-based water heater converts energy into hot water. A higher rating means better efficiency, which is really useful when you’re comparing similarly-sized models or brands.
• The ENERGY STAR® label is a government-backed rating that proves the unit met or exceeded strict efficiency standards. This should be considered non-negotiable and is often required if you want to take advantage of rebates or tax credits.

It’s best to look for units that have both a high UEF rating and an ENERGY STAR® label. The good news is you won’t typically find one without the other, because most water heaters need to meet a high UEF rating to qualify for ENERGY STAR® certification.

An Important Note on Gas-Powered Water Heaters

California is quickly moving toward full electrification, so gas water heaters are already on the way out throughout most of the state. Regulations that take effect in 2027 will ban them in new constructions entirely in 2027, and statewide sales are expected to end in 2030.

That’s why we strongly recommend against investing in fuel-powered water heaters at this point, regardless of whether they’re tank-based or tankless. Electric is more future-proof, energy-efficient, and won’t put you at risk of being in violation later on down the road.

Comparing the Options Side-By-Side

The Top Water Heater Brands for California Homeowners

When it comes to water heaters, some brands and models are just more reliable, more efficient, and more effective than others. All of the options on the list below come from brands with a reputation for excellence and consistently get positive feedback from homeowners.

• Stiebel’s Eltron Tempra 36 Plus. You may need a service upgrade to install this unit, but it performs exceptionally well under pressure. The Tempra 36 has a flow rate of up to 7.03 GPM, but special self-modulating technology reduces the flow of water slightly if you exceed this value, so you never run out.
• Rheem’s RTEX-18. This unit is compact, easy on the wallet, and ideal for small households. It has a max flow rate of 4.4 GPM and is estimated to cost just $288 per year to run, but you will need a 150-amp service to install it.
• EcoSmart’s ECO 27. This whole-home unit has a slightly lower flow rate of 6.6 GPM, but this is still more than enough for most homes in the Bay Area. The electric components, heat exchangers, and heating elements are all covered by a stellar lifetime warranty that can’t be beat.
• Titan’s SCR-4 18kW. This all-electric whole-home unit is recommended for large households and special applications, like large jacuzzis or garden tubs. It’s powerful enough to handle a large temperature rise, but it works even more effectively here in California, where the groundwater is warmer in the first place.
• Optimal’s Plus 208/220/240-Volt 27 Kw. This powerful little unit has a maximum flow rate of 4.5, but it’s also very affordable and comes with a lifetime warranty. It’s also Wi-Fi enabled, so you can control it from your smartphone or smart home system.

These tankless water heaters might be highly rated, but that doesn’t necessarily mean they’re automatically right for your home. Send us a message and we’ll help you explore your options so you can find the best possible unit for your needs.

Get Ready to Go Tankless With Caccia Home Services

Tankless water heaters don’t just provide endless hot water—they offer real advantages, like energy savings, a lower risk for costly repairs, and a longer lifespan. Making the switch now instead of waiting for regulations to force your hand will help you lower your carbon footprint and future-proof your home so you can enjoy as much hot water as you like without concern.

Trust our experts to help you find a tankless water heater that delivers so much more than just hot water. Call Caccia Home Services at (650) 294-8546 to make the switch.