Hybrid vs Tankless Water Heater: The key differences

Hybrid water heater vs Tankless – Confused which one to buy? If yes, you’re reading the right short post. With time, many sustainable water heaters have come into the market. Talking about which one is best? I would say that both Hybrid water heater and Tankless are excellent options. You need to curate the one that suits your climate, budget, location, and more factors. As you read further, you’ll discover more about it.

In this post, you’ll learn how both water heaters operate, their pricing, installation costs, their energy-efficiency, lifespan, how much space they occupy, and more. An average water heater lasts for a lifespan of 10-15 years, so it’s important to buy the best at once. So, you won’t regret it later!

So, read this post to purchase the best water heater.

Hybrid vs Tankless Water Heater

Difference between Hybrid Water Heater & Tankless Water Heater

Here is a quick-go-through of Hybrid water heater vs Tankless:


Hybrid Water Heater / Heat Pump Water Heater

Tankless Water Heater


Heats water in a tank using ambient air existent in its surroundings

Heats water as needed

Power Supply


Gas + Electricity





10-15 years

20 years

Space Occupancy

Ideal for spacious spaces

Ideal for any big or small space

Operational costs

Yields low month-to-moth costs

For Electric, yields low month-to-moth costs. For gas-fired, slightly higher month-to-month costs

Price/Initial & Installation costs



Though both may seem similar, there are differences that yield dramatic end-results. So, consider all features and then buy! Confused? Read further to discover more.

Hybrid Water Heater (Heat Pump Water Heater)

Hybrid Water Heater (Heat Pump Water Heater)

Hybrid water heater runs on electricity. It doesn’t create heat using gas rather uses ambient air surrounding it. The air gets into the water heater’s coil or converter after which water gets heated by way of a heat pump inside. Right after, the hot water runs through faucets, showers, etc.

This water heater system also uses a water storage tank like traditional water heaters. The tank resides at the bottom and the pump is at the top. It can store up to 120 gallons of water in a tank.

However, where conventional water heaters generate heat using gas, the heat pump water heater takes the heat from the atmosphere. Such a method makes this system twice-to-thrice more efficient than standard water heaters. Therefore, it is the greenest option and is energy-efficient.

As these appliances use surrounding air, it works best in warmer climates. Also, make sure that you place it in spacious rooms. Install it in an area that facilitates 1000 cubic feet or more of surrounding air. The reason being, a heat pump water heater requires ventilation to pull out air from the atmosphere. Doing so also increases their efficiency. These water heaters are smaller in shape so they are easy to move around.

These systems also have a venting system that avoids loss of heat. So, your water stays warm for longer. Using a digital touchpad, you can adjust the temperature settings as well. It maintains a consistent flow of hot water as it pre-stores water in a tank.

Moreover, it is easy-to-install and doesn’t need any additional components in the circuit. Also, it facilitates electricity-savings up to 90%. Talking in numbers, it can save up to $330 per year or $3500 across its lifecycle. It has high initial and installation costs, though it pays off the investment cost in 2 years itself.

For a few water heaters, you need to install a water softener. However, with hybrid water heaters, you do not require such additional equipment.  


  • It is sustainable
  • It provides tax benefits
  • It is suitable for warmer climates of 40-90 degrees
  • Ideal for smaller home spaces
  • It is smaller-in-shape so easy to move around
  • It has vents that prevents loss of heat
  • High durability. Lasts for 10-15 years
  • Ideal for larger families or heavy water requirements
  • These appliances yields low utility bills
  • It absorbs humidity to generate heat so thereby cools its surroundings


  • It has high initial and installation costs yet have lower operational costs
  • Not ideal for houses where ceilings are too low or temperatures below 40 degree Fahrenheit
  • Timely air filter maintenance required
  • When compared to tankless, it lasts only for 10-15 years
  • Installation can be tricky if you’re using a gas water model for years

Tankless Water Heater

Tankless Water Heater

Tankless water heater heat up water as needed. In other words, these appliances do not have an in-built tank installed inside. It heats up 2-to-3 gallons of water per minute. When it is turned on, it heats water instantly with the super-heated coils. These systems are also known as On-Demand water heaters.

Tankless water heaters run either on gas or electricity. You can install the tankless gas model with lesser efforts if you’ve previously had a gas model only. On the other hand, if you’re installing a tankless electric model, then you may need some electrical upgrade.

You never run out of hot water as tankless is installed. One doesn’t need to wait until the tank fills up with hot water. It heats up water on-demand. Problem arises when you wish to use water simultaneously for multiple home needs. Eg, you cannot use the clothes washer or dishwasher when another family member is taking a shower. It will dampen the efficiency. In that case, you’ll need to buy two or more tankless systems. Or else, purchase a higher GPM model if you’ve larger water needs or larger families.

Also, these appliances avoid heat loss which is prevalent in water heaters that have storage tanks. Though these systems can dissipate energy when pilot light is on. So, look for an Intermittent Ignition Device (IID) instead of a pilot light. It imitates the natural gas furnace.

Where a traditional water heater reheats cool water existing in a tank, the tankless has no such drama! The reason being it heats water on-demand.


  • It is sustainable
  • It provides tax benefits
  • Ideal for larger home spaces as it is compact-in-size
  • Can be installed on outside walls or in nooks & crannies
  • High durability. Lasts for 20 years
  • These appliances yields low utility bills


  • It has high initial and installation costs yet have lower operational costs
  • It may take longer to heat water as there is no tank
  • A household may require multiple tankless water heaters if it has huge hot water daily needs

If you’ve water needs of approx 41 gallons, then you can make upto 24-34% energy-savings. In another case, if you’ve water needs of approx 86 gallons, you can make upto 8-14% of energy-savings.

At any time, if a tankless heater gets damaged, you can extend its shelf life by replacing damaged parts.

Hybrid Water Heater (Heat Pump Water Heater) vs Tankless: Head-to-Head Comparison

Energy Efficiency

Hybrid Water Heater:

It assures energy-savings up to 75-90%. Hybrid takes atmospheric air and converts it to heat so never create its own heat

Tankless Water Heater:

It saves a lot of energy as it only heats water when needed. Also, it’s good for water-conservation practises.


Hybrid Water Heater:

A Hybrid/Heat pump water heater is durable for 10-15 years.

Tankless Water Heater:

A Tankless water heater is durable for almost 20 years.


Hybrid Water Heater:

It is expensive, especially initial and installation costs around $1600. However, you get rebate/tax benefits on your unit. So, your overall taxable amount will be reduced. That’s the benefit.

Also, these equipment have a Fast ROI. You can recover the price within 2 years of the instalment itself. It’s good as you’ll save money for the rest of its time span.

Tankless Water Heater:

Tankless is also expensive, especially initial and installation costs around $1660. Bundling up this big up-front amount may seem difficult. Though you’ll save a lot of money in the form of tax-credit & energy-savings.

You get a tax credit worth 10% on the purchase and installation of a tankless water heater. Also, you cut down electricity bills upto 22%. Moreover, longer warranties can assure long-term security.

Operating Cost

Hybrid Water Heater:

As it’s an electric appliance, a hybrid water heater has lower operating costs. The annual costs are around $190.

Tankless Water Heater:

If it’s an electric tankless, it will have low operating costs. If it’s a gas-fired tankless water heater, it will yield more operating costs. For gas-fueled tankless heaters, the annual costs are around $228.

Installation Cost

Hybrid Water Heater:

Costs vary depending on the previous water heater system. You may need additional electrical wiring if you were previously using a gas-fired heater.  

Tankless Water Heater:

Costs vary depending on the previous water heater system. One needs electrical wiring if they’re installing an electrical tankless heater. Also, you need larger gas lines if you’ve frequent demand for hot water at rush hours.

Space Requirements

Hybrid Water Heater:

It requires at least 1000 cubic feet of empty surrounding area to operate efficiently. As it uses ambient air around it to heat water, it is ideal for spacious homes.

Tankless Water Heater:

You can mount the tankless water heater on the wall, floor, or even in nooks & crannies. As there is no storage tank, it doesn’t require bulky space to mount.

Water Heater Performance

Hybrid Water Heater:

It heats water instantly if you’ve warmer weather around! If the air surrounding it is too cold, you may not get hot water.

Tankless Water Heater:

It heats water instantly as needed. You never run out of hot & warm water unless you’re using it for one-task at a time, and not multiple.


Hybrid Water Heater:

You must regularly clean heat pump water heaters, including its air filters. Timely maintenance helps a lot. Also, reconfigure pipes to avoid leakage and damages.

Tankless Water Heater:

You can conduct timely servicing of your appliance. It will increase its efficiency and overall life.

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When to use Hybrid Water Heater?

You can use a hybrid water heater in warmer regions. It can create heat easily in warm regions by pulling out warm air easily.

Also, these systems require roomy and spacious areas. So, if you’ve a spacious house, go for it. Or else, make a spacious room for it. 

Also, if you want an electrical appliance, go for a hybrid heat pump water heater.

When to use Tankless

You can use tankless in colder regions. It heats water as needed so you don’t run out of hot water anytime in cold winters!

If you’ve smaller space in your home, you can install it. It does get accommodated on walls, floors, or even in nooks or crannies.

Also, whether you wish to run a gas-fired or electrical appliance, tankless is ideal as it runs on both.

What is cheaper Hybrid Water Heater or Tankless?

A hybrid water heater costs around $1600. A tankless water heater costs around $1660. So, both cost roughly the same.

Both have a high initial purchase and installation costs. Yet, hybrids recover costs quickly only in a few first years. Also, tankless have lower operational costs. Compared to their lifespan of 15-20 years, they are efficient appliances.

Both are greener choices so are the future and best in the long-run.

What is better Hybrid Water Heater or Tankless?

No matter whether you’re upgrading the current water heater system, replacing the old one, or just going green, both of these are best choices!

Consider your climate zone, daily water gallon requirements, fuel type, pricing budget, home space, appliance’s lifespan, local building code, and similar factors before purchasing a water heater. As you consider all these elements, you’ll be able to buy the best – hybrid water heater or Tankless!

Be it any choice, you won’t regret installing the latest & greenest water heaters!

After all, these appliances are building sustainable societies of tomorrow!

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