Why do tankless water heaters cost less to run? A tankless heater has a much more efficient burner, and since it is only heating water when you need hot water, stand-by loss is altogether eliminated. A tank heater has to cycle on several times a day to keep the contents at the desired temperature. It does this when you are sleeping, when you are at work, when you are on vacation. It’s like keeping a teakettle heating on the stove 24/7 for the 2 or 3 times a day you want tea. Tankless heaters store no water, so there is nothing to keep warm. Plus, tankless heaters heat water only to the temperature at which it is used, while storage heaters maintain a supply of very hot water which is then mixed with cold water to the temperature of use.