A storage water heater holds a supply of hot water, usually from 20 to 80 gallons depending on the size of the tank, ready for use when needed. When you open a faucet, incoming cold water “pushes” the hot water out to the faucet. As the hot water flows out, the incoming cold water mixes with the hot water in the tank, and thereby limits the quantity of hot water you can use each hour. For this reason, a tank style heater only gives you 2/3 of its capacity as usable hot water.

Storage water heaters maintain a constant temperature within the tank, monitored by one or more thermostats, which control a burner or heating elements as needed to maintain the desired temperature in the tank. As the water sits in the tank unused, the temperature naturally drops, even though the tank is insulated, triggering the thermostat to heat the water back up to the desired temperature. This stand-by heat loss occurs in all tank style heaters. It wastes energy and reduces the Energy Factor of the heater.