Tank-type water heaters, also known as storage units, are the most common type of water heater used in homes in this country. While most are fueled by natural gas or electricity, some use propane, fuel oil or the sun as an energy source. Storage units come in a range of heights and diameters from tall, narrow ones designed to fit in small closet spaces, to short, squatty ones that fit under cabinets and in areas with little headroom. The most common sizes range from 20 to 80 gallon capacity. The higher gallon-capacity tanks are recommended for customers with electric units that are on the utility's off-peak usage rates because they sometimes need the higher capacity to hold enough hot water during times when electricity is unavailable or more expensive.
While they vary in energy source and size, these tanks share many common characteristics. For one, the outer jacket of tank water heaters is made of sheet metal. Inside the sheet metal, there are one or more inches of insulation wrapped around a water containment tank. Typically, a cold water pipe is connected to the top of the tank. Water enters the tank through this “dip tube,” which delivers it to the lower portion of the tank. Hot water for the home is drawn from the top of the tank and replaced with cold water entering through the dip tube at the bottom. In combustion-fired water heaters, the heat source is at the bottom of the tank.
Another common feature is the drain valve located near the bottom of the tank. It is used to drain off sediment that may accumulate at the bottom of the tank or to drain the tank completely. At the top of the tank, there is a high-pressure relief valve for safety. Should the temperature in the tank ever get too high, pressure will build up in the tank and the pressure relief valve will open. To prevent that from being needed, most tanks also have a high temperature thermostatic-switch, which stops the heating if temperatures reach a dangerous level.
In considering the energy efficiency of storage water heaters, keep in mind that they are essentially hot water-filled tanks radiating heat through their shells to the environment 24 hours a day. This heat loss is estimated to be 10 to 15 percent of the cost to operate the water heater. The rate of heat loss is directly proportional to the surface area of the tank and the thickness of insulation. Therefore, a smaller tank (e.g., 20 gallon vs. 80 gallon) has less surface area from which to lose heat and has lower heat loss. In addition, a tank with more insulation has lower heat loss. This is the reason people sometimes add an insulating blanket around the outside of a tank. The primary difference between new water heaters rated as highly energy efficient is they have more insulation around the tank. They cost more, but are worth considering since the payback can be rapid depending on your situation and energy cost.
If the water heater is located inside the home's conditioned space, in the winter, standby heat is not truly wasted since it contributes to heating the house. However, the reverse is true in the summer when, if you air condition, you are paying to remove the heat you already paid once for to heat your water. Storage water heaters are quite often located in unconditioned spaces like in garages, basements or crawl spaces. In these situations, the tank is just losing heat to the outside air.