Tankless, anyone?

Although tank style water heaters are still very popular, especially in the U.S., tankless water heaters are gaining in popularity. Where a tank-style water heater continuously heats the water to make it available when you need it, a tankless system creates hot water on demand. Although this can mean big energy savings, a tankless system can initially cost up to three times as much as a standard water heater setup [source: Novate Media].

Heating the Water

Let's take a close-up look at what's going on inside a water heater's tank to see how simply and elegantly it does its job.

A water heater's thermostat controls the temperature of the water inside the tank. Normally, you can set the temperature anywhere between 120 and 180 degrees Fahrenheit (49 to 82 degrees Celsius). The water temperature setting recommended by most manufacturers is between 120 to 140 degrees Fahrenheit (49 to 60 degrees Celsius). This is hot enough to be efficient for household use, but not so hot that it can pose a scalding risk. If there are children living in your home, it's wise to stay closer to the lower end of the range.

Setting your water heater to a lower temperature saves energy, too, and if you remember to dial back the heat when you go on vacation, you'll experience even more energy savings. Usually, the thermostat is located underneath a protective cover plate and has a knob or dial you can turn to set the temperature.

The dip tube feeds cold water from your home's water lines to the bottom of the tank's interior, where the water starts to warm up. The heating mechanism, either a burner or an element, stays on until the water reaches temperature. As the water heats, it rises to the top of the tank. The heat-out pipe is located near the top of the tank. Water exiting the water heater at the top is always the hottest in the tank at any given moment because it's the nature of hot water to rise above denser, cold water.

The secret to a water heater's design for separating cold, incoming water from hot, outgoing water is that it relies on the principle that heat rises to do the hard part. The position of the heat-out pipe at the top of the tank does the rest.