Heater Effectiveness
Because water heaters both heat and store water, the rate at which the water is heated and the capacity of the tank affect the supply of hot water at your fixtures.
The speed at which a unit heats water is called its recovery rate. This figure indicates the amount of water in gallons that can be heated to 100 degrees F in 1 hour. Once you draw water faster than it's heated, the temperature drops.
However, because the tank stores hot water, its capacity also affects the ongoing availability at the tap. Choosing a water heater that has an appropriate capacity and recovery rate depends on how much water your home demands and how your unit heats the water. Typically, heaters with low recovery rates have a high tank capacity. Although it takes longer to heat the water, there's more of it for intermittent use. Electric heaters fall into this category. On the other hand, a fuel-fired heater with a high recovery rate needn't have a large tank, because it can heat the water faster. In general, electric models have the lowest recovery rate, and oil-fired units have the highest.
Tankless Heaters
If your home doesn't have a hot-water tank, you probably have a hot-water or steam home-heating system that also heats water for your taps. To accomplish the job, your boiler has a tankless water heater. In this system, a coil of pipe is connected at one end to the cold water supply, and at the other to your hot-water delivery piping. As the boiler heats the water that warms your home, that water heats the coil, creating hot water at your taps.
Because tankless heaters only heat water as it's used, there's no cost for maintaining heat in a large volume of water during periods of low usage. However, they do have a few drawbacks. First, the hot water generated is far hotter than necessary, so a cold-water mixing valve should be installed to reduce the chance of scalding. Second, the boiler must fire to generate hot water—which is efficient during the winter months, but decidedly more wasteful when the weather is warm. Like tank-type heaters, tankless heaters are designed to achieve a specific heating rate. Once the rate is exceeded by demand, the temperature of the water drops. In some cases, storage tanks are connected to the heating coil to increase hot-water availability.
In addition to boiler-mounted tankless heaters, stand-alone units are available. Gas-fired instantaneous water heaters utilize a coil and heat exchanger to heat water as it's required. Like boiler-mounted units, instantaneous water heaters don't use energy to maintain the heat in a volume of water, but only fire as hot water is required. A downside is that stand-alone units typically have a lower flow rate than boiler-mounted systems and may fall short during periods of high demand.