Introduction: Hot Water Tank or Heater Basics

You might already know that down in the guts of your house, among the furnace, the sump pump, and your pipes that lead up into the walls, floors, and ceilings, there’s a machine in your utility room that heats water and pumps it through the house as you need it.

Not too long ago, people had to use pots to heat water over a fire or on a stove for cooking, baths, and washing, but as better technology became widely available, we created the beginnings of modern-day hot water heaters.

The first version was a huge, metal tank that was filled with cold water and heated with elements using oil, electricity, or gas. This hot water tank was wrapped with insulation to help keep the water at a steady temperature, ready for use as needed.

It wasn’t the most efficient system because water cools quickly, so the heating elements had to be on just about all the time.

Now, we have a variety of ways that we heat water for household or commercial use, and in this guide, we’ll tell you everything you need to know about them.

Types of Hot Water Heaters

There are a lot of different types of hot water heaters, and choosing the right one can be confusing if you’re not a plumbing professional. In this section, we’ll tell you about some of the best kinds to have for residential and commercial use.

Top 4 Hot Water Tanks Types for Residential Use

Electric Tank-Type Hot Water Tank

An electric tank-type hot water heater is exactly what it sounds like. It is basically a tank that holds water with elements that heat water that are powered by electricity.

Gas Powered Tank-Type Hot Water Tank

Another version of the tank-type hot water heater is one that is powered by natural gas. It has the same look as the electric version but has a few more components, like a pilot light, burners, and gas-specific safety features.

Whole House Tankless Hot Water Tank

Tankless water heaters are the newer, sleeker kind of hot water heaters that work a little differently than traditional tank-style water heaters. They don’t store water at all. Instead, when water is needed, it flows through this machine, gets heated instantly by a gas burner or electric element, and is sent out to where it is wanted.

Point of Use Tankless Hot Water Tank

The smaller version of the tankless hot water heater is called a Point of Use or Mini Tankless Water Heater. It’s so small that it can fit in a cupboard or under the kitchen sink, which can be ideal if you live in an apartment where the central water system doesn’t get the water hot enough for you. They’re also great for getting you hot water FAST! With these little guys, you don’t have to wait for your shower to warm up because it gives you hot water almost instantly.

Since they are small, they are only intended to serve one tap, faucet, or shower.

Top 3 Hot Water Heaters for Commercial Use

Boiler Systems

A boiler is a pressure vessel that creates heat and steam that is used to heat water, provide energy, or heat entire buildings. They can also be used in industrial applications.

Commercial Natural Draft

Also known as Condensing Water Heaters, these are high-efficiency water heaters powered by natural gas that capture the residual heat from the combustion process to preheat incoming cold water instead of venting it directly outside.

Commercial Power Vented

Commercial power-vented water heaters are designed to have high efficiency and deliver a constant flow of hot water on demand. If your water heater is located deep inside the building, it’s smart to get a hot water heater with power venting (a blower or fan) to blow the exhaust a long way to the outside. This type of heater can be necessary if there isn’t access to a vertical vent or chimney for the exhaust fumes to escape from.

Components of Tank-Type Hot Water Heaters

These next few sections aren’t intended to be comprehensive breakdowns of all the parts of each kind of hot water heater. They are basic overviews of the main parts of each type to give you an idea of how each one works.

Knowing the components will help you to troubleshoot and provide maintenance on your hot water heater and give you an understanding of how each one works.

The Cold Water Inlet and Shut-Off Valve

Cold water is brought into the tank via a supply line that is controlled by a shut-off valve. Knowing where your shut-off valve is can be crucial if you ever need to turn the hot water off right at the source. If you’re doing dishwasher, washing machine maintenance, or the hot water heater itself, this is one of the first things you should do.

The Hot Water Discharge Pipe

Put simply, this is the pipe that hot water comes out of. When someone turns on the shower or an appliance demands it, hot water comes out of the hot water discharge pipe and flows to the person or machine that needs it.

The Tank Itself

Hot water tanks are actually made up of three layers. The outside layer or ‘jacket’ is made of steel and inside it is a pressure-tested water tank surrounded by a layer of fibreglass insulation. To make hot water tanks retain more heat, some people will add another layer of insulation on the outside of the tank, for a total of four layers.

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The Dip Tube

‘Dip Tube’ kind of sounds like the name of a fun waterslide, but it’s really just a plastic pipe that brings water from the cold water inlet down to the bottom of the tank where it can be heated. When the water warms up, it rises to the top, ready to flow out of the hot water discharge pipe.

The Anode Rod

An anode rod is an anti-corrosion device. As the name suggests, it is a rod-shaped piece of aluminum, zinc, and/or magnesium pipe that hangs from the top of the tank.

The reason it’s there is because when metal and water come into contact with each other, the metal will corrode or wear down. Since the water tank is made of steel, the idea is that corrosion will feed on the anode rod rather than the steel tank because it is an easier target. That’s probably why it’s also known as the sacrificial rod.

Plastic or glass-lined tanks don’t have anode rods.

Heater Drain Valve

The drain valve looks kind of like a faucet and can be opened to flush out particles of sediment or to drain the tank if you need to.


Like the thermostat you use to control the air temperature in your home, your hot water heater has a thermostat. To adjust the temperature of your water, (usually, it is kept around 120 degrees) you use the knob on the side of the tank, near the bottom.

If your water heater has two thermostat knobs, make sure that they are set to the same temperature.

For a full explanation of hot water heater thermostats, watch the video below.

Temperature and Pressure Relief Valve

Another safety feature of hot water heaters is the temperature/pressure relief valve. When the water in the tank gets too hot or when there is too much pressure in the tank, this valve will automatically release water or steam.

Components Specific to Gas-Powered Hot Water Heaters

Venting System

The combustion from the used gas has to go somewhere, so a venting system needs to be in place. This consists of ducts that vent the combustion outside.

Pilot Light

Like all the old furnaces, gas-powered hot water heaters also have a pilot light that is always lit. It is used to fire up the burner.


The thermocouple looks like a small piece of copper wire and it works by sending a small electric current to the gas valve when the pilot is lit and sending gas to the burner when the thermostat needs it.

Burner/Pilot Orifice

This is a small piece of metal that controls the flow of gas to the pilot. It looks like a teeny tiny brass cup and you’ll find it at the end of the pilot supply line.

Gas Control Valve

This is a very important piece of equipment for a gas-powered hot water heater. It works with the pilot light and the thermostat to control the temperature of the water.

Components Specific to Electric Hot Water Heaters


The element in your electric hot water heater functions just like the elements on your kitchen stove. Usually, your hot water heater will have a couple of elements, one at the top and another at the bottom.

Thermal Cutoff/High-Temperature Cutoff Switch

In the event that an electric hot water tank malfunctions or the water inside it get too hot, there is a safety device called the high-temperature cutoff switch that will shut down the heater and the switch will need to be reset.

Components of Tankless Hot Water Heaters

Tankless hot water heaters differ from ones with tanks in that they don’t store water. Rather, they heat up water as it’s needed and pipe it directly to the faucet or appliance that called for the hot water.

They do have some similar components, like incoming and outgoing water valves, heating elements or burners, thermostats, and temperature-sensing equipment. The main difference is that tankless hot water heaters use something called a heat exchanger to transfer heat to the water flowing through it.

Below we describe the major components of tankless hot water heaters.

Temperature Control Knob or Digital Temperature Controller

To control the temperature of the water coming out of the hot water heater, there is a temperature control knob or a digital temperature controller on the control module that you set to the temperature you want your hot water to be.

Control Module

The control module is the brain of the tankless hot water heater. You input the temperature you want your water to be heated to, and the control module works with sensors in the unit to determine when and how much power to send to the heating element or burner.

Cold Water Valve

The water valve in a tankless hot water heater is