Hot water tanks: The complete guide

Written by the Square One team

Updated June 12, 2024 | Published November 11, 2013

It’s easy to take the hot water tank for granted. Canadians use an average of 75 litres of hot water per person per day, and it all comes from one humble appliance. Though they’re often hidden away in the basement, the hot water tank is one of the most important devices in the home.

In this guide, we’ll teach you everything you need to know about your hot water tank: how they work, how to choose a new one, how to maintain them, how they work with home insurance.

A man working on a hot water tank

What is a hot water tank?

A hot water tank (also known as a hot water heater) is exactly what it sounds: a large tank designed to heat and hold water. The tank draws cold water from the home’s water supply system, heats it, and distributes it to sinks, bathtubs, and dishwashers.

There are several types of hot water tank, which use different methods and fuels to heat the water. Gas heaters (fuelled by natural gas or propane) are the most popular, but electricity, oil and solar-powered tanks are also available. Most tanks hold around 200 litres of water.

How do hot water tanks work?

A hot water tank is a simple device: a big cylindrical water tank with a heating element inside.

The tank mostly metal, with a protective liner inside to prevent corrosion. There’s also a layer of insulation to prevent heat loss. Combustion-style heaters (oil or gas) have an exhaust vent much like a car does. Older models might even have a chimney.

Cold water enters the tank near the top, then makes its way via the dip tube to the bottom, where heats it to the target temperature set by the thermostat. The heated water rises to the top of the tank, where it enters the home’s hot water pipes.

Types of hot water tanks

Storage tank water heater

The tank-style water heater is the most common variety in Canada. They’re probably what you imagine when you think of a hot water heater. Tank water heaters can be as small as 85 litres in a 1-2-person home or surpass 200 litres in a large home with 5 or more residents. Most models use electricity, propane, or natural gas as their fuel.

Hot water storage tank in a basement

The main drawback of storage tank water heaters is that they expend energy keeping water hot around the clock, even during long periods where they’re not in use (like overnight).

Tankless hot water heater

True to their name, the tankless hot water heater doesn’t have a tank in which to store water. Instead, they heat water on-demand. They’re much smaller than tank-style models, and more energy efficient as well. Tankless water heaters are reliable and long-lasting, too. We’ve got a whole article on tankless water heaters if you’d like to read about those.

The downsides? They’re more expensive than tank-style heaters, and may not be able to output enough water for peak usage (like running the dishwasher while someone’s having a shower).

Tankless water heater in a basement

Heat pump hot water heater

Though they are tank-like in appearance, heat pump hot water heaters have one big difference from a typical tank heater: they use electricity to draw in heat from the surrounding air and use it to heat the water, rather than heating the water directly. They’re like the opposite of a refrigerator, which pumps heat out rather than in. These are highly efficient devices, using as much as 60% less electricity than a typical hot water tank.

Unfortunately, they aren’t well-suited to chilly basements where water heaters often live; the less ambient heat they have to work with, the less efficiently they run. They’re also rather expensive, though the energy cost savings can make up for that in short order.

Heat pump water heater in a basement

How to choose a hot water tank and heater?

Decide what fuel source your hot water tank will use

The fuel source is one of the principal factors in determining how efficient your tank will be (and how much it will cost you to run). Most people choose the fuel source that’s already set up in their home.

For example, if your home has a natural gas connection ready to go, you’d choose a natural gas heater. If you don’t have a gas system, it makes sense to buy an electric heater rather than set up a gas line and venting.

It’s also important to consider utility costs in your area. Natural gas is often much cheaper than electricity. So, while a gas heater costs more up front, it might end up paying for itself in the long run.

Here are the pros and cons for hot water tanks of the most common fuel types:


  • Pros: Easy to install and operate, lower upfront cost, high energy efficiency, safer than gas
  • Cons: Higher utility costs, slow to heat, won’t work during a power outage

Natural gas

  • Pros: Quick-heating, low utility costs, can work during power outage
  • Cons: More expensive up front, harder to install (needs gas lines and venting), potential safety issues with flammable gas


  • Pros: Same as natural gas, but propane burns cleaner as well
  • Cons: Same as natural gas

Figure out how much hot water capacity you need

If your tank is undersized, it will overwork itself and often run out of water. An oversized tank, on the other hand, will use more energy than necessary.

There are two ways to measure a hot water tank’s capacity: the physical capacity of the tank itself, and the unit’s First Hour Rating, or FHR. The FHR is a measure of how much hot water the unit can output in one hour, starting with a full tank of fully heated water.

Estimate your water usage during the busiest hour in your home. It’s often in the morning, before work, as everyone in the family showers. It could also be in the evening, while drawing a bath and running the dishwasher. With a high-end estimate, you can decide if a hot water tank’s FHR is high enough.

To add up your peak hourly usage takes a little math, but it paints a clear picture of your hot water needs.

Here are some estimated hot water usage rates for common activities:

Activity Water usage
Hot water faucet 3.8 litres / minute (1 gallon / minute)
Typical shower 7.6 litres / minute (2 gallons / minute)
Dishwasher 9.5 litres / minute (2.5 gallons / minute)

Appliances and plumbing fixtures often have their water usage rates printed on them (or at least in a manual somewhere).

If you want to choose a new tank based on total capacity, you can estimate what you’ll need based on how many people live in the house and how many bathrooms and appliances you have:

Home description Tank capacity
2 people, 1 bathroom 90-135 litres (24-36 gallons)
2-3 people, 2 bathrooms 135-180 litres (36-48 gallons)
3-4 people, 3 bathrooms 180-225 litres (48-59 gallons)
4-5 people, 2-3 bathrooms, plus dishwasher and laundry 180-290 litres (48-77 gallons)
5+ people, 3+ bathrooms, frequently-used dishwasher and laundry 290-540 litres (77-143 gallons)

If you have high-efficiency appliances and you know your family takes short showers, you can work with the lower end of the range. If you take frequent hot baths and have old, inefficient appliances, you might need something at the higher end.

As you can see, choosing a model based on total capacity is a little imprecise. It’s more effective to calculate your hot water needs using the FHR if you can.

Costs of hot water tanks

On average, buying and installing a hot water tank costs between $1,000 and $1,300.

The larger a tank is, the more it costs (unsurprisingly). Gas-fuelled models cost more than electric ones.

To buy a tank on its own, expect to pay between $700 and $1,000 for an electric tank or between $1,000 and $2,000 for a gas model. There are models priced outside these ranges, but for an average home that’s about where you should set your expectations.

If you need to have a professional install your tank, expect to pay an added $100-500, depending on how much work needs to be done.

If you’re wondering where to buy a hot water tank, you can do so from virtually any large hardware store, or a plumbing/heating company. Most businesses that sell hot water tanks can also install them for you. Many will also give you a free estimate and give you advice on the right size and model before you buy.

What should you do when your hot water tank is not working?

Here are some of the most common issues with hot water tanks and what you can do to address them:

No hot water

The most common cause of a gas-fired tank not putting out hot water is a failed pilot light. The pilot light is a small flame inside the device that’s always lit and serves as an ignition source for the main burner. If the pilot light goes out, your burner can’t heat any water. Check further down the page for instructions on re-lighting the pilot.

Another possible reason your hot water tank isn’t hot is a damaged or disconnected dip tube. The dip tube is inside the tank and sends the cold water to the bottom of the tank. A broken dip tube means cold water is sitting at the top of the tank and not being heated before entering the plumbing system.

Not enough hot water

If your hot water runs out prematurely, your heater may be too small. As a reference, check the sizing guidelines in the last section, or read Natural Resources Canada’s hot water tank guide for in-depth information on tank sizing.

The tank is leaking

Leaking is often a symptom of a serious problem that requires professional help. If you notice water around your tank, first shut off the fuel source and then the cold-water supply. Reliance Home Plumbing and City Wide Water Heater Service both have videos showing you how to do this. Then, get in touch with a serviceperson.

There’s a hissing noise coming from the tank

This could mean that the liner inside the tank has corroded or cracked, and water is leaking. You may not see any water on the ground, as the leaking water is boiling and turning to steam (hence the hissing sound). If you hear hissing from your hot water tank, get a professional to take a look.

There’s a boiling sound coming from the tank

Also known as “kettling” (like water boiling in a kettle), boiling sounds from your tank are often caused by water bubbling through sediment at the bottom of the tank. You might also hear kettling sounds if your tank is overheating the water. A faulty thermostat or other mechanical issue is often to blame. Regardless, you should speak to a professional if you hear boiling sounds — and ensure that the unit’s pressure release valve is working.

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What can you do to maintain your hot water heater?

While most tanks should last around ten years, some simple maintenance can extend this lifespan and save you money in the long run:

Flushing the tank

This should be done annually to remove built-up sediment. When sediment accumulates, your hot water heater may make popping, knocking, or boiling sounds. This is caused by water bubbling through the sediment. Check out this video for an in-depth guide to flushing your tank, or see Lowe’s guide to water heater maintenance.

Checking and replacing the sacrificial anode

Inside a hot water tank is a sacrificial anode, a rod of magnesium or aluminum. The anode attracts corrosive minerals in the water to prevent them harming the tank itself. Once fully corroded, it’s no longer effective and you need to replace it. Experts recommend doing so every 1-3 years, though homes with hard water may need to do it more often. Replacing the anode is a simple procedure — check out this video by

Relieving the pressure

Setting the thermostat high can result in increased water pressure. Hot water tanks have a release valve called the temperature and pressure release valve (T&P). Check the valve periodically to make sure it’s functioning correctly. In extreme cases of valve failure, a tank can even explode. Be sure to keep the thermostat set within recommended limits.

What is the life expectancy of a hot water tank?

The average life expectancy of a residential hot water tank ranges from 6 to 10 years. If you’re not sure of the age of your tank, check the serial number. For most brands, the first four digits indicate the month and year of manufacture.

If your tank is nearing the end of its life, the following signs could mean it’s time to find a replacement:

  • Water is leaking from the tank.
  • Water is not as hot as it should be: There could be corrosion on the heating mechanism, making it necessary for you to keep turning up the thermostat to get enough hot water.
  • Water aerators in your faucets are clogging: The water aerators are small screens that screw on the end of your faucets to give the water a nice smooth flow. If you take them off, and notice bits of plastic stuck in the screen, they could be coming from the water heater. The cold water intake tube is usually made of plastic and could be deteriorating.
  • Reduced pressure when you turn on the hot water.
  • You notice corrosion marks: Check the nipples where the hot water exit pipe meets the cold-water intake pipe. This is a prime location for corrosion.

Making your hot water tank more efficient may also help prolong its lifespan (on top of saving some energy). Here are a few common tips to make your tank more efficient:

  • Use less hot water.
  • Insulate your hot water pipes.
  • Buy an insulating blanket for your tank. Note: even though it seems simple to install, ask a professional. An incorrectly installed insulating blanket is a potential fire hazard.
  • Turn down the unit’s thermostat—but not too low. Check out the FAQ section to learn about hot water tank temperatures.

What should I do if the hot water tank ruptures?

In the unfortunate event that your hot water tank ruptures, take the following actions to prevent further damage to your home:

Shut off the water

There’s usually a valve on the cold water line close to your hot water tank. Close this as soon as possible. If you can’t find it, use your home’s main water shut-off valve which is usually in the basement of a house or the bathroom of a condo (side note: it’s a good idea to locate this valve before you need to use it).

Shut the power off

Electric water tanks have heating elements designed to be submerged in water. When the element is exposed to open air it can be a fire hazard. Locate the breaker for the hot water tank on your circuit breaker board and flip the switch to OFF. If you have a gas-fueled tank, shut off the main gas valve.

Contact your home insurance provider

Home insurance policies usually cover water damage that results from a ruptured tank. However, exclusions are specific to each policy, so check your coverage with your provider. Be sure not to throw anything out until you’ve spoken to your adjuster, as they may need to see the damaged items if you decide to submit a claim.

If you’re concerned about the risk of water damage in your home, check out Square One’s Preventing water damage article.

How to replace your hot water tank

If your hot water tank needs replacing, the first step is to decide what type of system you want to replace it with.

Is now the time to go tankless? Tankless systems heat water on-demand. As a result, they offer energy (and cost) savings, plus the luxury of unlimited hot water. They’re also smaller and often have longer life spans than hot water tanks. On the downside, they’re more expensive, and smaller units may not be adequate for homes with large simultaneous hot water demands.

If you’re not a handy person, you should call a professional when something goes wrong. They’ll advise you on whether you should repair or replace your hot water tank. You may save some money working on the tank yourself, but it’s not worth the risk of scalding yourself, flooding your house, or creating a dangerous gas leak and possibly an explosion or fire.

If you’re replacing your hot water heater with the same size and type, here’s a quick warning: If your hot water heater is located in a tight spot, we recommend hiring a plumber. Regulations on insulation have resulted in increased diameters for a given capacity of tank, potentially requiring complex re-routing of your water and gas pipes.

For those comfortable taking on the task themselves, installation will depend on which type of tank you choose:

Gas tanks

  1. Turn off the water and gas supply lines.
  2. Detach the chimney cap and open a hot faucet to allow air into the system, then drain the tank into a bucket or sink from the T&P valve.
  3. Disconnect the inlet and outlet water pipes (you may need to cut them to do this) and remove the water tank. We recommend having at least two people for this job.
  4. When reinstalling the new tank, allow at least six inches of space for ventilation. Reconnect the water supply line to the tank using a dielectric fitting, then reconnect the gas line.
  5. Turn both lines back on and check for leaks by covering the connection in liquid soap and looking for bubbles. If you smell gas at any point, shut off the gas completely and wait for it to clear. If the issue persists, call a professional before trying to start the unit.
  6. Set the thermostat and then light the pilot (more details on lighting the pilot in the FAQ section).
  7. Turn the control knob on and you should hear the burner ignite. If it doesn’t, you may need to relight the pilot.

Electric tanks

  1. Start by turning off the electricity supply at the circuit breaker.
  2. Remove the junction box (usually located on the top of your tank) and disconnect the wires.
  3. Open a hot faucet until the water runs cool, then shut off the cold water supply to your tank and connect a garden hose to the T&P drain valve. Open the valve and empty the tank into buckets or a drain.
  4. Once the tank is empty, remove the discharge pipe from the T&P valve (you may have to cut the pipe) and disconnect the water supply lines before removing the old tank.
  5. Set the new tank in a drain pan and install the pipe on the T&P valve to direct the water towards a drain if possible. (If not, you can use a bucket.)
  6. Attach the inlet and outlet water hoses to the pipes using dielectric fittings.
  7. Remove the aerator from a hot faucet and open the tap.
  8. Turn on the cold water supply and check for leaks using liquid soap at the connections and checking for bubbles. Your tank will now start filling with water. Once water runs from the faucet, the tank is full, but allow it to run for 3-5 minutes to ensure all air is out of the tank.
  9. Reconnect the green ground wire, then the remaining wires according to the manufacturer’s guidelines. Finally, turn the power back on and set the thermostat.

IMPORTANT: Don’t do this until the tank is completely full, or you could run into an issue known as “dry firing,” which could damage the heating element in your tank, or even cause a fire.

Heating the water may take several hours, but if you see any water dripping from the tank, consider lowering the pressure. Plumbers recommend 80 PSI or less.

What will your home insurance company want to know?

Home insurance providers may ask about the age of your hot water tank when you fill out your initial application. Once a tank passes its normal life expectancy, the risk of leaks or corrosion is increased. Insurers may advise (or in some cases require) replacement before they start coverage In other cases, replacing your hot water heater may reduce your premium.

Commonly asked questions

Is it safe to drink water from a hot water tank?

It is generally safe to drink the water from a hot water heater, but it’s a matter of some debate. If your tank is old, or hasn’t been flushed in a while, it may be full of sediment that can make its way to your faucet.

As well, hot water is more likely to leach minerals (like copper) from the pipes as it travels through your home. The risk is higher in large buildings with extensive plumbing systems, like condos or apartments. Though such minerals aren’t harmful in small doses, they can give the water an off taste.

It’s best to use cold water for drinking or cooking instead.

How do you turn on a hot water tank?

How you turn on your hot water tank varies by model. Regardless, the instructions should be printed clearly on the unit.

If you have a modern gas-powered hot water tank:

  1. Turn on the cold water supply and let the tank fill completely.
  2. Turn the temperature control to the lowest setting and turn the on/off/pilot control to “pilot.”
  3. If you smell any gas (a rotten egg-ish smell) at this point, stop what you’re doing, switch off the gas valve, and contact a professional. If you do not smell gas, you can proceed.
  4. Hold down the pilot igniter button, then press the spark button. You should see a pilot flame inside the unit, through a small window somewhere near the igniter.
  5. Once you see the flame, continue holding the pilot igniter button for 30-60 seconds. If the flame fails, press the spark button again. Stop if you smell gas and wait for it to clear before pressing the spark button.
  6. Once the pilot flame is stable, set the thermostat to your desired setting.

If you have an older gas tank, it might not have an igniter button. Instead, you need to manually light the pilot flame with a long barbecue lighter while holding down the pilot igniter button.

An electric tank is much simpler to turn on:

  1. Turn on the cold water supply and let the tank fill completely.
  2. Turn on the circuit breaker that controls the tank (this is located on your breaker panel).
  3. Turn on a hot water tap periodically to check that your tank is heating up.

Note: If you ever need to shut off your electric hot water tank to inspect or service it, place a lock out tag on the breaker switch after turning it off. This can be as simple as a piece of duct tape that says, “leave off.” It’s important to ensure that no one accidentally turns on the breaker while you’re working on the unit.

What temperature should a hot water tank be set at?

There are two commonly suggested temperatures for hot water tank thermostats: 60 °C or 49 °C (140 °F or 120 °F).

For many years (and in some places, presently), 60 °C was the recommended temperature. At 60 °C, the water in the tank is hot enough to kill any bacteria trying to set up shop inside the tank.

However, water at that temperature is also hot enough to cause third-degree burns in seconds. This makes it necessary to install mixing valves, which drop the temperature of the water after it leaves the tank. BC Hydro, for example, currently recommends setting your hot water tank at 60 °C.

If you do, you need to test the temperature of the hot water coming out of each faucet and shower in your home to ensure it’s under 49 °C at that point.

Government of Canada health authorities, meanwhile, suggest setting the tank at 49 °C. This is still hot enough to kill the overwhelming majority of bacteria, but cool enough to avoid scalding anyone in the home. Plus, it uses less energy than setting it at 60 °C.

Though, homes with immunocompromised occupants should set the temperature at 60 °C to be certain no lingering bacteria survive — just make sure you’ve got your mixing valves set up.

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