In my 30-plus years as a plumbing contractor, I’ve replaced countless water heaters. Our company, which works in the San Francisco Bay area, installs three basic kinds: conventional gas models, tankless models, and — increasingly — condensing storage heaters. Customers who want to save energy nearly always ask for a tankless water heater. That’s no surprise — tankless heaters have been getting a lot of media coverage and are the only efficient heaters most people have heard of.

In most cases, however, we recommend condensing storage heaters to our replacement customers, because they are arguably more efficient than tankless models and — when used to replace an existing heater — frequently less expensive to install. For homeowners, switching from a conventional heater to a condensing model is not a big change. If they...

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