Conventional Storage Type Water Heaters
Conventional storage water heaters remain the most popular type of water heating system for the home. Water is kept hot and ready for use at all times in insulated storage tanks. One drawback of these units is the energy used to keep the water hot at all times, known as “standby losses.” It operates by releasing hot water from the top of the tank when you turn on the hot water tap. To replace that hot water, cold water enters the bottom of the tank, ensuring that the tank is always full.
Because water is constantly heated in the tank, energy can be wasted even when a hot water tap isn't running. This is called standby heat loss. Only tankless water heaters avoid standby heat losses. However, you can find some storage water heater models with heavily insulated tanks, which significantly reduce standby heat losses, lowering annual operating costs. Look for models with tanks that have a thermal resistance (R-Value) of R-12 to R-25.
Source Material: US Dept. of Energy
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