WE DISCOVERED our water heater had died when the basement flooded. Mopping up the mess, we considered whether to get a tankless water heater, or North America's favourite, a standard storage unit. Both types can use various energy sources. The most available (therefore least expensive) energy is likely natural gas in Saskatchewan and Alberta, electricity in Manitoba and British Columbia, and electricity or propane in Ontario, says Kelly Winder, a research engineer with the Saskatchewan Research Council. "A gas water heater with traditional venting has a 55 to 65 percent efficiency rate," Winder says. That is, of the energy available in the gas you're burning, 55 to 65 percent is turned into heat. Paul Salmon, of Salmon Plumbing and Heating in London, Ontario, says Ontario homes have been built without chimneys for the past decade. Most of them have high-efficiency furnaces and power-vent or direct-vent water heaters. Power venting reduces standby heat loss up the chimney. However, says Salmon, those whose homes have chimneys are better off with conventional venting. "It's cheaper and there are not as many parts to break down." Tankless heaters "are still fairly expensive; we sell only the odd one," Salmon says. His family has one, and he admits it requires a lifestyle change. "You can't have two showers at the same time, but you can have 20 showers in a row and never run out of hot water." The compact tankless units, popular in Europe and Japan, operate on demand. At 80 to 95 percent efficiency, they are the environmentally responsible choice. However, they have higher purchase, installation, servicing and replacement costs. They may cost two to three times as much as a storage water heater. Considering the price difference, including additional venting we'd need to go tankless, it would take many years for us to recoup our investment through energy savings. Also, tankless heaters don't provide the instant hot water we're used to. Friends with a tankless heater are accustomed to washing their hands in cold water. They're finished before the hot water arrives. In addition, tankless units require a certain flow rate, and yearly servicing to flush the heating coils. Both tankless and storage units must be replaced if leaks develop. Warranties vary from one year for a tankless unit, to the lifetime guarantee on the 50-gallon heater we purchased. "A warranty is just a sticker," Salmon says. "It's the same tank with big insurance. A water heater is not a complicated appliance. It's a tank with insulation around it and a burner underneath." Most water heaters last 10 years, he adds. "Beyond that, especially if you have hard water, there'll be lime build-up affecting efficiency." On its website, Natural Resources Canada says energy-efficient storage water heaters "can perform as much as 40 percent better than conventional models." But consumers may find few options, and little data on energy efficiency. "In Western Canada, there are only about three models readily available on the retail market," says Winder, adding John Wood manufactures some 70 percent of the water heaters sold in North America. Retailers re-brand them. To add to the confusion, John Wood water heaters are made by GSW, purchased in December 2006 by A.O. Smith Corporation. Generally, higher-priced water heaters are better built, more efficient, and have better warranties, Winder says. But price is only one indicator of value. "Look at the specifications on the model," he advises. "Do a web search on the manufacturer." Winder recommends solar water heating. "It's a huge untapped resource in most of Western Canada. On the Prairies, getting 65 percent of your water heat from solar is pretty easy." Solar water heating kits from Thermo-Dynamics of Nova Scotia cost about $5,000. A drawback: solar units require backup. Winder suggests purchasing a tankless unit too, for on-demand heating in winter, when sunlight is reduced. Initially, we chose a particular gas-powered storage heater that Sears assured us was more energy efficient than competitive models. It proved too tall for our cramped basement. (Do consider space limitations when shopping for any appliance.) We settled on a slightly more expensive and less efficient Home Depot model because it was shorter and had the best warranty. Despite the $1,500 bill, we were happy to have it after seven days, three hours and 16 minutes of heating water on the stove for household use. - SHEILA ROBERTSON Hot Water Use Family Size Electric Tank Size Gas Tank Size Oil Tank Size Vacation Cottage - no dishwasher - no clothes washer Up to 2 people 135 litres (30 gallons) 90 litres (20 gallons) 90 litres (20 gallons) Small/Medium Family Home - 1 bathroom - no dishwasher - clothes washer 2 people 180 litres (40 gallons) 135 litres (30 gallons) 135 litres (30 gallons) Medium Family Home - 1.5 bathrooms - dishwasher - clothes washer 3 people 225 litres (50 gallons) 180 litres (40 gallons) 135 litres (30 gallons) Medium/Large Family Home - 2 bathrooms - dishwasher - heavy-duty clothes washer 4 people 290 litres (65 gallons) 180 litres (40 gallons) 180 litres (40 gallons) Large Family Home - 2 or more bathrooms - heavy-duty dishwasher - heavy-duty clothes washer 5 people 360 litres (80 gallons) 225 litres (50 gallons) 225 litres (50 gallons) Large Family Home - same as above with whirlpool baths 6 people 540 litres (120 gallons) 340 litres (75 gallons) 340 litres (75 gallons)