A home’s space-heating system can also be used to heat water. Two types of water heaters that use this system are tankless coil and indirect.

No separate storage tank is needed in the tankless coil water heater because water is heated directly inside the boiler in a hydronic (i.e., hot water) heating system. The water flows through a heat exchanger in the boiler whenever a hot water faucet is turned on.

During colder months, the tankless coil works well because the heating system is used regularly. However, the system is less efficient during warmer months and in warmer climates when the boiler is used less frequently.

A separate storage tank is required with an indirect water heater.

Like the tankless coil, the indirect water heater circulates water through a heat exchanger in the boiler. But this heated water then flows to an insulated storage tank.

Because the boiler does not need to operate frequently, this system is more efficient than the tankless coil. In fact, when an indirect water heater is used with a highly efficient boiler, the combination may provide one of the least expensive methods of water heating.