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Tankless water heaters are 80-99% energy efficient. When the water heater is actually used to heat the water, tank type water heaters are 40% to 60% energy efficient (the rest of the energy is spent to heat the exhaust and walls of the tank!), while tankless water heaters are 80% (gas) to 99% (electric) efficient. When you don't use hot water, you can save up to 15%-20% of your energy bill with tankless water heaters, because tank type water heaters are subject to standby heat loss.