When shopping for a commercial water heater, you might be tempted to go straight for the one with the highest efficiency rating. After all, 98% efficiency must be better than 94%, right?

Well… not so fast.

Let’s unpack a surprising truth: sometimes 94% is actually better than 98%, especially when it comes to real-world performance. Here’s why.

What’s the Difference Between Thermal Efficiency and Operational Efficiency?
Most water heaters are rated by thermal efficiency, which is how well they convert fuel into
heat under ideal lab conditions. But here’s the catch: those conditions rarely exist in the real
world. What really matters is operational efficiency, which is how the system performs day in and day out, under fluctuating demand, varying temperatures, and real usage patterns.

Why Do Tank Water Heaters Lose So Much Efficiency in Practice?

Tank-style water heaters suffer from three major hidden inefficiencies:

1. Standby Loss
• Even when no one’s using hot water, the system keeps the tank warm, wasting energy
24/7. In large commercial systems, this can mean millions of BTUs lost per day.

2. Purging & Cycling Loss
• Tank systems often cycle on and off to maintain temperature. Each cycle wastes energy
by:
o Running combustion blowers
o Purging unburnt fuel
o Drawing in cold air
• This can eat up 8% or more of your daily energy use.

3. Reheat Efficiency Loss
o Every time the tank reheats water, it often operates outside its most efficient range,
especially in condensing systems. That’s another 12% of energy potentially wasted.

💡 So, Are Tankless Systems Always Better?
Not always, but in many commercial applications, yes.

Tankless systems like those from Intellihot are designed to:
o Eliminate standby losses (no tank = no stored water to keep hot)
o Avoid cycling losses (they only run when needed)
o Maintain high efficiency across a wide range of conditions
That means their operational efficiency, the number that really matters, can outperform even higher-rated tank systems.

💰 What Does This Mean for Your Bottom Line?

Choosing a system based on thermal efficiency alone can lead to:
o Higher energy bills
o More maintenance
o Wasted capital on oversized or underperforming systems

By focusing on operational efficiency, you get:
o Lower total cost of ownership
o Smaller carbon footprint
o More reliable performance

🧠 How Can You Make the Smart Choice?
Ask the right questions:
o How often will the system cycle?
o What’s the real-world usage pattern?
o How much energy is lost just keeping water hot?
And most importantly: Don’t be fooled by the sticker number

🚀 Ready to Upgrade Your Water Heating Strategy?
Intellihot’s tankless systems are engineered for real-world efficiency. If you’re designing or
upgrading a commercial system, it’s time to think beyond the tank.