Source: https://www.remonline.com/what-you-need-to-know-about-the-three-types-of-water-heaters/
CONVENTIONAL
Conventional tank-style water heaters can be powered by electricity, oil, natural gas, propane or even wood. This style not only heats the water, they also store the water once it’s been heated. This is why they’re so large. The tank’s water capacity usually ranges from 150 to 230 litres.
Non-electric, fuel-fired water heaters are equipped with a burner situated at the bottom of the tank. This allows the exhaust gases to travel through either the middle of the tank or around the outside of the tank to the exterior of the home.
TANKLESS
Tank-style electric water heaters have heating elements inside the tank that heat the water directly. Since there’s no heat lost through the generation and venting of exhaust gases, tank-style electric water heaters are 80 per cent to 90 per cent efficient.
Tankless water heaters can also be fueled by electricity, oil, natural gas, propane or wood. This style is relatively small and is usually wall-mounted and takes up very little space.
They are, however, significantly more expensive to purchase and install than traditional tank-style units. The water heater senses any time the hot water tap is turned on and ignites the burner or energizes the heating element. A larger element (or burner) will supply more hot water, which is much more convenient if two or more appliances require hot water at the same time. The energy savings from eliminating the off-cycle costs (keeping an entire tank of water heated overnight) can be as much as 10 per cent to 15 per cent.
SOLAR
Fueled simply by the sun’s energy, solar-style water heaters are typically used to supplement standard fuel-fired or electric water heaters, mainly because it can be difficult to obtain enough energy from the sun to heat water to necessary temperatures on an ongoing basis. Solar water heaters are characterized either as open-loop or closed-loop systems. An open-loop system circulates household (potable) water through the solar panel, where the water is heated directly by the sun.
A closed-loop system uses a heat-transfer fluid to collect heat from the sun and a heat exchanger to transfer the heat from the heat-transfer fluid to household water.
The off-cycle heat losses for both oil and gas-fired units can be reduced by insulating the tank and hot water pipes. Before installing insulation on a tank, it’s best to consult with a qualified heating contractor to determine the required clearance around the burners, exhaust vents and water pipes to ensure safety.