A tankless water heater does not have to keep the stored water hot at all times, so it uses less energy. A standard water heater uses energy when it is on standby, even when there is no demand for hot water. There is no standby heat loss while using a tankless water heater because it only runs when there is a call for hot water. Typically, in San Diego, you can expect 20%-30% energy savings when using a tankless vs. a conventional hot water heater.