An electric water heater heats and stores the home's hot water supply. These units use one or more electrical resistance heating elements to supply the heat. A thermostat senses the water temperature and regulates the power to the heating elements as needed to maintain the water at the set temperature.
Most water heaters have the capacity of supplying water at temperatures between 120 and 180 degrees Fahrenheit. Setting the thermostat to a lower temperature reduces the energy consumption and reduces the risk of scalding burns.
Opening a hot water tap removes the hottest water from the top of the tank. A dip tube reaches near the bottom of the tank. It attaches to the cold water supply to replace the hot water as it leaves the tank and provides the pressure the system requires for moving hot water through the pipes. If the tank is large enough, the additional cold water reaches the set temperature before it exits the tank.
Tankless electric water heaters eliminate the storage tank and heat water on demand. These units provide an unlimited supply of water, but for only one or two fixtures at a time. They are more common in Europe than in the United States, as of 2015.