These highly insulated tanks are attached to the boiler and heated by it as a separate zone. Boiler water is circulated, usually though a coil, where its heat is exchanged with the domestic water in the tank. A typical stand alone tank type water heater has a firing chamber at the bottom, which cannot be insulated, and a chimney through the tank. This chimney continues to draw cool air into the heater and to take heat out with it when the unit is not firing. This heat migration is called stand-by loss. Because indirect water heaters have no flame and therefore no chimney, they can be insulated completely and therefore have almost no stand-by loss. Once the water is heated, it stays warm, as in a thermos, until it is used.
The best indirect tanks are made of excellent materials and have lifetime warranties. Because they are heated by the boiler, their “engine” is more efficient than that of a typical water heater. Likewise, they have much larger and better designed heat exchange area, allowing more of the fuel’s heat to be captured quickly. Their downside is their dependence on electricity – a conventional tank type heater will work during a power outage, the indirect will not, because the boiler and circulating pump will not be able to heat it.