A methodology for the sizing of domestic hot water heating and storage systems is defined, by assuming an extreme operating condition cycle composed of only two parts, a water consumption period and a system repositioning period. In both parts to respond to the extreme hot water demanding conditions, the heating is always on. The subsequent exergy analysis of this domestic hot water production system compares the irreversibility and the exergy efficiency of the water storage and the tankless situation. To carry out such analysis, some basic assumptions were made: a constant temperature heat source, a short duration operating cycle and a constant thermal energy supply. Under these circumstances it is shown that the hot water storage system leads to lower exergy losses while the tankless system is more exergy efficient, but requiring a higher instantaneous thermal power input. The use of the joule effect electricity, as the system heat source, be it a water storage one or a tankless one, maximizes the system irreversibility losses and minimizes the system exergy efficiency. The tankless system, with the joule effect electricity heat source is the worst situation.