Once researched, build as everything else.
Purpose? Water tank is meant to act as water tank. You use it between producer and consumer to even out production excess and shortage.
For example well which has only direct power from solar panels without battery. They do not produce at night, but with sufficient daytime surplus you can store daytime water and use it to cover water needs during night.
If I try to build it I get red everywhere…
You have to build it attached to the well, you need to disconnect the well pipe first and it should pop into place so you can build it.