Tankless Water Heaters

You might have seen recent advertisements for tankless water heaters.  What are they, and are they a good deal?  Will you really save both money and energy through the use of a tankless water heater?  While these are good questions, unfortunately there are no simple answers.

How They Operate
Tankless water heaters, also known as demand heaters, have been used in the United States for over 25 years.  Unlike conventional water heaters, tankless water heaters work by heating the water as it is needed.  This can be accomplished through either an electric or a gas unit, which has a heating device to deliver a continuous supply of hot water as needed.  By eliminating the standby heat loss associated with conventional water heaters (the cost of keeping hot water always available for use), proponents tout tankless water heaters as being more energy-efficient.  

Types and Sizing
A tankless water heater can be purchased as either a point-of-use unit or a whole-house unit.

The point-of-use unit is less expensive, since it is dedicated to a specific use in a smaller area, such as servicing one sink or faucet.

A whole-house unit has a higher flow rate, which enables it to handle a larger hot-water demand.  The purchase price of a whole-house unit runs from several hundred dollars for an electric model to several thousand dollars for a gas model.   

Units must be properly sized in order to deliver the amount of hot water needed in a home.  The flow rate of the unit will determine how much water it can deliver at a particular temperature.  The flow rate in your home is a calculation based upon how many fixtures (such as faucets and appliances) are demanding hot water.  As more hot-water faucets are turned on at the same time, more water flows through the heater.  When this happens, water may leave the heater before it gets to the desired temperature.  Therefore, the size of a unit or the number of units a home needs should be based on the water-flow rate at peak demand.

It is also important to ensure that fixtures are in compliance with local, state and federal flow-rate requirements or guidelines.  For example, the Federal Energy Policy Act of 1992 required all faucets and shower fixtures made in the United State after 1992 to have a flow rate of no more than 2.2 gallons per minute (GPM).  The effectiveness of a tankless water heater system could be compromised if faucets or shower fixtures are operating at a flow rate other than what was assumed.

Other factors that will affect the size of the unit or the number of units needed include the temperature of the incoming water and the desired temperature of the hot water.  The incoming water temperature is obviously lower in a cold climate, such as Michigan, than the temperature of water entering homes located in a warm climate like Georgia.  

Factors to Consider Before Buying

  • Benefits of a tankless water heater:
    • Estimated to use 10 to 20 percent less energy than conventional tank-type water heaters.
    • Occupies less floor space than a conventional water heater.
    • The equipment is durable and, since it does not store water, is subject to less corrosion than a conventional water heater, thereby lasting longer. 
    • A continuous supply of hot water.
  • Drawbacks of a tankless water heater:
    • The purchase price is greater than a tank-type water heater.  
    • Installation in an existing home may involve additional costs.  Extra venting hoods for gas models, replacement of existing gas lines with larger ones, additional electrical circuit-breakers, or the need to purchase a second tankless water heater to accommodate simultaneous use of hot water at multiple sites are potential expenses that might not be evident until after installation begins.
    • Some consumers have experienced difficulty in locating a plumber or technician who is knowledgeable about the maintenance and repair of tankless water units.  Consequently, a service call could cost you more, due to the limited supply of trained technicians.
  • Electric tankless units appear to be less powerful than the gas units and require an ample supply of electricity.  Installing an electric tankless water heater may cause an increase in your monthly electric usage.  Also, the heavy demand of electricity may cause an overload on household electric panels.
  • Some research has suggested that a heavily-insulated conventional water heater may be as energy-efficient as some tankless water units.
  • One of the advantages of having a tankless water unit is the continuous supply of hot water.  However, this feature may affect your water usage.  If you never ran out of hot water, would you take a longer shower, thereby increasing the amount of hot water you use in a month?
  • Based on industry averages, water heating accounts for 20 to 25 percent of a household’s annual energy expenditure.  Yearly operating costs for conventional water heaters average from $200 for gas to $800 for electric.  Standby losses associated with a conventional water heater appliance represent approximately 15 percent of these yearly expenditures.  You can use these estimates to compare potential energy savings with the use of a tankless water unit versus a conventional water heater. 

As with any other major purchase, doing the necessary research in advance helps you make an educated, well-informed decision and avoid any "buyer’s remorse" once the sale is consummated.  There is no right or wrong answer.  Factors unique to each consumer household, such as the water consumption level, the availability of a gas or electric connection, and water temperature preferences, will affect whether or not a tankless water heater is the right choice for you and whether it would be more cost-effective than a conventional water heater.