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Average Cost of a Tankless WAter Heater

Tankless water heaters are fairly modern pieces of technology, although they are becoming increasingly common. They work by heating only the water you are about to use, rather than storing hot water in a tank. They are sometimes known as point-of-use or on-demand systems, although the key point of difference from traditional models is the absence of a tank. As a result of their efficiency, they can be extremely cheap to run.

This guide will walk you through all the costs involved in a tankless water heating system so you can see if it’s the right fit for you and your family.

THE OVERALL COST

For a whole-house electric tankless water heater, you can expect to pay around $500 (in comparison, a similar gas version will cost around $1,000). The cost of a heater with installation will be between $1,500 and $6,000.

The costs are dependent on whether you install a single point or a whole house heater, and whether you undertake the installation yourself.

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DIFFERENT TYPES OF TANKLESS WATER HEATERS

Even more than with a tank-based system, there is a great deal of variance when it comes to tankless water heaters – you can have a small device attached to a single faucet or shower, or a much larger, whole-house system. This naturally plays a huge role in the overall costs involved.

SINGLE POINT

A single point unit is a tankless water heater located close to a water use point. It serves only one single water use, rather than the system as a whole.

Typically they can supply between .5 and 2 gallons of hot water per minute – more than enough for a shower or kitchen sink, for example. For a single point heater, you can pay between $150 and $1,000, dependent on the flow rate.

WHOLE HOUSE

In comparison with a single point unit, a whole house system works at all water use points. A whole-house system can handle between 5 and 10 gallons per minute, meaning in larger households it may not be sufficient for multiple different uses simultaneously. In these circumstances, you may need to install multiple tankless systems.

A whole-house system costs between $600 and $800. With installation, you can expect to pay between $1,000 and $2,000.

ELECTRIC

The most common types of tankless water heaters are electric. They are extremely energy efficient and require only minimal maintenance. Electrical models usually run between 95% and 98% energy efficiency, with some models running even higher.

The cost of an electric device is usually around $500 (excluding installation, which is usually simple enough for you to do yourself, without the need for a professional). The annual running cost with this type of model is around $185.

GAS

The second most common type of tankless heater runs off natural gas. In order to have this type of system, you will require an existing natural gas connection. The cost for a gas heater is usually $800 and $2,000 (this does not include installation, which will almost certainly require a professional because of the risks of working with gas).

The running cost of this type of heater is around $163 per year.

COLD CLIMATE

If you live in a cold climate, you may require a slightly different model of tankless heater. This is because, firstly, you will need to make sure the pipes and the lines are insulated adequately from the cold. Secondly, you will also most likely require more hot water than if you lived in a warm climate. For example, your flow rate will need to be between 6.5 and 8.5 gallons per minute.

A larger tank like this will cost between $800 and $1,200.

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ENERGY-EFFICIENT MODEL

Although tankless water heaters are more efficient than tank-based models (because they use all the water they heat immediately, rather than constantly needing to store and heat it for later use), there are still models that are more energy-efficient than others.

An electric water heater with the Department of Energy certification will cost $200 to $300 more, although this cost will be recouped over the lifetime of the product in reduced running costs.

INSTALLATION COSTS

As shown above, a significant chunk of the costs involved in a tankless water heater are the installation costs. If you don’t have the requisite level of plumbing, electrical, or contracting experience, you will need to hire a professional for safety reasons. 

Having an improperly fitted water heater will not only mean that it doesn’t work correctly, but it can be actively dangerous. Electricity and water don’t mix well, and neither do gas and an open flame.

LABOR COSTS

Throughout this guide, we have worked on the basis that a plumber will cost between $45 and $150 per hour, with an average somewhere around $85. This naturally depends on the area you live in and the nature of your call.

An emergency call-out will cost an additional $50 to $150. There may be an economy of scale where multiple hours results in a drop in the hourly rate.

ELECTRIC HEATER

To install an electric tankless water heater takes an average of two to three hours. This means that a professional will cost between $90 and $450 to complete the project.

An electric heater requires its own electrical circuit. If you don’t have one already available, then installing one will take an additional two hours of work, adding an extra $90 to $300 for the project. This is a common requirement when you switch from a gas-based system to an electrical one.

GAS HEATER

Installing a gas-based water heater is more expensive than an electrical one as you need to install a gas line. This alone costs around $500. The labor of installing a gas line can also cost up to $1,200.

In addition, you may need to install heat pumps, water pumps, and additional piping, which will add between $250 and $500 to the overall cost of the project.

DRYWALL REMOVAL

Depending on where you are installing the tankless system, you may need to remove and reinstall the drywall (or at least cut a segment out). If you are adding in a tankless system you may require an access door in the drywall to allow you to make future adjustments.

This additional labor may require a different contractor – a carpenter rather than a plumber – and will therefore cost around $70 per hour – a total cost of $100 to $300.

COLD CLIMATES

If you do require a cold climate tankless heater, then there will be additional labor costs involved. One of the big differences is the need for insulation of the pipes so that they don’t freeze in the cold weather. There are also additional requirements when it comes to venting – the run needs to be at least six feet.

The additional labor means that the installation cost will be around $1,400 – the labor makes up around $400 of this.

ADDITIONAL COSTS

As well as the cost of materials and installation, there are ongoing and additional costs involved in having a tankless heater system. Although these costs soon mount up, the average savings for a tankless system compared with a traditional tank-based system is around $116 per year.

Given that tankless systems last around 20 years, these savings can make a short-term investment worthwhile if you have the capital available.

Maintenance

Once you’ve installed a tankless system, you will need regular maintenance to ensure that it is working as efficiently as it can. The Department of Energy recommends regular maintenance, although this will vary based on the type and model of water heater you have. Consult with your manufacturer if you have any doubt.

An annual inspection will likely cost you $45 to $130 (i.e. an hour’s work for a contractor). If your system is under warranty, then you won’t need to replace any parts out of your own pocket.

Additional Insulation/Piping

If you are changing from a tank-based system to a tankless one, you may need to add in additional piping to make the connections fit properly. This is something you can potentially do yourself. 

If not, add on another hour of work for your contractor – and the cost of the materials will be roughly $10 per linear foot. Typically, this will require 3-6 feet of piping, resulting in a cost of $30 to $60 if you install it yourself.

Compatibility with Electrical System

Naturally, installing a new system will require some adjustments to ensure compatibility. For example, you need to ensure that the voltage in your electrical system is at the required level.

Although this is not a complex task, it will take an electrician an hour to complete it, meaning you’ll pay $65 to $85 to get everything synchronized.

Removal of old system

If you are upgrading to a tankless system, you will need to remove and dispose of the old one. This is not as simple as placing it in the recycling as there are many components that require specialists to dispose of them. In addition, you need to make sure that the wiring or gas hoses are left in a safe condition.

You can, therefore, expect to pay around $500 for a professional to come and dispose of your current system.

Permitting

In some jurisdictions, you will be required to get a permit for your tankless water heater. This is to certify that the tankless system is up to code.

This will cost somewhere between $50 and $500. If you are not familiar with this process, your contractor can complete it for you and add it to the final cost of the project.

Tankless systems are very much the way of the future. Indeed, looking back, it may seem incredibly wasteful that we used to heat our water constantly on the off chance that we may need it.

As heating technology improves it will be more feasible to have whole-home systems installed at smaller costs. Moreover, as these systems become standard, they will be automatically installed into homes.

If you can’t wait for the future to be here, then a tankless system is an option – this guide has hopefully shown you how you can make it the right financial option for your family.

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