What is a Tankless Water Heater?
According to figures from the Department of Energy, between 14% and 18% of household utility bills are spent on heating water. This cost is greatly reduced with the use of a tankless water heater. Tankless water heaters are devices that heat water only when it is needed.
Tankless water heaters are also known as:
- Point-of-use water heaters
- On-demand water heaters
- Instantaneous water heaters
They are more efficient than traditional methods of heating water, owing to the fact that they don’t heat and store water. They are becoming increasingly common in new homes, and are beneficial for homeowners who are environmentally-conscious and financially-savvy.
This guide will walk you through all of the different aspects of a tankless water heater. To learn more about traditional tank-based water heaters, see our guide What is a Tank Water Heater.
HOW DO THEY WORK?
Tankless water heaters are surprisingly simple devices. Here’s how they work:
When the hot water tap, shower, or another source of hot water is turned on, cold water flows through the pipes until they get to the heating section.
There, a gas burner or an electric element heats the water.
Once the water has reached the required temperature, it is sent to the required location in a home.
Theoretically, therefore, with a tankless water heater, you can keep your hot tap running all day without losing power. In practice, the flow of water may not be adequate, and there is always the chance of the heating element becoming overworked.
Generally, a tankless water heater provides hot water at between 2 and 5 gallons per minute. There are slight differences in operation between gas and electric models.
GAS VS. ELECTRIC
Both gas and electric tankless water heaters are more energy-efficient than tank-based systems. Generally, a gas-based system is cheaper to run because of the relatively low cost of natural gas.
However, some gas water heaters require venting, meaning they are less efficient when it comes to space. This also makes gas heaters slightly trickier to install.
See our guide on the average cost of a gas water heater for a more in-depth cost breakdown.
You can install an electric heater yourself, although, with gas, you will most likely need a professional to help, due to the need to connect to the gas mains and the resultant risks of doing so.
As a final factor, some homeowners prefer electrical elements since natural gas or propane is highly combustible. We have a guide on the average cost of an electric water heater if you are looking for more details.
For for information on the difference between gas and electric water heaters, see our guide on gas vs. electric water heaters.
WHAT ARE THE PROS AND CONS?
Deciding to change from a tank-based system to a tankless one is something that will require a lot of research, particularly because you’ll be paying $1,000 and above for the materials and installation costs. The below list will give an overview of the strengths and weaknesses of this type of system.
PROS
There are five main advantages of a tankless system. These are:
HIGH EFFICIENCY
Efficiency is the primary advantage a tankless system has over a traditional system. Generally, a tankless system runs at 80%+ efficiency.
In the case of electrical elements, this is above 98%, meaning that the money you spend heating your water is actually being used to heat your water, rather than the space around the heater.
LONG-TERM SAVINGS
The general measure of savings when it comes to a tankless water heater is the ‘payback period’ – namely, how long it takes for you to save the money it cost to have it installed. Generally, you can expect a payback period of between 10 and 25 years for a tankless system.
This is faster than changing from one tankless system to another. Moreover, tankless systems last longer, meaning you are more likely to reach the payback period (and beyond).
ENVIRONMENTALLY FRIENDLY
Connected with the idea of energy efficiency is the idea of being environmentally friendly. Traditional tank systems run at about 40-60% percent efficiency – far less than the 80% to 98% of a tankless system.
LONGER WARRANTIES
Tankless systems have fewer moving parts than tank-based systems. This means that companies are more willing to offer longer warranties. This helps tankless systems reach their payback point more easily than a tank-based system.
SAVES SPACE
Because you don’t need a multi-gallon tank stored somewhere in your home, you can free up space. This space can be significant in the case of some of the larger storage tanks. It may also make wiring and plumbing more accessible.
CONS
Although the advantages of a tankless system are large, there are some drawbacks meaning that they are not for everyone. Below are the most common three that are cited.
LIMITED FLOW RATE
Because tankless systems heat water as it is needed, they have a limited flow rate compared with a tank-based system. It may not be possible, for example, to have two showers and a laundry running at the same time.
A tank-based system, for example, can use all the water in its tank at once, if necessary. For a large family, that peak flow rate may make a tankless system not possible.
HIGH UPFRONT COST
Tankless systems can cost as much as three times what a tank-based system would cost. For those who are operating on a budget, the idea of making the money back over a decade, or a quarter-century may not be possible.
Our guide on the average cost of tankless water heaters sheds more light on this topic.
DIFFICULT TO INSTALL
As well as the practical difficulties of installation, there is also the potential for added costs. You may, for example, need to upgrade your electrical wiring, water pipes, or gas pipes in order to make your home suitable for a tankless system.
This all adds to the upfront costs and can lengthen the payback period significantly.
HOW TO CHOOSE A TANKLESS WATER HEATER
Making sure you get the right tankless water heater for you is vital. Choosing one that is undersized, for example, will mean that you run out of hot water too quickly. You also need to think about practicalities such as where your unit will be located, and whether you want a gas or electric device. All of these will involve some research pre-purchase.
DEMAND
Although the temptation may be to choose a smaller (i.e. cheaper) unit, this is a false economy, as it won’t provide you with enough hot water.
Instead, you will need to do some research into your specific needs.
Use the following steps to calculate your desired usage:
1
Calculate your usage at peak times.
This is usually the first thing in the morning when families are all taking showers, making breakfast, and potentially running laundry. Add up the total gallons used. The below examples give you a sense of two different families’ usage.
FAMILY #1
| Activity | Water Used |
|---|---|
| 2 showers | 40 gallons |
| 1 shave | 2 gallons |
| 1 food prep | 5 gallons |
| Total gallons used | 47 gallons total |
FAMILY #2
| Activity | Water Used |
|---|---|
| 3 showers | 60 gallons |
| 1 shave | 2 gallons |
| 1 food prep | 5 gallons |
| 1 load of laundry | 32 gallons |
| Total gallons used | 99 gallons total |
2
Next, calculate your desired temperature rise.
Assume that all water entering the system is 50 degrees Fahrenheit. You can assume you want your water heated to a temperature of 105 to 115 degrees (in both input and output, you may have the precise figures, but the example ones can work as a rule of thumb).
3
Combine the two calculations to work out what size heater you need.
For example, Family #1 needs to raise 47 gallons of water by 60 degrees in an hour, or a roughly 60-degree rise in temperature at .75 gallons per minute.
4
Multiply this number by 2-4.
Once you have your gallons per minute calculation, multiply it by between 2 and 4. This will give you a nice margin of error when it comes time to buy. After all, the one thing you don’t want is to run out of hot water.
GAS OR ELECTRIC
A good quality gas tankless heater will cost around $1,000. A non-condensing unit will cost slightly less than this, although they will require somewhere to be able to vent. A condensing unit doesn’t have the same requirements and therefore are more expensive. For a quality electric unit, you can expect to pay around $500.
Gas water heaters usually peak at 80-85% energy efficiency. By contrast, electric water heaters run at 98%+ efficiency. Therefore, there is far less energy loss with an electric tankless system.
LOCATION
The location will also play a major role in what type of water heater you buy. Since tankless water heaters don’t store hot water, they don’t require as much space.
Furthermore, since electric units are about one-third the size of gas units, and don’t require venting, they can be located in a greater range of places.
Tankless water heaters are very much the systems of the future. Although the installation cost can be high, particularly if you already have a tank-based water heater, these installation costs are constantly dropping, and with the energy savings, the amount of time it takes to earn back the installation cost is also dropping.
So, if you have a smaller household and would love to save money and help the environment, then a tankless water heater is a viable option for your home.