The U.S. Department of Energy estimates that the energy used to heat water accounts for 17.7% of energy consumption in U.S. residential energy use. That is one of the largest segments of the energy consumption pie. So money saved in heating water can be substantial.
There are two types of water heaters:
- Tank water heaters (called storage water heaters): these are the kind of water heaters in the US that we commonly see in our basement or garage. These heaters heat water relatively slowly and then store the hot water in a large tank from which hot water may be drawn as needed.
- Tankless water heaters or On-demand water heaters, on the other hand, heat water directly as the water passes through the tankless gas or electric heater without using a storage tank.
Why are tankless water heaters more efficient?
Comparing tankless versus storage water heaters, Storage water heaters may have a lower initial cost but a higher lifetime cost, although this is less true now that water heaters often have strict emissions limitations that raise the out-the-door cost. Tankless water heaters typically have a life expectancy of 20 years or more, whereas storage water heaters typically last 10 to 15 years.
Disadvantages of storage tank water heaters
- Recovery time (the time to heat the cold water in the tank) is slow, so once you run through the hot water stored, there can be a substantial period of time before you can take another shower or do laundry.
- The capacity to produce hot water is inherently limited by the volume of hot water stored in the tank unless you are willing to wait the recovery time to heat a new tank of water.
- The water heater including the tank is typically quite bulky and can occupy substantial space in your house or other building (hence, they are commonly located in the basement or garage).
- Since by its design a water heater using the tank is keeping the tank full of water hot at all times, it can be quite inefficient depending on your usage patterns. For example, if you go away for the weekend, your hot water heater is still merrily consuming energy to keep your water hot in the tank.
- The most common failure mode of storage water heaters is for the tank to rust through and start leaking.
- Although the use of thick insulation (and even insulation blankets) has improved the energy efficiency of hot water heaters with tanks, they are still typically less energy-efficient than tankless water heaters.
Advantages of tankless water heaters
- Energy Savings & reduced cost
- Instant hot water
- Endless hot water
- Saves space
- Long life
- Simple Maintenance
Energy savings: The U.S. Department of Energy estimates that energy savings can total 8% to 34% by use of a tankless water heater (with the larger savings accruing to those using smaller amounts of hot water). This has an estimated benefit of lowering energy costs by $100 or more per year using an Energy Star qualified tankless water heater. Tankless water heaters avoid the heat losses associated with storing hot water in a tank.
Instant and Endless Hot Water: Tankless water heaters provide what is often called instant hot water, meaning that the water is heated instantaneously as it passes through the tankless heater. However, it’s important to recognize that the time until hot water flows from your shower or faucet still depends on the distance between your hot water heater and that outlet. So simply replacing your storage water heater the tankless water heater will not change the time it takes to get hot water. However, what it will change is how much hot water is available. Since tankless water heaters produce instant hot water as it flows through the heater, you will essentially have an endless supply of hot water for your showers, laundry, dishwasher, etc.
Saves Space: Tankless hot water heaters typically take much less space than the storage (tank) water heater that they replace, so that space is freed up for other uses. When it comes to space saving, tankless heater wins. Check out this before (with storage tank) and after (with tankless) picture. See how much space a tankless water heater can safe!
Long Life: Tankless water heaters typically have a life expectancy of 20 years or more, whereas storage water heaters typically last 10 to 15 years.
Simple Maintenance: Maintenance of tankless hot water systems is typically pretty simple. There is a myth that tankless water heaters require annual maintenance, manufacturers typically disagree with that. There aren’t many moving parts or things to go wrong on a tankless water heater, although they may require period cleaning of mineral deposits if installed in an area with hard water.
What is a Tankless or On-demand Water Heater?
Tankless water heaters, as the name implies, have no tank for the storage of hot water and instead rely on heating water “instantly” to meet demand. When you turn on the hot water tap, cold water begins flowing through the unit. As soon as your tankless water heater senses this flow, it turns on a heater that uses either a gas burner or an electric heating element to heat the water as it flows through. The result is that your tankless water heater will deliver a constant supply of hot water. No waiting for water in a storage tank to heat or reheat. Tankless heaters have been popular for many years outside of the US where energy costs are typically higher and energy efficiency regulations more strict. For example, we recently stayed in an apartment in Barcelona, and it had multiple tankless water heaters, one in each room using hot water (e.g., each bathroom, the kitchen, and the laundry room).
There are two types of tankless water heaters:
Tankless gas water heaters
Tankless gas water heaters may use either natural gas or propane to heat water via a heating element that transfers heat from the burning gas to the water as it passes through. As a general rule, you want a water heater that uses the type of gas you have available. Generally, natural gas is less expensive than propane, so it would be your choice where you had access to natural gas. However, a propane tankless water heater would be the best choice if your house did not have access to natural gas or if you wanted a mobile or portable tankless water heater (such as a propane tankless water heater in an RV or a boat). Gas tank less water heaters use to require a constantly burning pilot light to light a larger burner on demand. This is generally no longer true, as the heaters typically use an instant dictation device to ignite the gas burner. While this does save significant energy, it also means that tankless gas water heaters need to be plugged into electricity for the ignition device.
There are two types of systems in tankless gas water heaters: Non-condensing and condensing. The right system for you depends on the venting systems in your home, and whether you are doing a new construction. Check out our informative article on condensing vs. non-condensing.
Tankless electric water heaters
Electric water heaters use electricity to heat an element around which the water passes providing “endless” hot water on demand. Electric tankless water heaters are often initially less expensive than equivalent capacity gas water heaters and may be simpler to install, depending on the availability of utilities where you want the water heater(s) installed. Electric tanks water heaters tend to be quite reliable, and operating costs are typically higher than with natural gas. Check your own utility rates to estimate operating costs.
How do you size a tankless water heater?
How much hot water do you use?
The size of the water heater you need depends on how much hot water you use. With a tankless water heater, the flow rate (measured at gallons per minute, GPM) of that water heater is what limits the amount of hot water available for use. Choosing a tankless water heater for your house or other building requires a simple calculation of what flow rate will be required.
It is important to pay attention to the rated flow rate of any tankless water heater you are considering and to compare that to your needs. Available tankless water heaters provide hot water at a flow rate of 2 GPM to over 10 GPM.
Typically, tankless water heaters are rated for flows in approximately the 4 GPM to 10 GPM range. Flow requirements of 4-5 GPM are considered small, requirements of about 7 GPM are considered moderate, while 10 GPM is considered large.
Two layouts of tankless water heating systems for the home:
Do you want to be able to take two showers and run your dishwasher all at once? If so, your water heater will need to have sufficient capacity for all of that at once. There are two ways to increase the capacity of a tankless water heating system.
- You can either size a single tankless heater to accomplish all of your needs (more common in the US or where an existing storage system is being replaced by a tankless system). A single tankless heater for the whole house is called a centralized tankless water heater.
The drawback of this option is that there still may be lengthy pipe runs from the water heater to your shower or dishwasher which can cause some lag in getting hot water.
- You can use two or more tankless heaters placed near your points of use, to independently heat water for showers, your dishwasher, or other appliances. A dedicated tankless to one specific use is called a Point-of-use tankless water heater. This has the added advantage of placing the water heaters near the points of use so that you truly get instant hot water. This practice is less common in the U.S., where houses were often plumbed when built assuming a single, central water heater. It is a common practice in Europe and Asia.
Cost of buying and installing a Tankless Water Heater
According to Improvenet, most homeowners spend between $1,273 and $2,300 to purchase and install a tankless water heater. Tankless water heater prices typically very between $200 and $1000. The installation itself is typically around $1,500 for a single point (single heater) system. This can vary greatly depending on the difficulty of the installation.
Let me share our experience with installing a tankless water heater and why a tankless water heater is worth it for our house. We installed a high capacity tankless system in our five bedroom house seven years ago. The process was actually quite simple.
- We simply removed the storage water heater (which was gas) and installed a high capacity gas tankless water heater. This unit quite simply fit into the space previously occupied by the storage water heater – as the gas connections and plumbing connections were all right there. So this was quite readily done as a homeowner project (make sure you get all required permits).
- This installation was relatively inexpensive and easy, and it gave us the economic benefits of a tankless water heater. It provided unlimited hot water, but did not change the time required for hot water to flow to our back bathroom. We had the advantage of an existing good plumbing system where gas, water, electricity, and a flue for venting were already available at one spot.
Tankless water heater installation tips
As we become more conscious of energy use and efficiency (and as building codes force us to become more energy efficient), there are a number of considerations when installing any new water heater.
- Use a professional unless you are confident in your abilities to install a water heater
- Get a permit; permits are generally required and help insure a safe installation
- Check out gas and electric tankless water heater reviews
- Check out tankless water heaters at Home Depot, Lowes, etc.
- Strongly consider changing shower heads and faucets to reduce your water usage and flow requirements.
- Insulate your accessible hot water pipes with foam insulation.
- For those gas tankless water heaters requiring venting of exhaust gases, make sure you have allowed for that.
Yes, it is entirely possible for you to have instant and endless hot water where you need it and when you need it and also to save money and help the environment. You should consider installing a tankless water heater in any new construction or in your current home. Check out our pick of the top tankless water heaters. Checklist of things that you should consider include:
- Capacity: make sure you size your tankless water heater to meet your hot water needs
- Choose gas or electric: which is cheaper in your area? What do you have available?
- Budget: purchase price, installation cost, operational costs