indoor tankless water heaterVia The Home Depot

What Is a Tankless Water Heater?

Tankless water heaters take up much less space than storage water heaters as they heat the water directly. When you turn on the hot water, the cold water travels through a pipe and into the tankless water heater unit where it is heated by a gas burner or an electric element. This allows you a constant supply of hot water.

On average, tankless water heaters can provide 2 to 5 gallons of hot water per minute. Gas-fired tankless water heaters, according to energy.gov, can produce higher flow rates than electric models.

For those with large families who go through a lot of hot water, installing more than one tankless water heater is common. This will ensure there is always enough hot water available for showers, laundry and the dishwasher.

Tankless Water Heater Advantages

Tankless water heaters (also called “on demand” units or instant hot water heaters) use 30 to 50 percent less energy than units with tanks, saving a typical family about $100 or more per year, depending on water usage.

  • These units heat water only when you turn on the faucet.
  • They usually operate on natural gas or propane.
  • The main advantage is that they eliminate the extra cost of keeping 40 to 50 gallons of water hot in a storage tank, so you waste less energy.
  • They also offer a continuous supply of hot water, which is ideal for filling a big hot tub or a whirlpool.
  • They’re more compact than a standard water heater and mount on a wall.

‘’Tankless water heaters have a lot going for them,” says Myles Robinson, home expert at UK Composite Doors. “They’re also a great choice for homes with limited space, plus, you never run out of hot water, which is great for larger households.”

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Tankless Water Heater Disadvantages

“On the downside, tankless systems have a higher upfront cost, both for the unit and installation,” says Robinson. “They also may not keep up with high-demand households unless you install multiple units, which can get pricey.”

Other disadvantages include:

  • Smaller units won’t produce enough hot water to serve most households. They’ll only serve one faucet at a time—a problem if you want to shower while the dishwasher is running. There are larger units that can handle the demand of a whole family, but they are expensive.
  • Because tankless units have high-powered burners, they also have special venting requirements (a dedicated, sealed vent system, which requires professional installation). Natural gas burners often need a larger diameter gas pipe, which adds to the initial installation cost.
  • Larger ones also may require an electrical system upgrade

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Electric vs Gas Tankless Water Heaters

The biggest difference between electric tankless water heaters and gas tankless water heaters is their efficiency. Electric tankless water heaters are typically around 98 percent or more efficient while gas tankless water heaters are around 80-85 percent efficient.

“Choosing between the two often depends on your home’s size and existing utilities,” says Robinson. “Electric tankless heaters are cheaper upfront and easier to install, but they’re better suited for smaller homes or as point-of-use systems. Gas models, on the other hand, are more powerful and better for whole-house use but require venting and may cost more to install.’’

If you have to choose a new water heater, a gas tankless water heater can be cheaper to run and will typically last longer. Here’s what else to know.

Electric Tankless Water Heaters

Compared with gas tankless water heaters, “Electric tankless water heaters are more compact, easier to install and ideal for smaller households or supplemental hot water needs,” says Pete Duncanson, vice president of training and development at ServiceMaster Restore.

An electric tankless water heater will also be more efficient than a tankless gas water heater, but they do still require a lot of electricity. A whole house electric tankless water heater can use more than 25,000 watts of electricity, compared to 5,000 watts of electricity with a conventional water heater.

If your goal is to reduce fossil fuel use, an electric tankless hot water heater will be better than gas, since electric power will eventually be supplied by renewable energy.

Gas Tankless Water Heaters

Compared with electric tankless water heaters, “Gas heaters tend to have higher flow rates and can be better for larger homes,” says Shaylin King, owner of Mr. Rooter Plumbing of Tri-Cities. “They do require proper ventilation and may have a higher installation cost.”

Gas tankless water heaters will last longer than traditional water heaters and they’re safer than conventional water heaters. One disadvantage is that if there is scale build-up, a tankless water heater can automatically shut off.

The Bottom Line: Tankless Water Heater Pricing and Installation

When you’re pricing a unit, be sure to get an estimate or firm bid on installation costs. This is not a do-it yourself project unless you have pro-level skills. You can find the best tankless water heaters at many home centers and plumbing specialty stores.

Figure A: Tankless Water Heater Details

When a hot water tap is opened, the heating elements turn on. Water is heated as it flows through the heat exchanger.

tankless water heater diagramFamily Handyman

Is a tankless water heater for you? Learn about them in this video:

How to Choose the Perfect Water Heater

From tankless to traditional models, our expert tips will help you find the right water heater for your home and budget.

About the Experts

  • Myles Robinson is a home expert, founder at UK Composite Doors and previously owned and operated Boiler Central, a multi-million dollar boiler repair business.
  • Pete Duncanson is vice president of training and development at ServiceMaster Restore, where he has worked since 1995.
  • Shaylin King is owner of Mr. Rooter Plumbing of Tri-Cities, Yakima, where he has worked as a plumbing and drain cleaning professional since 1995.