Switch to a Tankless Water Heater: Why It’s a Good Idea and Why It’s a Bad Idea

How a Tankless Water Heater WorksWhen purchasing a new hot water heater, one of the basic decisions to make is: tankless or storage device?

While tankless hot water heaters have been used in Europe and Japan for decades, they are fairly new to the US. However, they are quickly gaining popularity among homeowners, who love the device’s numerous advantages over the traditional storage water heaters.

Lets take a look at the pros and cons of switching to a tankless hot water heater.

How Does a Tankless Water Heater Work?

The concept behind a tankless hot water heater is simple: it warms up the water and delivers it to you, just when you need it. Hence, the name: on-demand.

Unlike, in a storage water heater, where water sits around and needs to be periodically reheated to be ready for use, a tankless device does not store any water.

Instead, when needed, the water comes in, gets heated and is delivered into the piping system that brings it to the appliances being used: shower, faucet, washer, dishwasher, etc.

Because a tankless gas heater does not constantly warm up water, it can save up to 30% more energy than a gas storage heater.

Advantages of a Tankless Hot Water Heater

switching to a tankless water heater

Here are the main advantages of a tankless device. Keep in mind that depending on your particular household size and water usage, you may realize all or only a few of the heater’s benefits.

No Cold Showers: because the water is heated up as you need it, there’s no running out and no chilly showers. By comparison, a 50-gallon electrical storage water heater can take over an hour to entirely recuperate the warm water.

Lasts Longer: most tankless units have a 10-15 year warranty and can last approximately 20 years before needing replacement. Storage tank devices generally have a 6-year warranty and only last 8-10 years. This means that you may go through 2-3 storage hot water heaters in the lifecycle of one tankless device.

No Energy Waste: you conserve energy by simply heating up the water when you need it. While container water heater waste power heating water you aren’t using, the tankless unit save energy by only making use of gas when you need warm water.

Saves Space: tankless devices can be put almost anywhere in your home. It can be hung up on the wall, either inside or outside your house (depending on your location). Consequently, you gain useful flooring or storage room space. By contrast, a storage water heater is very bulky; a 40-60 gallon tank measures on average 60″ tall and 24″ wide (most of them are installed on the floor).

Cleaner Water: traditional water heating units could build up corrosion and scale inside the storage tank, contaminating the water stored in it. This is why, you sometimes see rusty water coming out of your faucet or shower. By contrast, you will not have this issue with a tankless device; your water will always be fresh and clean.

Disadvantages of a Tankless Hot Water Heater

As with any device, a tanless water heater has its own set of disadvantages, that may not make it the right option for every household.

Initial High Cost: The biggest drawback to switching to a tankless water heating systems is that the purchase and setup prices are dramatically higher than what you would pay for a storage model. The average cost of a tankless unit together with installation can run $2,500-4,000 (a large portion of the cost goes to expensive installation). By comparison, you can purchase and install a 40-60 gallon storage tank for $800-1,500. The price difference is the primary reason why most homeowners stay away from tankless heaters.

Limited Water Output: a typical tankless device usually supplies enough hot water to only one location. This means that if you have a large and/or busy household, where multiple people may be showering, doing laundry etc. at the same time, you may find that there is not enough hot water for everyone at the same time.

One solution is to install a number of tankless devices to meet the needs of your household. However, this further drives up the already high cost. By contrast, most 40-60 gallon storage tanks do just fine servicing the needs to a busy household, and many higher-end gas powered models can heat up additional water very quickly.

Requires Too Much Energy At Once: to heat enough hot water on demand, a tankless gas heater typically needs 150,000 to 200,000 BTU (by comparison a storage gas heater only needs 30,000 to 50,000 BTU). If your home has a low pressure main, you will be limited by a fairly low total BTU allowance among all your gas appliances, making it a challenge to install a tankless gas heater.

Similarly, if you consider getting an electric tankless heater, you need to make sure that your system has the capacity to handle this load. You also need to factor in the higher electricity costs, as compared to gas in most regions on the USA>

3 thoughts on “Switch to a Tankless Water Heater: Why It’s a Good Idea and Why It’s a Bad Idea

  1. The Man

    Also, more cash in hand at the moment is more valuable than more savings later. My tank water heater broke. I am just going to stay with tank and will be prepared to replace again 10-12 years from now. My plumber gave me a hard press for tankless, but it is easy for him to spend my money.

  2. Jeff

    This article has pointed out the general advantages and costs for utilizing tank less water heaters and I’d like to share my experience. I installed 4 electric tank less water heaters in 2010 when building my home so there was not a problem with retro-fitting. I chose to install 4 due to the various GPM (Gallons Per Minute) demands for bathrooms and kitchen / utility room. The upfront cost is greater than installing a traditional water heater due to the increased amp load (80, 120 and 160 amp) depending on the size of the heater (more breakers and larger wire). The heaters themselves are generally more expensive as well.

    As for the performance I would have to give a mixed review. I am sure that it saves me money as I have three teenagers so our hot water usage I would say is above average. The tank less heaters also have to advantage of continuous hot water supply without running out. The only drawback I can perceive is the operational cost of the tank less heaters. I usually need to replace an element on the most heavily used heaters at least every 8 months to 1 year. I can do the work myself which saves the cost of a plumber. The elements are simple enough, a coil wire attached to a 7 inch long cylinder that is inserted into a chamber (manifold) that the water passes through. The element runs about $46.00 but what I don’t understand is all that is needed to be repaired is the coil wire which breaks. If one has to take into the account the maintenance cost then it would be interesting to see if tank less water heater really do save money.

    1. Leo Post author


      Thanks for your input – very few people out there have tankless heaters, and it’s great to hear from a homeowner with real long time experience using them.

      As for saving money – I don’t think they do. I have gas TANK heater and my bill is about $25-35/month for hot water. Your electric bill should be about the same.. maybe less per unit. But considering MUCH higher initial cost, and need to replace heating element every 8-12 months, it becomes quite expensive.


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