July 3, 2019

Why Should You Choose a Tankless Water Heater System?

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Written by Jose

Have you ever started the day with a cold shower because someone else in the family has used all of the hot water? The water tank has refilled, and now you face a long wait before the water will be warm enough for a comfortable shower. Your inefficient traditional water heating system will then cool and heat several times during the day while you’re at work, wasting energy. This is why many homeowners are turning to tankless water systems. These systems ensure a continuous supply of hot water is available without wasting energy.

Tankless water heaters vs traditional hot water storage tank systems

Traditional water heaters keep heated water on standby in a large water tank just in case you need it. This represents a waste of energy that is called standby heat loss. Unlike the traditional water heater, the tankless water heater heats the water as it flows through the tank. Hence the on-demand nature of the technology. Tankless water systems are also known as instantaneous water heaters or demand type water heaters.

The gas burner or electric heater uses a powerful heat exchanger to heat the water that flows past it.  The exchanger is activated when the water flows over the flow sensor, which activates the heat source. The heat source warms the heat exchanger, and the water flows around the heat exchanger until it reaches the pre-set temperature. There is, therefore, no need for a tank. The resulting carbon monoxide leaves the room through a sealed vent system.

checking on the water heater

With a tankless water heater, you could fill up your tub and then have an hour-long shower and you would never run out of hot water. This is why tankless water heaters are very useful in homes with large families or where the demands for hot water are high. Tankless water systems do not waste standby energy like a tanked system where the water will be heated all day even when you’re not at home.

Flow restrictions

A tankless water system does, however, have some restrictions. The flow of water is restricted by the ability of the elements to heat it. It is therefore important to purchase a system that can deliver the flow that your household requires. As long as the household uses hot water at a flow rate less than the tankless water heater can deliver, the household will always have a continuous flow of hot water.

Point-of-use or whole-house units

Tankless water heaters come in point-of-use and whole-house formats. The point-of-use heaters will only heat one or two outlets. They are small and can be tucked away into a cupboard. They are typically installed very close to the outlet so there is no lag before the hot water comes out of the faucet. They are also relatively inexpensive. In large homes serviced by a whole-house heating system the lag before the hot water reaches an outlet can be significant.

Choosing the size most suitable for your household

The flowrate of a tankless water heater is measured in gallons per minute (GPM). Tankless water systems can deliver hot water at a flow of between 2 and 5 GPM (7.6 to 15.2 liters). Smaller units are only suitable for one-bathroom homes. If your home has two or more bathrooms, you should install a larger unit as the water system will be called upon to service more than one outlet at a time.

Tankless water heaters fired by gas can deliver water at faster rates than electrically powered heaters. Sometimes even the largest gas heaters are not capable of delivering sufficient water to several points in the house at the same time, so you may have to install more than one tankless water heater in your house to ensure that hot water is available at all points when required. Your energy savings will be highest when tankless water heaters are installed at each hot water outlet.

The bigger the unit the more you will pay for it, so you don’t want to choose excess capacity nor do you want to regret having bought a heater that is simply too small for your household's needs.

There are several considerations when choosing the right size for your home:

  • Water temperatures differ between areas and by season. The colder the starting temperature of your water, the harder your heater will have to work to heat it. Ask your utility supplier for the groundwater temperature in the winter months. The tankless system will heat the water from the groundwater temperature to the heat that you have set on the thermostat. This is usually set at 120 degrees Fahrenheit.
  • Find the required flowrate at peak demand like early in the morning or just before bedtime. To calculate your GPM requirements:
    • According to energy efficiency regulations, any outlet installed after 1992 will use no more than 2.2 GPM.
    • A standard bathroom faucet installed before 1992 will use between 3 and 5GPM.
    • A standard kitchen faucet pre-1992 uses between 3 and 7 GPM.
    • A shower pre-1992 between 3 and 8 GPM.
    • Low-flow shower heads and bathroom taps may use less than 2.2 GPM.

Tankless systems don’t run out of hot water but the hot water is split between the competing outlets, so the more outlets in use, the less hot water they will receive. Tankless water systems take longer to deliver hot water. All the cold water in the pipes between the heater and the outlet will arrive cold. It is possible to install a circulation system that will ensure that hot water is delivered during peak water use periods.

Size and space requirements

water heater

Tankless water systems are also great space savers. The water tank of a traditional water heating system stores around 40-60 gallons of water, and its bulk can take up a large chunk of space in your home. A tankless water system, on the other hand, is not much bigger than a computer and they are typically wall mounted so they do not take up a large amount of space.

Installation costs are higher

Tankless water heaters cost more than traditional water heaters but they save on energy and they last longer; most have a lifespan exceeding 20 years. Replace the worn parts and the heater will last even longer. Water storage heaters have a lifespan of 10-15 years. A tankless water heater is about double the price of a traditional water heating system and the installation can be pricey as they are difficult to install since they must be vented and they often require larger gas lines.

Maintenance requirements

If you live in a hard water area you will have to descale your water system on a regular basis, as the minerals build up in the pipeline. In hard water areas, the minerals create a buildup on the elements and the water heater has to work progressively harder. To avoid this, you should flush your system every six months with descaler or white vinegar. The components that are used in tankless water systems are usually top quality and are less likely to rust or leak.

Energy efficiency

The cost of heating water typically makes up around twenty percent of a household’s energy costs. The US Department of Energy estimates that the average household converting to a gas tankless water heater will save in the region of $100 per annum. The most efficient tank water heaters operate at 67% energy efficiency. This is a measure of the transfer of heat from the source of energy to the water. Tankless water heaters are usually 80% energy efficient. These systems also save additional energy as they are not constantly heating water in storage that then cools off and needs to be reheated again. A tankless water system will maintain its efficiency regardless of its age whereas a traditional heating system will become less efficient as it builds up sediments.

Types of tankless water heaters

There are three types of tankless water heaters

  • Non- condensing units – This is the first type of tankless water heater that went into use. These types of units have been used successfully in Japan and Europe for many years. These are very reliable units and their manufacturer is well established. They use a heat exchanger to heat the water. They have an efficiency factor (EF) of between .82 and .85. They do have some disadvantages: they exhaust hot fumes and must be vented using expensive stainless steel. Their energy efficiency is not as good as some of the newer styles.
  • Condensing units – These units have two heat exchangers. The secondary heat exchanger uses the hot exhausted fumes to further heat the water and the result is a higher EF of between .92 and .94%. This leaves the exhausted fumes considerably cooler so the venting can be made from PVC. The operating costs of these units are a little higher. Both condensing and non-condensing units are less efficient when short bursts of water are required.
  • Condensing hybrid – This type of system is the most recent technology and it includes a small holding tank that holds around two gallons of water. This small amount of water eliminates the lost efficiency when small bursts of hot water are required. These heaters manage a very consistent energy efficiency of .92 to .96%. They can be vented using cheaper PVC. They are also better at addressing problems of water pressure. The technology is fairly new so there have been some quality issues with the early version. You should do your research before purchasing one of these systems.

Gas or electric

Electric units have less capacity than gas units. For this reason, large homes should stick to a gas-powered tankless water heater. You will not find an electrically-powered water heater that can manage more than about 5.5 gallons per minute (GPM). Point-of-use heaters are usually electric because they serve only one or two outlets, while whole-house systems are usually powered by gas.

Although an electric heater is more energy efficient than a gas heater, electricity is more expensive than gas. The installation of a gas water heater is, however, significantly more expensive. Whatever system, you should have it professionally installed or risk voiding the warranty. Electric heaters are more efficient than their gas equivalents but they don’t qualify for rebates. A gas tankless heater, according to the US Department of Energy, is about 23% more efficient than a traditional water tank. If you opt for a gas-fired unit, you can choose either propane or natural gas. Natural gas is cheaper than propane, but propane is cleaner and more efficient.

gas water heater illustration

Electric water heaters are cheaper than gas equivalents. They cost less to install since they don’t require vents. It is possible that an additional circuit may be required, in which case the electrical work would add to the cost of installation. Electrical water heaters are also easier to maintain. Tankless systems must be located within 50 meters of the power source.

The costs of installing a tankless water system

The cost of installing such a system can vary considerably between systems. Tankless water systems cost almost three times more than traditional water heaters. The biggest cost factors are labor and the type of equipment that you choose.

  • You can expect to pay between $100 and $450 dollars for labor.
  • You will need a vent kit, which will cost between $40 and $100. If you are installing a gas unit, you will need a dedicated gas line as your heater will need 200,000 BTU.
  • You will nee either stainless steel or PVC venting, depending on which type of water heating system you purchase.
  • If you are installing an electrical system it will require its own power supply. You may also want a backup battery system to ensure that you have hot water in the event of a power failure.

The total cost of a fully installed unit will be anywhere between $2000 and $4500. If you are replacing an existing tankless water system or if yours is a new home that has already been set up for a tankless water system, then the costs will be considerably lower. With careful consideration, you can adapt your installation to meet your budget.

Advantages and disadvantage of tankless water heaters compared to traditional water heaters


  • Most tankless water systems qualify for a federal tax rebate of $300.
  • They last up to twice as long as traditional water heaters.
  • You will always have hot water.
  • There is no loss of heat so they are more energy efficient.
  • They take little space. They’re usually installed on the wall and can even be installed outside.
  • You can save money on electricity.
  • Small units can be tucked away in cupboards at the point of use.
  • Many come with a remote control for easy operation.
  • There is no tank that could flood your home.
  • Installing one could improve the resale value of your home.
  • The components with which they are made are high quality and will not corrode or leak.
  • Tankless water systems are better for the environment as they do not end up in a landfill and many environmentally aware people are going down the tankless route.
  • Tankless water heaters are usually covered by a 15-year warranty.


  • They are expensive and can cost up to three times what a traditional water heating system will cost.
  • Your hot water system could be split across a number of outlets.
  • You will need expensive stainless steel to vent gas or propane.
  • You may have to install a larger gas pipe system.
  • You may need to put an additional electrical circuit into your home for electric models.
  • Gas systems must be serviced annually.
  • You can waste water if there is a lag between turning on the water flow and having hot water.

Why you should consider a tankless water heater today

A traditional water heater is an inefficient way to heat your household water. While you’re at the office, it is running up your energy bills, keeping the water in the tank hot. And then when the whole family is home getting ready to go out or when you have guests staying at your home, it fails to supply sufficient water to ensure that everyone has a hot shower. Tankless systems are expensive to install but they are an investment for the future since they last so much longer, use less energy, and could improve the value of your home.

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