Tankless Water Heaters - Worth the Hype?

Looking to save money on your home energy costs and be environmentally conscience at the same time? Traditional water heaters typically account for 30% of an average household's yearly energy budget. Instead of continually heating and storing hot water - comparable to leaving your car running all night long - tankless water heaters heat water "on demand" as it's needed, eliminating the need for a large storage tank and dramatically increasing energy efficiency. Depending on your water usage, most manufacturers claim a 20-40% savings rate overall. Sound like a no-brainer? For the most part, it is. But before jumping in and making the switch, weigh the pros and cons of a tankless water heater system to make sure it's right for you and your family. Pros:

1. Energy savings: An estimated 20-30% of energy used by a traditional hot water tank is wasted from thermal heat loss.
2. Endless supply of water: Conventional water heaters frequently run out of hot water after several back-to-back demands; you then have to wait for more hot water.
3. Safer temperatures: Most tankless heaters allow you to set an ongoing water temperature to a safe temperature, closer to the actual temperature you will use the water, typically 100-110 degrees F. Most traditional water heaters are set to 130-150 degrees F, wasting energy and increasing the risk of scalding.
4. Longer life span: Most tankless heaters have a life expectancy of 20 years or more. Traditional water heaters generally last 8-14 years and have issues with hard-water mineral buildup, which can cause a loss of efficiency, shorter lifespan, and leaking.
5. Size: Tankless water heaters are compact in size compared to traditional heaters making them ideal when space is limited.
6. Tax credits and rebates: Many tankless models qualify for utility rebates and state/federal tax credits offseting the higher equipment costs. For example, you can get up to $1500 federal credits if you purchase a model with an Energy Factor of 0.82 or a thermal efficiency of at least 90%.

Cons:

1. Costs: Tankless water heaters are typically 2-3 times more expensive than traditional storage water heaters and can cost much more to install as you'll most likely be replacing an existing traditional hot water tank. Depending on the how much hot water you need to generate for peak demand and the type of tankless water heater you buy - propane, natural gas, or electric - the size of the electrical wiring or gas pipeline may have to be increased to handle the increased load and existing venting might have to be replaced.
2. Start-up delay: A common complaint from users is having to wait for the hot water to reach them. Since tankless water heaters only heat water upon demand, the standing water in the system needs to be purged before the hot water will reach its end point, which can lead to significant water wastage if you have long pipe runs (if either of these are a major concern, I suggest looking into supplementing your system by installing a hot water pump right before your faucet or shower).
3. Flow-rate: Tankless water heaters often have a minimum-flow requirement before the heater is activated, so if you're only trickling of hot water, you'll have to increase the flow before the heater turns on.
4. Recirculation systems: Since tankless water heaters are inactive when hot water is not being used, they're incompatible with passive hot water recirculation systems.
5. Emergencies: Tankless water heaters need to be plugged in. In the case of a power outage, you'll find yourself without hot water.

Bottom Line: Tankless water heaters are, in the long run, more water and energy efficient than traditional water heaters, but you'll need to modify your family's water-usage behaviors. Consumer Reports estimates that a household would save up to $80 a year by utilizing a tankless heater, but hesitates on recommending them because of their extended break-even point (due to their overall higher costs - but, with today's tax credits and rebates, those costs are greatly reduced). As long as the pros and cons above are understood by all family members, switching should be considered when looking for a new water heater. Here are some guides to further help with your decision making about tankless water heaters:

• US Department of Energy EERE's Demand (Tankless or Instantaneous) Water Heaters
• Tankless Water Heater Buying Guide
• Consumer Search's Tankless Water Heaters
• Consumer Report's Tankless water heaters
• E-tankless.com's The Shortcomings of the Tradional Approach to Heating Water
• Wikipedia
• Sizing Demand on Tankless Water Heater
• Tax Incentives: Federal and State

Major Manufacturers:

• Bosch
• Rinnai
• Rheem
• Takagi
• Titan

photo courtesy of Bosch