Tankless Water Heaters Have Pros and Cons
Tankless water heaters cost more up front, but the energy savings may make up for it in the long run. (Photo courtesy of Angie's List member Scott D., Westhampton, Mass.)
When he built an addition to his Portland, Oregon, home, Peter Ravagni decided to replace his old electric storage water heater with a tankless gas one after some cost-comparison research. "It's been a huge savings," Ravagni says. "Several hundred dollars a year, easy."
Hot water accounts for up to 30 percent of an average home's energy budget. Tankless water heaters provide an endless supply of hot water as needed by running through a heat exchange coil, eliminating the standby energy losses of a conventional tank, which uses fuel to maintain water temperature even when not needed.
The U.S. Department of Energy estimates gas-fired tankless heaters save an average of $108 in energy costs per year over their traditional counterparts, while electric tankless heaters save $44 per year.
Is a tankless water heater right for you?
Demand: Do you want a unit to heat water in one bathroom or the entire house?
Type: Consider the requirements. An electric model will need the proper voltage, amperage and circuit breaker. Gas-fired models need to be vented.
Location: They must be within roughly 50 feet from a power source, and can be mounted on an interior or exterior wall.
Life expectancy: Most last more than 20 years - about twice the lifespan of storage water heaters.
Installation: Hire a highly rated plumber or heating and A/C contractor to install it. Often, the installation is included when you purchase a unit from a dealer.
Electric tankless heaters are 99 percent efficient. However, they don't qualify for rebates or an Energy Star rating, which requires a product improve energy output 14 percent over older models. The worst traditional electric heaters are 93 percent efficient. Conventional tank gas heaters are only about 60 percent efficient, according to the Department of Energy.
"And we all know that energy prices aren't going to stay stable," says Joe Kruger, vice president of sales and marketing for highly rated Isaac Heating & Air Conditioning in Rochester, New York.
Tankless heaters also save space with a compact design, last longer and are better for the environment because a rusty tank doesn't end up in the landfill. "A lot of people buy them because of the green movement," says Connie Steele, co-owner of highly rated Gulf Coast Tankless Hot Water in Clearwater, Florida.
However, tankless water heaters cost up to three times more than storage heaters — from less than $1,000 for an electric, whole-house model to $3,000 for a gas-powered one, including installation by a qualified plumber. Switching to a tankless heater can pay off, particularly if you buy a gas model, which is about 23 percent more efficient than a traditional storage version, according to the DOE. Most gas-powered tankless water heaters also qualify for a $300 federal tax rebate. Many states offer similar incentives.
Whole-house models do waste a minimal amount of water. When a faucet's first turned on, cold water flows out before the hot water can replace what's already sitting in the pipes. Environmentally conscious users often use this excess water to cook or water plants.
Point-of-use tankless heaters are installed next to an appliance or sink, eliminating wasted water. They cost between $150 and $350, but like the larger models, a professional plumber should install point-of-use tankless water heaters.
Steele started her business after watching her own electricity bills decline thanks to a tankless water heater. "I've been in business almost five years," she says. "No one has said, 'I'm not saving any money.'"
Editor's note: This is an updated version of an article originally published on May 28, 2009.