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[an error occurred while processing this directive]Tankless water heaters: Everything you wanted to know

Last update: March 2015

Ten reasons you don't want to own a tankless water heater

  1. They rarely pay for themselves.  The energy savings are more than offset by the fact that they're more expensive to buy, more expensive to install, and more expensive to repair.  One report found that the energy savings "was not enough to offset the high incremental cost, resulting in paybacks from 20 to 40 years." (source)  That is, the payback time is often longer than the expected life of the unit!  Consumer Reports put the payback time at 15-22 years.

    If your goal is to save energy (as opposed to saving money), you'd be better off by going solar, because then you can save even more energy and save money.

  2. They promote water waste.  So while you might save some energy, you'll likely be wasting more water.  More on this in a minute.

  3. They're more likely to break down.  Normal tank heaters are simple, but tankless heaters have tons of custom, rare parts that are less reliable and subject to failure.  Hard water also makes breakdowns more likely—standard tank heaters are a lot more tolerant. (PM Engineer)  You could get a water softener, but if you do, then there goes any potential savings from going tankless.

  4. When they break down, they're hard to get serviced.  Fewer plumbers know how to work on them, and the ones who do will have to order the parts because they won't have them on-hand.  Have fun being without hot water while you wait on parts to arrive.  Our tankless died on Christmas Eve when we were hosting four guests, and we found out that there is exactly one authorized service provider for our heater brand in all of Austin, Texas.  They came out and determined they had to order parts from the manufacturer, which would take days to arrive.  If we had a standard tank he could have fixed it on the spot with parts in his truck.  Actually, let me take that back:  If we'd had a standard tank then our heater wouldn't have died in the first place, because tank heaters are super-simple and typically don't have printed circuit boards to control them!  That's the part that died in our tankless, the logic board.  You almost wonder if soon they're going to start putting memory and hard drives into tankless heaters, too.

  5. The warranties are shorter.  Tankless models supposedly last twice as long as tanks, but if so, then why are the warranties for tankless models shorter?  At Home Depot, entry-level tankless heaters have 1/5 year labor/parts warranties, while the (cheaper) tanks carry 2/6 year warranties.  Hmm.

  6. It takes longer for hot water to reach the tap with a tankless unit, because the heater has to sense that water is being drawn and then fire up the heating apparatus. (WaterHeaterRescue)  It took around a whopping two minutes for us.

  7. Cold water sandwich.  When you turn the faucet on, it takes 15+ seconds for the tankless heater to actually get the water hot.  If you're the second person to take a shower, that means you'll get hot water initially from the hot water still in the pipes, then 15+ seconds of cold water right in the middle of your shower (yow!), then hot water again once the tankless finally kicks in.

  8. No water when the power goes out.  Even gas tankless heaters require electricity to operate.  If the power goes out, so does your tankless.  But if you have a regular tank heater, you've got 30-50 gallons of hot water waiting on standby.

  9. Tankless heaters use extra electricity.  While the 5 watts of standby power isn't a big deal, the 100-200 watts of anti-freeze protection in cold areas could be.  Total use in one study was 31-170 kWh/year, which could be $2.50/mo.  That's not a lot, but when the savings on gas is only $6/mo. to begin with, suddenly the small savings are even smaller. (MNCEE PDF)

  10. Tankless heaters are incompatible with solar and geothermal.  A solar water heating system stores the water it heats in a tank.  (The tank is also heated with conventional fuel on cloudy days.)  So where does a solar system store the hot water if you don't have a tank?  If you're thinking of going solar or geothermal in the future, you won't be able to do it with a tankless heater; you'll have to have a tank.
Consumer Reports doesn't think much of tankless heaters.  In their report they wrote, "So is it time to switch [to a tankless]? Probably not." (source)

How tankless water heaters promote water waste

Tankless heaters waste water in three ways, which can easily erase any savings, and possibly make it more expensive to run the tankless:

  1. It takes longer for the hot water to reach the tap, because the heater has to sense that water is being drawn and then bring the heat exchanger up to temperature.  While the penalty is supposed to be only around 15 seconds (which is sizable enough), it took around two minutes in our home, even with insulated pipes.

  2. Some people leave the shower running so the next person taking a shower doesn't get a "cold water sandwich" (see above).

  3. An endless supply of hot water could encourage you to take longer showers.  If that happens, then that wipes out the savings.

  4. Tankless units require a minimum flow rate before they kick in, meaning you might have to turn the water on stronger in order for it to come out hot.  In fact, we had to replace our low-flow shower head with a higher-flow model in order to get the hot water to work!  More hot water used = higher energy bill.  Tankless units are supposed to work with flowrates of only 0.5 to 0.65 gpm, but that wasn't our experience.

How much do tankless water heaters save?

As we saw, the payback period for tankless models is so long that they're generally not worth it.  But if we look only at energy savings (that is, we ignore purchase and installation costs), how much do they save?

There have been a few different studies to address that question.  Here's what I found:

Cost of the unit Installation Total Installed Cost Monthly energy cost Monthly Savings
for tankless
($ • %)
Payback time

Tankless Tank Tankless Tank Tankless Tank Tankless Tank
CMHC, 2011

$6 • 46%
MN Office of Energy Security, 2010 $1400

     • 36% 20-40 years
EPA, 2008

$1470-2500 $865

$8 • 30% 5-15 years
Consumer Reports, 2008 $800-1150 $480 $1200 $300 $2000-2350 $780 $27 $33 $6 • 18% 15-22 years
Okaloosa Gas, 2002

$10 $16 $6 • 38%
My conclusions $1188 $480 $1225 $300 $2370 $823 $27 $33 $6 • 34% 16-22 years

Payback time does not include the cost of the additional preventative maintenance (e.g., annual flushing/deliming) or occasional expensive repairs that tankless heaters require.  Once you factor in that, the payback time is even longer.

How much you'll save depends on:

  1. Your local costs for fuel.  (Higher fuel costs = more savings.)
  2. The size of the tank you're using or replacing. (The bigger the tank, the greater the savings.)
  3. How much hot water you use.  (More water use = more savings.)
  4. The temperature where you keep your tank.  (Warm temperature = less savings.)
  5. Whether your tankless would be subject to freezing temperatures.  (Freezing = extra electricity for the anti-freeze feature.)
  6. Whether having unlimited hot water seduces you into taking longer showers.  (Longer showers = less savings.)
  7. Whether your tankless breaks down out of warranty. (Tankless repairs = expensive.)
  8. Which model you choose.

Experts against tankless water heaters

Don't take my word for it.  Here's what others have to say about tankless heaters.

    1. Water Heater Rescue:  "Tankless heaters are oversold.  Consumers are seduced by claims of greater efficiency, greater savings, and perhaps a chance to be 'really green'.  This warms many hearts until the owners realize that they paid a lot more money up front, their utility bills are significantly higher than before, and that they face expensive service bills."
    2. Gene Hayes,  "The genius of tankless is not that they save money or energy, because they don't. The genius is marketing that targets folks who believe that tankless save money and energy."
    3. Consumer Reports: "They're efficient but not necessarily economical.  Is it time to switch?  Probably not."

Tankless water heater advantages

Tankless heaters do have three possible advantages over tanks:

  1. Endless hot water.  If you have a huge family, or sometimes host lots of guests, you won't run out of hot water.  (Of course, if endless hot water encourages you to take longer showers, then there goes any potential savings.)

  2. Space Savings.  Tankless heaters take up very little space.  You can mount them right on the wall.  When we got rid of our old tank heater we were able to put a door on the back of the old water heater closet and make a shortcut through the garage from the rear bedroom to the kitchen.  We couldn't do that when the old tank heater was in the way.  You can also install some models outside on an exterior wall to free up even more space.  (Though they'll either use 100-20W of electricity for freeze protection, which you'll be paying for, or when it freezes outside you'll need to turn the water off at the meter and open the hot water taps so your heater doesn't freeze up. [MNCEE PDF, p. 13])

  3. No leaks.  Leaks with tankless units are unlikely, while all standard tanks eventually leak.  The problem here is that the leak could cause damage to the home which could be expensive to fix.

Gene Hayes has a good Tankless Pro & Con comparison.

Water heater timers are a better solution.  For whatever standby losses you do have with your old tank heater, you can prevent some of those losses with a water heater timer — at a drastically lower installation cost.

Still want to try a tankless water heater?  A typical tankless unit starts at around $400 for either flavor, though they cost a bit more to install.

How to buy a tankless water heater

If you're determined to get a tankless model, then you'll choose it based on the flow rate (how much how water it can deliver per minute) and the temperature rise (how much it heats the water).  You don't look at those separately, because they're related.  For example, one unit might heat the water 54 at 1.5 gallons per minute (gpm), but only 27 at 3.0 gallons per minute.

So let's first look at typical gpm requirements.  Here's the typical flow rate for water use in your house:

  • 2.0 - 4.0 gpm - Bathtub
  • 1.5 - 3.0 gpm - Shower
  • 1.0 - 3.0 gpm - Dishwasher
  • 1.0 - 2.0 gpm - Sink
  • 0.5 - 1.0 gpm - Toilet

So for most uses, a 2.5 gpm unit would be fine, as long as you don't want to run various things at the same time, and as long the temperature rise is also good.  If you want to use more than one thing at a time, you need more gpm, so you'll need a bigger model.  Conversely, if you have an efficient showerhead and run the water slowly when you shower, you might do fine with a 1.5 gpm model, which will cost less than a bigger model.

The temperature rise you need depends on the climate where you live.  If you live in the north where the incoming water is cold, you'll need a bigger rise to get your water up to shower temperature than you would in the south, where the incoming water is warmer.  You can get a thermometer from the grocery store to measure your cold water temperature. You'll need to get it up to about 104F (40C) for showers or dishwashing. And keep in mind that the temperature will drop a few degrees as the water travels from the heater to the faucet.

Here are some links to check out electric models and gas models at Amazon.

Here's a Tankless Water Heater Guide that tells you pretty much everything you'd want to know about selecting and installing a tankless water heater.


On a separate page I have questions I've received and answered about how saving on water heating costs.

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