Tankless Water Heaters: The Pros and Cons

Tankless water heaters, also called on-demand water heaters, produce hot water on an as-needed basis, for example when you turn on the faucet, start the washing machine or dishwasher, or when you take a shower. They work in contrast to traditional hot water heaters, which constantly heat water and store it until needed.

Is it time to make the switch? If you need to replace your water heater and you’re interested in energy efficiency and/or saving space, tankless water heaters are worth a look. Let’s explore in greater detail.

The Benefits of Tankless Water Heaters

While storage tank water heaters are certainly still the standard, tankless water heaters are slowly gaining in popularity due to their energy efficiency (heating a home’s water is the second highest utility cost after heating and cooling the house itself). Thisoldhouse.com estimates that gas tankless heaters save between 27 to 50 percent of fuel costs as compared to traditional water heaters. Perhaps the most appealing benefit?

A homeowner’s risk of flooding due to a faulty water heater is reduced to zero!

How Do They Work?

Tankless water heaters can run on electricity, natural gas, or propane. They use a heat exchanger to rapidly bring water up to the desired temperature. Heating water on demand eliminates the energy losses of a traditional unit. Tankless units vary in size, but they are usually wall-mounted and average about two feet tall by one foot wide, offering tremendous space savings.

Ongoing Maintenance

Tankless heaters require cleaning, changing water and air filters, and checking the burner. If you live in a hard water area, a vinegar flush every 500 hours prevents mineral buildup from blocking the heat exchanger.

The Costs

Tankless water heaters tend to cost more up front than storage tank models, ranging from about $500 to more than $1,000 plus installation costs (which will run another $800 to $1,500, according to HomeAdvisor.com).

Tankless units have high-powered burners which require special venting namely a professionally-installed dedicated, sealed vent system. Often, a larger diameter gas pipe is also necessary. If your unit is electric, you may have to upgrade the electrical service to your house to 200 amps or more due to the power they require. With all of these costs, it may take longer to recoup your investment on the unit than its warranty. Gas tankless water heaters can last more than twice as long as traditional units (20 years or more!) while electric heaters typically last seven to ten years.

The Drawbacks of Tankless Water Heaters

Keep in mind that with a tankless water heater, you’ll have to be mindful about running more than one appliance at the same time or while someone is showering. Tankless heaters may take longer to heat the water if your incoming groundwater is cold (as opposed to traditional heaters that are always warming water).

The Bottom Line

If you’re in the market for a new hot water heater, tankless may be the way to go. While you’ll face more upfront costs, the energy and space savings and reduced risk of flooding make them a very attractive alternative.

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