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Tankless Water Heater Pros and Cons
5 minute read • Last update August 2024
What is a tankless water heater?
A tankless water heater, also known as an on-demand or instant water heater, heats water only when needed. Unlike traditional storage tank heaters, which continuously heat and store water in a tank. In other words, tankless models provide as much hot water as your household requires without having to pay to keep a large tank of water hot all the time.
Tankless water heater vs tank heater
Whether a high-efficiency tankless water heater is the right choice depends on several factors. We’ll get into a complete list of pros and cons in just a moment. However, how much instant hot water your family needs will typically be a deciding factor. According to energy.gov, tankless water heater energy savings are between 24%–34% for small households using 41 gallons or less per day and 8%–14% for larger families that get through around 86 gallons per day.
Types of tankless water heaters
Here’s a quick rundown of the different types of tankless hot water heaters available to you:
- Electric tankless water heater – An electric tankless setup (not to be confused with an electric heat pump water heater, which still relies on a tank) uses electrical heating elements to warm water as it flows through the system.
- Gas tankless water heater – Gas tankless heaters burn either propane or natural gas to heat water. Gas tankless water heaters come in two varieties:
- Non-condensing models use a single heat exchanger.
- Condensing models have a secondary heat exchanger for increased efficiency.
- Point-of-use tankless water heater – Point–of–use systems are smaller and specific to particular fixtures or appliances, such as a single–tap faucet or shower.
How does a tankless water heater work?
Tankless water heaters work by heating water on demand without storing it in a tank. When the hot water tap is turned on, cold water flows through the unit, where it is heated instantly by either a gas burner or an electric element. The heater’s sensors detect the water flow and activate the heating process, adjusting the power output to maintain the desired temperature. This allows for a continuous supply of hot water, as long as the demand does not exceed the unit’s capacity, making it more energy-efficient since it only heats water when needed, without the standby heat loss associated with traditional tank water heaters.
Pros of tankless water heaters
The primary benefits of a tankless water heater lie in energy, water, and space savings. Here’s a rundown of the primary factors to consider:
Energy efficiency
As you can see from the Energy Gov stats we mentioned earlier, you use much less fuel and electricity by only heating water as needed. Even if the saving is just 10%, that equates to a considerable amount over time.
Water conservation
Demand-type water heaters are a proven way to minimize hot water wastage. For environmentally conscious homeowners, this is a great way to step up your water conservation efforts.
Continuous hot water supply
Because they always provide hot water, you never need to worry about being stuck with only cold water and icy showers if you’re the last one up in the morning!
Space-saving design
Tankless water heater installation takes up minimal space in your home compared to a traditional tank water heater. Tankless units can even be installed in tight spaces like closets or utility rooms.
Lower utility bills
Using less energy is one of the most effective ways to lower your energy bill. Even with rising or fluctuating energy costs, a minimum saving of just 8% could equate to around $200 a year based on the average electric bill in Texas.
Longer lifespan
Tank water heaters typically last only 10–15 years, whereas tankless versions usually last over 20. Plus, they have easily replaceable parts that may extend their lifespan even further. So, even if the initial investment is higher, the cost will likely be offset over time.
Eco-friendly
Tankless units avoid the standby heat losses associated with conventional storage tank models, which consistently use more energy — regardless of whether they’re in active use or not.
Better temperature control
Many tankless water heaters have advanced thermostatic controls, allowing you to set and maintain precise temperatures. This is particularly helpful for households with young children or elderly members at risk of scalding.
Potential tax incentives and rebates
Some tankless systems qualify for tax credits and rebates. For example, tankless gas water heaters with an ENERGY STAR certification and a UEF (Uniform Energy Factor) greater than 0.95 are eligible for tax credits of up to $600 or 30% of the project cost.
Cons of tankless water heaters
With such an extensive list of tankless water heater advantages, you may already be thinking it’s a no-brainer. However, there are some cons of tankless water systems to consider, too. Here’s a list of considerations:
Higher initial cost
The upfront cost of tankless water heaters tends to be higher than a standard storage water heater. Even though the long-term savings can be significant, this may be a drawback for many homeowners.
Complex installation
Installation requires a professional plumber and may involve modifications and upgrades to your existing gas and water lines or electrical system to handle the increased demand.
Requires professional maintenance
Routine maintenance is required to maintain efficiency and longevity. Proper maintenance on a tankless setup typically involves descaling, air filter replacement, and regular checks of the heating elements, condensing unit, etc.
Electricity or gas dependency
While they provide an endless supply of hot water in theory, models that rely on electricity or natural gas won’t function during power outages. For gas models, in particular, any disruption in the gas supply can lead to a lack of hot water.
Multiple units for larger households
For homes with multiple showers, appliances, and fixtures that require hot water simultaneously, a single no-tank water heater may not be sufficient to provide enough heated water at all times. You can install multiple units, but this also increases installation costs and overall complexity.
Requires venting
While electric tankless water heaters are more straightforward to install, gas models require proper venting to remove exhaust gas and may involve installing additional stainless steel or PVC pipes.
Possible upgrade of gas lines or electrical systems
Tankless units often require a higher gas flow rate or a larger electrical capacity than storage water heaters. Upgrading your existing system from a limited flow rate could significantly increase your tankless water heater installation cost.
How much is a tankless water heater?
The total tankless water heater cost varies depending on several factors, including the type of unit, fuel source, installation complexity, and ongoing maintenance costs:
- Unit price – Electric models cost between $500 – $1,500 from big box stores, and gas models are usually $1,000 to $2,000.
- Installation costs – Installation can add another $1,000 to $3,000, depending on complexity and any necessary upgrades to existing gas and electrical systems.
- Maintenance – Even with the best tankless water heater, you should expect to pay a few hundred dollars annually to maintain optimum performance.
Is a tankless water heater right for your home?
Before making the switch to a tankless system, it’s essential to consider your investment from multiple angles. Here are the steps to ensure you make the right decision:
- Assess your household’s hot water needs – If your household frequently uses multiple hot water fixtures simultaneously, you may need to install multiple units to ensure enough hot water.
- Consider the space available for installation -You may be able to free up valuable living space in your home by ditching your storage tank water heater.
- Evaluate your budget – If your primary goal is to save money over the long term, the higher upfront cost may well be justified.
- Decide on a fuel source – Electric models are typically easier and cheaper to install, but depending on your local electricity rates, they may have higher operating costs than gas models.
- Consider your local climate – In colder climates, the incoming water temperature is lower, affecting your heater’s ability to provide instant hot water at a consistent temperature.
Save on electricity plans with BKVE
We hope you’ve found our analysis of tankless water heater pros and cons helpful in making your decision. Whatever system you decide on, choosing the right electricity plan can enhance your energy and energy bill savings even further.
At BKVE, we offer straightforward homeowner electricity plans tailored to your household’s needs and preferences. Simply enter your zip code to learn more and find the right plan for you.
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