Tankless Water Heaters: A Great Way To Save Money

Tankless water heaters have been around for years but they are just starting to become more popular in the US. The basic idea is simple. Heat water only when you need hot water, as opposed to keeping a 40 or 50 gallon tank of water hot for use if you may need it in 5 minutes or 5 hours from now. Repeatedly heating the same water, just in case you may need it, wastes energy because the burner (if gas or LP fired) or heating elements (if electric) will need to operate every so often just to keep the water in the tank hot.

When hot water is needed in a structure with a tankless system, a flow monitor senses when a hot water valve in the home is opened and will automatically turn on the unit’s burner and flash heat the water. When the hot water valve is turned off, the flow of hot water stops, and the burner shuts down. Oh, and neither one of these (tank-style or tankless) are called “hot water heaters”.. if they were, why would you need to heat already hot water? I guess you could call them “cold water heaters”.

A minor drawback to a tankless system is that the delay to get hot water to a hot water fixture (such as a sink) is slightly longer than with a storage tank system. This can also lead to what is called the ‘cold water sandwich’ if a hot water valve is turned on, then off, and then back on a little later. The hot water drawn into the plumbing at the initial call for hot water still sits in the pipe (waiting to be drawn to a hot water faucet), then cold water sits behind the initial hot water (from when the unit shut down after the hot water valve was turned off), and now that a hot water valve was turned on again, hot water is again created. A recirculating loop system, which keeps reheated water in the hot water pipes by circulating it through the tankless unit periodically, is a possible remedy for the ‘cold water sandwich’ but you do lose some of the energy saving benefit of only heating water when you actually need it.

Living with a tank system, you will still often have a delay if hot water has not been drawn into the system in some time, so there is not much different with a tankless system.

If the home’s family takes baths or showers or does the dishes or laundry around the same time, a tankless system can also be energy wise, as a storage tank system would be drained and refreshed with new water causing the burner to heat up more often. In other words, the more spread out the hot water usage is, the more energy savings there can be with a tankless unit. But, regardless of usage, a tankless unit will save energy.

Cost of the tankless unit, of course, is important as well. Whereas a 40 or 50 gallon tank-style water heater will typically run approx. $800-$5000 installed, a tankless unit ranges from around $1,500 to $2,500 installed. Due to the fact that a gas-fired tankless water heater draws 4 or 5 times more BTUs (nearly 200,000 BTUs) than a tank-style gas fired water heater (40,000 to 50,000 BTUs), a larger than normal natural gas or LP line to the unit will be needed to feed the tankless unit. In most circumstances, the home’s gas or LP supply pipe won’t need to be upgraded but, in some circumstances, this may be needed. If a circulating system is also installed, of course, this will increase the installation price for a tankless unit. Some tankless water heaters can also be configured to replace a hot water boiler and, therefore, heat the home plus provide hot potable water.

The life expectancy of a tankless water heater, according to the manufacturers and real-life experience, should exceed 20 years whereas a tank-style water heater will generally last approx. 8 to 12 years on average. The harder the water is, the more impact the water quality can have on any style of water heater’s life. The longer life expectancy along with the energy savings per month may make installing a tankless water heater financially feasible in many cases. If you recently replaced an old tank-style water heater with a new tank-style water heater, it doesn’t make sense financially, of course, to install a tankless unit now. If your tank-style water heater is 8 or more years old (nearing the end of its design life), then it may be wise to consider a tankless unit. A licensed qualified plumber should be able to provide an approximate cost breakdown and theoretical break-even point when trying to decide if a tank-style versus a tankless unit is right for your home. Some of the manufacturers can also provide some of this information for comparison reasons.

Electric tankless water heaters also exist, but the potential cost savings are somewhat less compared to a natural gas or LP fired unit, especially with the electric price caps expiring last year. Electric heats water at a much slower rate (compared to gas) which is why electric tankless water heaters are much less common.

There are numerous manufacturers of tankless water heaters, such as Rinnai, Rheem, and Noritz. The basic operation of each unit is pretty standard, however the units do vary in the rate of potential hot water flow delivered versus temperature rise. In the winter, when the water service delivered to the home is lower (approx. 50 to 60° F in our area), the temperature difference of incoming water into the tankless unit is a bit higher than what is delivered out of the tankless unit (approx. 120° F by default). The wider difference causes the flow through the unit to be lower due to the fact that it will tank a little longer for the incoming colder water to achieve 120° F. In the summer when the water supply into the tankless unit will be warmer (60°+ F) than winter, this temperature difference (called “Delta”) is lower, therefore the flow rate of hot water out of the tankless unit will be higher.

14 years ago, I replaced my tank-style water heater with a tankless unit. My tank-style unit was 10 years old and, with the 30% government tax credit still in effect at the time, it made sense to consider replacing the tank-style unit even though it was still functional. Of course, I had no idea when the old tank-style unit may start to fail; it could have been 5 weeks later or 5 years. So far so good with the tankless unit. It has taken a little getting used to the extra little delay in getting hot water once a hot water valve is turned on, but you almost don’t even notice it after a while.

As far as maintenance.. it’s pretty low. Always make sure the intake and exhaust vent(s) are not blocked by vegetation, snow, mulch, etc. Most of these units use a concentric vent meaning the intake (combustion) air in and the exhaust air out is done from a 2-part plastic vent requiring only 1 opening through the siding or foundation wall. If the vent were to get blocked by snow, for example, the unit will not run (since it would be able to detect a blocked intake air supply) and the display on the unit will often show an error code corresponding to a blocked vent.

The 2nd maintenance item that is needed is flushing (cleaning) of the system on a regular basis (approx. every 12~18 months). How often to do this will depend on hardness of your water, how many people live in the home, manufacturer recommendation, etc. The flushing process is straightforward and can be done by a licensed plumber or the homeowner, if they have the right equipment. Without doing this cleaning procedure, minerals (such as calcium and magnesium) can coat the interior components of the tankless water heater leading to shorter life or less efficient heating of the water. These units also have an inlet mesh filter which needs to be cleaned.

Several companies manufacture tankless water heaters for residential and commercial use, such as: Rinnai, Bosch, Noritz, Rheem, and A.O.Smith, just to name a few.

A good resource to learn more about tankless water heaters: This Old House Tankless Water Heater Guide

As part of a home inspection, the home inspector should report on the installed water heater(s), note their type, report on any leaks, or other issues with their installation. Why not required to report on the unit’s age, personally, I feel that it is a duty to my client to include the installed water heater’s age and include information that the generally life expectancy of water heaters is about 8~12 years (tank style) and 20+ years (tankless). Providing this extra info helps my client budget for the future especially if the installed water heater has exceeded its design life.

Read my related Water Heater Temperature And Pressure Relief Valves article.

Matthew Steger is a Certified Level 1 Infrared Thermographer, an ASHI Certified Inspector (ACI), and an electrical engineer. He can be reached at matthew@thehomeinspectorsnotebook.com. No article, or portion thereof, may be reproduced or copied without prior written consent of Matthew Steger.