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Today’s Water Heaters – Should You Go Tankless?

Which water heater works best for your home?by Lori Cunningham

There has been a lot of talk surrounding water heaters in the past 5+ years.  The typical water heater most of us have in our garages or basements has been dramatically updated.  Labeled as bulky, environmentally unfriendly, and inefficient, yesterday’s water heaters have paved the road for a newer more efficient model called the tankless water heater. 

The latest rage in water heaters doesn’t even have a water tank – well, at least for the most part.  Tankless water heaters are gaining a lot of momentum due to their compact size, savings on energy costs and water, and their ability to provide enough hot water to provide heated water to several showers at once — throughout the duration of the shower.  They are hailed as “on demand” water heating and “endless” hot water due to their ability to heat up water soon after the hot water faucet is turned on. 

Traditional Water Heaters

Traditional water tank heaterWith traditional water heaters, water is stored in a 40+ gallon tank and heated and reheated continuously throught the day and night.  Once water in the tank is depleted, the house no longer has hot water until the water heater can replenish it.  Furthermore, when hot water is taken from the tank to supply a household’s needs, new cold water replaces the dispensed hot water.  This means that the cold water is co-mingling with the hot water.  The result is a lukewarm shower and lukewarm water instead of the desired hot water for “whites” in the washing machine.  Thus, because of this process of cold water combining with the hot, if you have a 50-gallon tank, you are only utilizing 35 gallons of usable hot water(1).   Once hot water runs out, it takes a considerable amount of time for the water to be heated to the desired temperature again. 

Think about the energy inefficiency as well.  Say you and your family members only shower in the morning.  Consider the energy expanded throughout the day and night to ensure you all have hot showers (assuming no one is a hot water hog!) during the morning. This is what is known as “standby loss.”  Standby loss is the term for energy wasted to keep the water in the tank at a specific temperature.  Standby loss can contribute up to 20% of a home’s annual water heating costs(2.).  And what about waiting for hot water to reach your faucet or shower?  According to Seisco,  we waste more than 10,000 gallons of water a year waiting for cold water to turn hot so we can have hot water (3).  Due to the bulky size of traditional water heaters, most water heaters are placed in the basement or garage, making them further away from the areas that need hot water the most.  This makes the availability of hot water to a faucet or shower longer. 

With regards to durability, the traditional water heaters’ lifespan averages to 12 years (4.).   Typically, water heaters break down due to minerals and sediments that can settle in the tank.  These elements can encrust the heating elements of the tank thereby causing degradation and contamination. 

Here are some of the main advantages and disadvantages of traditional water heaters:


  • Affordable cost
  • Works well for families/people with little demand for simultaneous hot water
  • Uses gas/electricity at a slow rate


  • Hot water will run out
  • Not energy efficient – constant reheating of water
  • Takes a while to heat water after heated water is depleted
  • Bulky – takes a lot of space
  • limited lifespan of 12 years
  • Potential of water damage if leak occurs
  • Pilot light always on – potential fire hazzard


Wouldn’t it be much more efficient to just heat the water as you use it? 


Enter Tankless Water Heaters

Installed tankless water heaterHow Tankless Water Heaters Work: 

Unlike traditional water heaters, most tankless water heaters do not store water.  No water is heated until a hot water faucet is turned on somewhere in the house.  Once the faucet is opened, cold water flows into the tankless water heater which then instantly heats the water using heat exhanger heating coils to reach the desired temperature.  It takes only 5 seconds for the water to heat initially. 

Most people confuse “on-demand water heating” with instant hot water. This is a misnomer.  Due to the travel path of pipes throughout the house, there will still be some lag time before a faucet’s water become hot.  However, since tankless water heaters are smaller than bulky traditional water heaters, you have the flexibility to move the tankless water heater closer to the source where hot water is desired.  In the home we are building, we placed the tankless water heater right behind the kitchen, which is close to our master bathroom too.  These are the two main areas I desire to receive faster hot water.  Because of their size and flexibility, you can place tankless heaters inside the house, in closets, on walls, or in the garage. 


  • No standby loss
  • Tankless heaters can be more energy efficient in the long run
  • Less wasted water since water is heated almost immediately
  • Hot water will not run out in the middle of a shower
  • Long lifespan at 20 years
  • Flexible – can be installed anywhere  (new home buildAn example of how one tankless water heater workss)













  • Costs more initially to purchase over standard water heater
  • Almost twice as expensive to retrofit in a home that was using a water heater
  • There are fewer plumbers with the knowledge of how to install and maintain a tankless water heater
  • Older homes may not meet building code rules for the ventilation needs of a tankless heater
  • No hot water during a power outage – if electric powered
  • Some homeowners complain of inconsistent temperature at times

Adding an Addition to Your Home? 

You might want to seriously consider using a tankless heater to cover for the extra room capacity needed for heated water.  It is very doable for the new addition to use a tankless water heater while the rest of the house uses the current water heater.  Doing so will help you to decrease further electricity costs while saving costs from needing to hook up the new pipes to run back to your current traditional water heater, which may not have the capacity to handle the extra load anyways. 

Does it Make Sense to Retrofit Your Current Water Weater with a Tankless Water Heater? 

The answer is it depends.  Certainly, the cost is higher to retrofit your house with a tankless heater than to install one in a new house.  Most typical water heaters are gas generated.  So whether you prefer a gas or electric tankless water heater, it shouldn’t be a problem retrofiting your home with a tankless water heater.  However, there are two main considerations in doing so: 

First, tankless water heaters need piping to an outside vent in order to release heat and condensation.  To accomplish this, you will need a plumber to install stainless steel (for most models) or pvc (for some models) piping and venting to let out to the side of your house.  This is a moderate expense here – especially if stainless steel piping is required. 

Second, the current location of your water heater was most likely chosen to hide it from the rest of the house.  Typical locations are the garage or basement.  These locations tend to be further away from the main sources where you’d desire to have hot water faster.  Thus, you lose some of the benefit of placing a smaller tankless water heater, which could be located anywhere, in a location furtherest away from where you need it.  While it’s true you could still move the location of your water heating source, extra expense will result in hooking it up to your gas line and current plumbing. 

Video Explanation of Tankless Water Heaters

To explain the benefits of tankless water heaters versus traditional water heaters, I found a video on YouTube.com that does a great job.  Tankless water heaters can be powered by gas, electricity, or propane gas.  The makers of this video promote propane gas, but I must add that rarely are propane tankless water heaters used.  Nonetheless, this video does a great job of explaining the need for tankless water heaters. 



Saving Money with a Tankless Water Heater?

There are varying reports as to how much money can be saved with a tankless heater.  Here’s a breakdown: 

Annual Equipment Cost: 

Will you save money?    Average installation for water heater:  $625 divided by 12 year lifespan: $52/year cost 

     Average installation for tankless:  $1,200  divided by 20 year lifespan:  $60/year cost 

More than 20% of a home’s energy bill results from heating up water for showers, laundry, cooking, and washing dishes.  On an annual basis, the yearly cost can add up to $450 for a traditional storage water heater (5/).  Tankless water heaters tout that they can save 10-20% of a homeowner’s heating bill.  So the breakdown would look like this on a yearly basis: 

Annual Operation Cost: 

     Water heater fuel cost: $450 

     Tankless heater cost: $450 x 15% = $67.50.  $450-$67.50= $382.50 

Estimate Lifetime Cost: 

Based on only 12 years (for apple-to-apple comparison): 

     Water Heater:  $625*(avg. cost + installation) + (12 years x $450) = $6,025  

     Tankless Water Heater:  $1,200**(avg. cost + installation)  + (382.50 x 12 years) = $5,790

Based on 20 years (for apple-to-apple comparison): 

     Water Heater:  $625 + (12 yrs x $450) = $6,025   for 12 years plus $625 + (8 yrs x $450) = $4, 225.  The cost for 20 years:  $6,025  + $4, 225= $10,250  – not including inflation for the additonal water heater + labor.

     Tankless Water Heater:  $1,200 + (382.50 x 20 years) = $8,850 

So, using basic assumptions, using a tankless water heater saves money over time.  However, if your house needs to be retrofitted to receive a tankless water heater, your lifetime savings have been spent before they were gained. 


A Homeowner’s Perspective

As mentioned earlier, we have decided to implement a tankless water heater in the home we are building.  It’s smaller size allows us to place the tankless heater closer to the places we require faster heated water the most.  We’ll have more room in our garage since a large water heater tank will not be needed.  With two small children, our hot showers won’t tax us…yet.  But as they become teenagers, I can be secure in knowing we’ll have plenty of hot water. Love being in hot water?

I am disappointed that tankless water heaters are not the “holy grail” for our instant heated water needs.  I still would like an “instant hot” solution in our kitchen and in our master bedroom.  To handle this, our plumber installed a recirculation pump near the tankless water heater.  To decrease the costs of always heating the water so it’s readily available, he will be installing timers so that the recirculation pumps only heat water during the times we most likely will need them, then they will shut off. 

Now, I must warn you that most tankless water heater manufacturers state that their warranty is null and void if you use a recirculation pump with their heaters.  So there is some risk involved with recirculation pumps.   

Our house is currently in the stucco phase.  We have not selected our tankless water heater yet.  However, I did have the opportunity to talk to serveral manufacturers at the PCBC (Pacific Coast Builders Conference) Show.  At a later time I will go into our selection process once we have confirmed our chosen tankless heater. 

We Want to Hear from You. 

If you have strong opinions on tank vs. tankless water heaters, leave a comment.  If you have personal experience with a water heater, we’ll publish your review.  Your personal experience is needed to help other homeowners make smart decisions about their water heating needs.  Please contact us with your review. 



(1.)  http://www.e-tankless.com/tank-water-heater.php
 (2.)   http://www.toolbase.org/Technology-Inventory/Plumbing/tankless-water-heaters#benefits 
(3.)  http://www.seisco.com/pages/gas_vs_electric.html 
(4.)   http://www.e-tankless.com/tank-water-heater.php
(5.)  http://www.toolbase.org/Technology-Inventory/Plumbing/tankless-water-heaters#benefits 
*      based on average from reviewing larger water tanks at homedepot.com
**    http://www.consumerreports.org/cro/appliances/heating-cooling-and-air/water-heaters/tankless-water-heaters/overview/tankless-water-heaters-ov.htm

9 comments to Today’s Water Heaters – Should You Go Tankless?

  • Great Article! I am a plumber myself and we have found that these new tankless water heaters can save you money over the life of the unit. Keep in mind there are advances in the tankless water heaters very often and some of them are now coming with a recirculating system built in! We love the Navien Tankless Water Heater with the recirculating system it gives our customers endless hot water in addition to more instant hot water. Good luck with your choice for your tankless water heater installation!!

  • this page was exactly what i’ve been looking with regard to! I found this blog bookmarked by a friend of mine. i can also share it. many thanks again!

  • Great Article! I am a plumber myself and we have found that these new tankless water heaters can save you money over the life of the unit.

  • Hi Lori Cunningham !
    Thank you for the write up! Also, just a heads up, your RSS feeds aren’t working. Could you take a look at that?

  • Minh Toma

    Solar water heaters. These types of water heaters rely on the power of the sun to heat your water. How efficient they are depends on the amount of sunlight they get so this usually depends on where you live. The more sunlight the better and the more intense the sunlight the better and if the climate is hot in the first place then the water is sort of pre heated to ambient temperature before the action of the sun. They are a good source of some hot water but are not really good enough to be classed as your main water heater so you will need a conventional water heater as a backup. Solar water heaters can also be used to help warm the water in your pool and for this they can be very efficient but again they rely on sunlight to provide a high enough water temperature. I have one of these and I am very impressed about how good it is as a water heater for my pool. It wasn’t cheap though.;

    • Lori Cunningham

      Thank you for your comment on solar water heaters. We just signed a contract to have a solar water heater installed in our home to heat our pool. We are anticipating that the temperature of the pool, through the use of solar heating, will be roughly 10 degrees lower than the outside temperature during the warmer months. We live in Southern California, so this is possible. But time will tell to see if our theory is correct. It should be installed within the month. I’m glad to hear that you are happy with your solar heater.

  • I was actually in a dilemma these past few weeks whether to go tankless or stick to water heaters with tank. I’v heard a lot of pros about tankless units but I also heard a few cons. I never really had a problem with my tank, it’s just that it’s kinda old and I wanna replace it. But after reading this article I know exactly how to decide now, and thanks for that!

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  • This is a rare review of tankless water heaters that goes beyond the usual cliches on the units and provides some real and useful insight. I think the most important point you made here is about the location, which cannot be overemphasized. Most people who change to tankless and yet, there are many who get a tankless end up saying never again. Take a more detailed look at these cases of failure and at least half of those have to do with not choosing a good location. People just put it in the most remote location when the tankless offers the leeway to install it only inches away from your shower head. That would make it an instant water heater, literally. I think, one point people need to remember when changing to tankless is installation being at least as important as the model, features and brand name.