A tankless, on-demand water heater is just what it sounds like – there is no storage tank with water that is already hot. Tankless water heaters only heat water when you are ready to use it, but they are able to continuously heat water so that no one runs out of water when they need it. In addition, they have a longer lifespan than storage water heaters, usually about 20 years. Please visit Energy Star for additional information.
Tankless water heaters do have a limitation on the amount of hot water they can produce (typically 2-5 gallons per minute) when multiple users are demanding hot water simultaneously, thus users with larger simultaneous demands may wish to install more than one heater in order to keep up with their particular needs. In addition, depending on the building’s layout, installation may be more complicated and expensive for tankless water heaters than they would be if replacing a typical storage water heater with a condensing water heater. Please visit Energy Savers for additional information.
Similar to a gas condensing storage water heater, a tankless water heater allows most users to reduce their natural gas bills by over $100 per year, the equivalent of a 30% savings in water heating energy use. Families with higher than average usage will have increased savings. Energy Savers estimates that families that use 86 gallons or more per day can acheive additional savings of 8%–14%, with even greater energy savings of 27%–50% if a tankless water heater is installed at each hot water outlet.
To estimate your potential to save energy and money by installing this improvement, please see the U.S. Department of Energy’s Home Energy Saver calculator.