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Are Tankless Water Heaters a Waste of Money?

The energy savings you’ll get from a tankless water heater are usually too low to justify the high purchase price

Posted on Apr 6 2012 by Martin Holladay

Although tankless water heaters are, on average, more efficient than traditional tank-style water heaters, they’re also more expensive — so expensive, in fact, that many potential customers wonder whether their high cost can ever be justified by likely energy savings.

Before you can decide whether to buy a tankless water heater, you’ll need to know how much energy you’ll save. Can you trust the information provided by tankless water heater manufacturers — for example, the estimate from Rinnai’s online calculator that you’ll save $178 per year?

Before I get around to answering that question in detail, suffice it to say: probably not.

Real-world answers from a monitoring study

To figure out the payback period for the incremental cost of a tankless water heater, it would be useful to know:

  • The installed cost of a tankless water heater;
  • The number of gallons of hot water used per day by the average American family;
  • The in-use efficiency of a typical tank-type water heater and the in-use efficiency of a typical tankless water heater;
  • The annual natural gas savings and the annual dollar savings attributable to switching from a tank-type to a tankless water heater.

To find the answers to all of these questions, a group of researchers in Minnesota undertook a monitoring study to measure the performance of tank-type and tankless water heaters in actual homes. The researchers concluded that most tankless water heaters will fall apart from old age before they save enough energy to justify their high cost.

The researchers — Dave Bohac, Ben Schoenbauer, and Martha Hewett of the Center for Energy and Environment in Minneapolis, along with Tom Butcher of Brookhaven National Laboratory and Mary Sue Lobenstein of Lobenstein Consulting — monitored water heaters in ten homes for over a year. Their data have been published in a report, “Actual Savings and Performance of Natural Gas Tankless Water Heaters”.

The ten families enrolled in the study were chosen based on household size. The number of people in these families matched the household size distribution shown in the census data for the Minnesota in 2000: two homes had 1 resident each, three homes had 2 residents, two homes had 3 residents, two homes had 4 residents, and one home had 5 residents.

A total of twenty-four water heaters were installed in the ten homes; each home got at least two water heaters. Eight homes got a tank-type water heater (an A.O. Smith GCV40 40-gallon natural gas water heater with atmospheric venting). In addition, each home got at least one natural gas tankless water heater. Ten tankless water heaters were tested; a variety of models were chosen from among those sold by five manufacturers (Bosch, Noritz, Rheem, Rinnai, and Takagi). The researchers did not test any electric tankless models.

Monitoring equipment for each test set-up included a dedicated gas meter, a dedicated water meter, and temperature sensors that measured the temperature of the incoming water as well as the temperature of the hot water. (The incoming water temperatures varied seasonally by about 30°F to 35°F.)

At each house, researchers adjusted gas and water valves to alternate between the tank-type water heater and the tankless water heater at monthly intervals. Only one water heater was used at a time. The changeover schedule was adjusted at each site so that every tested heater operated over the full seasonal spectrum of incoming water temperatures and outdoor air temperatures. An average of 363 days of useful data were collected from each home.

Installation costs are high

The study found that tankless water heaters cost more to install, and save less energy, than many energy experts claim. “From interviews with eight local contractors, installed costs for whole-house gas tankless water heaters as a retrofit were estimated from $2,000 to $5,000, with typical price range of $2,500 to $3,400. These costs are considerably higher than estimated by others. … For comparison, these same contractors estimated the installed cost of a conventional standard water heater to range from $900 to $1,300, with an average cost of about $1,100.”

Installing a tankless water heater in an existing home is significantly more complicated that swapping an existing tank-type heater for a new tank-type heater. In most cases, the tankless water heater will require a different method of venting — usually double-walled vent pipe through a side wall — as well as a larger gas line, reconfigured water piping, and in some cases the installation of a new 120-volt electrical receptacle.

EF ratings are less than measured efficiency

Among the data gathered by the researchers for each water heater were the following:

  • The temperature of the incoming cold water;
  • The temperature of the hot water leaving the heater;
  • The number of gallons water flowing through the water heater;
  • The amount of natural gas burned by the water heater.

Using these data, it was a simple matter to calculate the actual efficiency of each water heater. The researchers’ efficiency calculations included standby losses but not distribution system losses. The researchers reported, “Across all sites and water heaters, the measured annual efficiency averaged 16% less than the DOEUnited States Department of Energy. EF” — that is, 16% less than the Energy Factor calculated in a laboratory according to a standard established by the U.S. Department of Energy.

The tank-type water heater used in the study (A.O. Smith GCV-40) has an EF rating of 0.60, but its monitored efficiency was only 49% (11 percentage points lower than the EF).

The non-condensing tankless water heaters had EF ratings that ranged from 0.82 to 0.83, but the monitored efficiency of these units ranged from 69% to 78% (about 9 percentage points lower than the EF ratings).

The condensing tankless water heaters had EF ratings that ranged from 0.89 to 0.95, but the monitored efficiency of these units ranged from 62% to 89% (about 17 percentage points lower than the EF ratings).

In their report, the researchers noted two major factors responsible for these low efficiencies. The first factor is that the hot-water draw schedule used in the EF laboratory testing procedure is unrealistic. The test procedure requires six draws of over 10 gallons each at one hour intervals followed by a 19-hour period of inactivity. In the real world, however, only 3% of actual hot-water draws are greater than 10 gallons. In a real home, there are a great many low-volume draws rather than a few high-volume draws.

The second factor is that the EF laboratory testing procedure requires a daily draw of 64.3 gallons, which is higher than the amount of hot water used by average families. In this study, the average daily hot water use per house was 41 gallons.

Tankless water heaters use a significant amount of electricity

Unlike old-fashioned atmospherically vented tank-type gas water heaters, tankless water heaters use a fair amount of electricity. The measured standby electricity use averaged 5 watts; during operation, these tankless gas water heaters consumed between 50 and 80 watts of electricity. If there is any need for the units’ freeze-protection heater to turn on, electricity consumption rises to between 120 watts and 182 watts.

According to the researchers report, “Electricity consumption … accounts for about 5% to 18% of operating costs for tankless water heaters.”

Calculating simple payback

The researchers calculated the simple payback period for the incremental costs of these tankless water heaters. To make the calculation, they assumed that the incremental cost of installing a non-condensing tankless water heater ranged from $1,500 to $2,500. Using these figures, the simple payback period for non-condensing tankless water heaters ranged from 21 to 35 years.

The researchers assumed that the incremental cost of installing a condensing water heater ranged from $2,500 to $3,500. The payback period for condensing tankless heaters (not including the Navien CR-240A, an outlier with dismal performance) ranged from 27 to 38 years.

The Navien CR-240A was in a category by itself. Equipped with a very poorly insulated 0.5-gallon buffer tank, this water heater proved to be an energy hog. The Navien CR-240A (a condensing unit) had energy savings of only $49 per year; assuming that it had an incremental cost of $2,500 to $3,500, the payback period for this unit ranged from 51 to 71 years.

In general, the condensing tankless units weren’t worth the upcharge in cost compared to the non-condensing tankless units. The researchers noted, “On average, switching from a non-condensing tankless water heater to a condensing tankless water heater only increased savings by 3%, which is small compared to the 9% average difference in Energy Factor ratings.”

Should I buy one?

Tankless water heaters have at least two drawbacks: they are expensive and mechanically complicated. They also have at least two virtues: they are compact and can provide “endless” quantities of hot water. For some applications, these benefits are desirable enough to tip the balance in their favor.

As long as you realize that you'll never save enough energy to justify the high purchase price, you may want to buy a tankless water heater for its performance specifications and compact size.

Last week’s blog: “Energy Modeling Isn’t Very Accurate.”

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Image Credits:

  1. John Eisenschenk

Apr 11, 2012 9:25 PM ET

using these things...
by peter blackmore

Our tankless was installed by the previous owner. It looks as if the 40 gallon electric tank he had didn't service 3 adults and 2 pre-teens. But here's the bane.... The old tank was installed centrally in the house, with but a short run to all the faucets, whilst the tankless is in an unheated garage some 45' of additional run away. To get any hot water to the showers now means enough time to undress, clean teeth, and have a shave before hopping into the shower. That means all the 45' of pipe is going cold. If we've interrupted the flow, moving from one room to another, there's a cold surge right in the middle of the showering. On top of that, the missus often turns on the hot tap to wash dishes (no matter how often I tell her not to), finishing them before the hot water even reaches the faucet, ergo 4 litres of heated water go to waste. I suspect that, had we been part of the survey, our usage would have clinched the pro-electric tank vote. Would I go back to electric - yes, if I intend to stay in the house long enough to justify the installation. And no, if I want to sell.

Apr 11, 2012 10:19 PM ET

Thanks, Peter.
by James Morgan

I wondered when someone was going to bring up the issue of service run differentials.

Apr 12, 2012 5:18 AM ET

Response to Karl Henschel
by Martin Holladay

I have the same system at my house that you describe -- a two-collector solar thermal system with propane backup (a tankless water heater). All I can say is, that's a lot of very expensive equipment, and propane is an expensive fuel. I'd swap all of the equipment out for an electric heat-pump water heater in an instant if my house was on the grid.

Apr 12, 2012 5:21 AM ET

Response to Jim Price
by Martin Holladay

Q. "Has anyone done a fact based study between a traditional tank and the heat pump heater based on actual usage in the Northern part of the country? Florida doesn't count."

A. Yes. Look for my upcoming report on such a study, and an overview of heat-pump water heaters. It will be published tomorrow (Friday April 13, 2012).

Apr 12, 2012 7:37 AM ET

I wish I had read all this first....
by Lloyd Alter

I put in a gas fired tankless water heater and connect it to my 100 year old radiator system through a heat exchanger. It is complex, In winter I never know if I can take a shower or not because it is at capacity driving the rads, and when the shower works I can never get my daughter out of it. In retrospect it was a very big $ 7500 mistake.

Apr 12, 2012 9:48 AM ET

Response to Lloyd Alter
by Dana Dorsett

Lower the flow rate on the heating-loop side of the HX, lower the output temp, or both. Unless you have fully analyzed and tweaked the heating side to right-size the output to the actual design day heat load, it's far more likely than not that the heating-rate into the radiation is way too high. If you truly need high temp output at design condition (unlikely) you may want to consider cutting in an outdoor-reset pump/valve on the heating system side. The vast majority of hydronic heating systems are WAY over-designed for the actual heat loads, and both water temps & flow rates can be cut back considerably and still meet the load at the outdside design temperature.

Apr 12, 2012 9:50 AM ET

Study participant observations
by Stephen Martinson

Our household was one of the study houses for this study and I have a few personal observations about the Navien 240A

1) The study was done with an older model of the 240-A. This model did not have a programmable thermostat, thus the tiny stand-by tank was always on. After the study was done, I had the electrical board swapped out which allowed the unit to be programmed so the stand-by tank can be turned off if there are times when you know you will not be using hot water (like in the middle of the night, or when the family is at work or school). Unfortunately, this programming is still rudimentary, and does not have a way of programming different shut-off times for weekends. I ended up programming it to shut down at night, but I manually shut it off on days when there is no one home. Since the study is over I don't have the sensors to know how much impact this has.

2) One advantage of the Navien is that it does not need a chimney for flue exhaust. My furnace also does not need a chimney, so it was possible to seal off the chimney, thus saving energy from this large leak. It would be possible to demolish the chimney to better seal this opening and recover the floor space it takes, but of course this is quite difficult to do, especially if one has vermiculite insulation in the attic.

3) Another advantage of the unit is that flue exhaust runs through plastic pipe. These pipe are smaller and much less leaky and easier to seal around than the metal flues required by noncondensing units. One side note - the fiberglass window screen adjacent to the furnace and hot water heater exhaust is deteriorating. Is this just coincidence, or is the exhaust detrimental to fiberglass screens?

4) Even though the unit is about where our old tank type water heater stood, it still seems to take longer to get hot water to fixtures. This has actually modified our use of hot water. It used to be that I would wash dishes when they were dirty. Now I also have to wait until someone has just taken a shower or a bath, so the lines are "primed". If, for some reason I do need to start from cold, I fill up a pitcher with water while waiting for the water to get hot. Of course there is only so much water the house plants need, so there is still water waste at times.

5) Being part of the study, installation cost was not a factor for me, but I do worry about equipment replacement and maintenance costs more than I did with a tank type water heater. If I abandon my chimney am I locked into replacing the Navien with another Navien?

6) Would I do this on my own? Well first, I would not even think of installing one of these units If I could not get the unit very close to the point of water use. There is too much water and time wasted waiting for the hot water to appear. I know one can add a recirculation line to reduce water waste, but at the expense of wasted heat.

Second, I would be sure that the installer knew what they were doing. We had some real problems getting things to run properly in the beginning. But that's a story for another time.

By the way, one of the authors of the study was Schoenbauer, not Schoenbrauer.

Apr 12, 2012 10:02 AM ET

Response to Stephen Martinson
by Martin Holladay

Thanks very much for sharing your story; it's rare to get the perspective of a participant in a research study, and your observations are relevant and helpful.

Your experience that it takes a little longer for hot water to reach the faucet after a tank-type water heater is replaced with a tankless water heater is common, and it's good for homeowners to be forewarned before making the leap to tankless.

Finally, thanks very much for catching my typo; I have corrected the error. My apologies to Ben Shoenbauer.

Apr 12, 2012 10:36 AM ET

Edited Apr 12, 2012 10:41 AM ET.

Quick correction
by Kohta Ueno

Hi Martin--nice writeup, as always. I'm probably pretty late to the party, but just a quick correction:

The Navien CR-240 was in a category by itself. Equipped with a very poorly insulated 5-gallon buffer tank, this water heater proved to be an energy hog.

It's actually their CR-240A model--the "A" differentiates those that have the mini-buffer tank, and those that do not. Also, it's a 0.5 gallon tank--as per the CEE study:

The Navien CTWHs are noteworthy due to their low cost and the option of a small (0.5 gallon) buffer tank that eliminates some of the hot water delivery and performance issues.

But I was looking at the CEE study, and was amazed at how dog-tastic their performance became with that micro-storage tank.

Apr 12, 2012 10:55 AM ET

Edited Apr 12, 2012 11:09 AM ET.

Response to Kohta Ueno
by Martin Holladay

Thanks very much for your corrections; I have edited the article to reflect the information you provided.

Your sharp eyes are much appreciated. And yes, you're right -- it's amazing how a little buffer tank without much insulation can screw up the performance of a tankless water heater.

Apr 12, 2012 2:50 PM ET

Response to by Stephen Martinson
by Dana Dorsett

The flue-purge & ignition delay can pretty long on some models, which contributes to the time-to-tap of any electronic-ignition forced draft tankless. Some try to cure this with recirculation pumps, but that cuts into efficiency pretty dramatically.

If maintenance or failure drives you to replacements, sealed-combustion tank-type water heaters are out there that are easily retrofitted to side vented situations (eg Vertex ), as well as many power-vented non-condensing models that can use PVC venting. You have options other than another Navien/other condensing tankless.

FWIW: Condensing tanks like the Vertex or Polaris are easily adapted to space heating applications, and have purpose-built side ports designed in for space heating applications. But they have no isolating heat exchangers- the heating system water IS the potable water, unless an exterior heat exchanger is installed. For short-loop hydro-air systems using the potable water may not be an issue, but retrofitting to most hydronic heating systems would require isolating them (for a number of reasons.)

Apr 13, 2012 8:04 AM ET

Solar with Tankless is the way to go.
by Jason Szumlanski

I agree with Karl Henschel. The best option where solar resources are high is a solar water heater with a storage tank to preheat the water. You need a fully modulating gas instantaneous heater to make this setup work right. In theory, the cost of the fuel will be very low, so propane or NG would not make a huge difference.

Jason Szumlanski

Apr 13, 2012 8:13 AM ET

Response to Jason Szumlanski
by Martin Holladay

The problem with your proposed system is not the fuel cost (although propane is very expensive right now); it's the cost of the equipment.

A homeowner can expect to pay $6,000 to $10,000 for a solar thermal system, plus $1,200 to $3,400 for the tankless water heater. The economics don't pencil out, because the equipment falls apart before you can recoup enough energy savings to justify the very high investment.

Apr 13, 2012 6:00 PM ET

Electric tankless heater
by John Knox

Hi Martin
What about electric tankless water heaters - Are they, when gas is not an option, a waste of money?

Apr 14, 2012 11:08 PM ET

Edited Apr 14, 2012 11:11 PM ET.

Are Tankless Water Heaters a
by aj builder, Upstate NY Zone 6a

Are Tankless Water Heaters a Waste of Money?


How about a million other ideas, like piping a hot spring to my house from Talula?


So what to do?

Buy the least expensive unit you can and love yourself for not spending an extra several thousand dollars just to save two twenty dollar bills in a year or so!

Tankless and HPWHs are expensive GADGETS. Money grabbers they are. Listen folks, you can't SAVE money by SPENDING money even if every TV ad says you can.

No soup for anyone who thinks spending money equals saving money!

Enjoy the rest of your weekend kids... get outside and enjoy this big blue ball we are all playing upon.

Apr 16, 2012 10:43 AM ET

Edited Apr 16, 2012 11:11 AM ET.

Closed cell foam jacket is the key
by Terry Goodrich

My 40 gallon Bradford-White LPG water heater is power vented and it has a 2" closed cell foam jacket to cut down stand by heat loss. I can't imagine living with an annoying tankless heater cycling from OFF to MAX every time I touch a hot water tap, let alone the cost and the low reliability.
Put another tank in front of my BW with a solar pre-heater, and it's a combination that is very hard to beat from an economical basis as well as use and maintenance. This configuration would still be cheaper than the tankless set up, a lot more user friendly, and a 'set it and forget it' set up with low to non-existent maintenance.

Apr 16, 2012 10:49 AM ET

savings calculation
by Tony Cavaliero

I may have overlooked it but I did not see the price of natural gas addressed. It has spiked as high as $13 or $14 dollars. I would expect this would effect the savings outcome exponentially.

Apr 16, 2012 11:07 AM ET

Edited Apr 16, 2012 11:13 AM ET.

Convection return loop - Brilliant innovation
by Terry Goodrich

Being the son of a plumber, it was easy for me to avoid the long wait (and wasted cold water) with my heater being almost 50 feet away from the kitchen taps. A simple convection loop was the brilliant solution. Simply ran a 3/4" PEX line from bottom of the tank after I added a nipple and a tee between the tank and the drain spigot. Ran the PEX line to the existing supply just below the kitchen sink, and VIOLA! .......instant hot water. I'll bet there isn't a pint of water run down the drain before 150 degrees is pouring from the faucet. Stand-by heat loss is nil in the PEX. The natural convection cycle requires no pump (and no electricity), is zero maintenance, and is dead-on user wonderful (not just friendly).
Can't do this with a tankless..........another drawback for them. When you factor in the cost of the cold water saved while waiting for hot, it's a no-brainer.

Apr 16, 2012 11:22 AM ET

Tankless Water Heaters Need a tank
by Howard Steadman

I made the mistake of installing 2 tank less water heaters. I needed a new gas line and meter. Then I discovered that I also needed a tank. Based on an article in Fine Home Building, I added a Tank. I also added a tempering valve. DO NOT use the Watts valve, it is not safe. You also need a expansion tank. I also needed circulation since the runs are long. I was able to do all the work myself. I do like the unlimited supply of hot water, but the cost are high.

Apr 16, 2012 2:19 PM ET

Are electric tankless heating systems a waste of money
by John Knox

Looks like I may have no soup - Spending money equals saving money. 40 years ago when fuel oil prices were something like 25 cents per gallon, I replace my old (coal converted to fuel oil) boiler with one those very expensive GADGETS being promoted at the time. A multi fuel boiler. At 25 cents per gallon for fuel oil, I realized a 20 percent return on the investment cost for the new boiler. Today I am looking at adding another one of those expensive GADGETS. An electric tank less water heating system. The tank less system would be an alternative to heating about 100 gallons of water in the boiler by either oil or electric. Gas is not available. Can I get a better then a 20 percent return on investment cost by installing an electric tank less system? I installed a tank less domestic hot water system about 3 years ago. I realized a 16 percent savings on electric use. I believe this translates to a greater then 20 percent return on investment. Will I be able to continue to have my soup by installing an electric tank less system for space heating?

Apr 16, 2012 2:21 PM ET

Payback comparison
by Ed Horner

I am late to the party. This discussion is very insightfull. I have one question and a comment.
Q. In the installed cost of the tank vs. tankless WH, is the payback the difference between the average unit type or something else? It appears in the chart above that the whole avarage install price of the tankless unit is used ($3000) instead of the differnce between types, i.e. $3000 - $1100 = $1900 since at least some type of unit is needed.
Comment: Your point of spending financial resources for proven energy savings whether it is improved water heating, insulating/ air sealing against building heat loss or more efficient HVAC systems etc. vs. investing in technology that has questionable savings is somewhat lost in the overall discussion.

Apr 16, 2012 2:22 PM ET

Tankless Hydronic Heating systems
by Brian Tober

I installed 3 Takagi TK-JR Nat Gas tankless water heaters to heat 3 separate apartments in my multi family home in NJ. They are connected to the original cast iron radiators. Before I installed the tankless units I replumbed the entire system using 1/2" hydronic oxygen barrier pex tubing in a home run configuration with a supply and return manifold with ball valves. This setup lets me turn off each radiator independently in case of a leak so I can still have heat to the other rads. I called Takagi before I installed this system becasue I was concerned about the cast iron rads causing problems. They told me to put some type of filters in the system to protect the heaters. I found hi-temp clear filters that have a ball valve at the bottom and self clean with a venturi effect when opened. I check them every month and blast them into a bucket to clean the screens which you can see thru the clear plastic housing which is nice. They each have a Taco 007 circulator tied into a relay that the t-stat activates. When the pump starts the flow triggers the Takagis to ignite. I have had good luck so far and it has been 3 heating seasons. The Takagi TK jr is available online from many vendors for around $600. The venting will cost another $150 if you go out the wall with elbow and wall thimble and hood, it requires all stainless. If anyone wants to see a photo of the system let me know. I did run all new 1 1/4" gas pipes from the meters to meet the demand for 2 units per pipe.
I use a separate TK-jr for each apartment for the domestic hot water so I have 6 total installed.

Apr 17, 2012 6:10 AM ET

Is lost standby heat wasted?
by Steve P

I think we should consider that the "waste" heat from a standing HW tank may in fact be captured within the building and useful. Obviously some HW heaters are in poor locations (garages, unheated basements) but in many cases, the "waste" heat warms the house. In the Northeast, that's not wasted for at least half the year.

Many people today have cottages or condos as second homes. In that usage, the payback on many energy-efficient products is infinity (or beyond :-) I installed a 60 gal. electric HW heater myself at our cottage. It cost me $300. It runs about three months a year, and is simply switched on and off upon arrival/departure.

I think point-of-use heaters make sense when "mains" gas is available, and where the technology is common and accepted. This makes running costs low and brings installation and maintenance costs down to realistic levels. I have seen systems in developing countries mounted directly over a wash-up sink, where the unit is basically a pressure sensor, a pilot light and a burner aimed at what looked to be a small car radiator. Turn on the tap, the burner fired up and heated the water on the way through. Slower = hotter. I don't think it will get a UL sticker, though.

Apr 19, 2012 9:02 PM ET

Edited Apr 19, 2012 9:05 PM ET.

Response to John Knox
by Curt Kinder

Electric Tankless water heaters have some advantages. They can be installed very close to point of use without the gas line and venting hassles of gas tankless. That makes for quick hot water and less wasted water. However their Energy Factor is only a hundredth or two higher than a electric tank heater, and they are sensitive to hard water.

We install them in new construction, sometimes feeding them with warm water stored in a heat recovery tank connected to a refrigerant desuperheater.

The major issue for most retrofit situations is their prodigious electric service needed - up to three 60 Amp duplex circuits. Most existing household electric service panels lack anywhere near that much spare capacity. Contrast that with the 30 amp service ( actual draw about 19 amps) of a typical 4500 wat electric tank heater.

One has to be realistic and careful about the required GPM and temperature rise needed - do the math and be sure the heater and electrical service can handle the load.

Apr 21, 2012 9:30 PM ET

Response to Curt Kinder
by John Knox

Thanks for the feedback. In regard to hard water sensitivity, I find that both the tank and tankless systems (both gas and electric) have the same sensitivity to hard water. Apparently, hard water is not considered a problem with the hot water tank systems but is a problem with the electric tankless system. For the electric tankless system, I find that Aqua Pure AP430SS Scale Inhibition system is recommended as a requirement and a Stainless Steel sediment, rust, hot water filter is recommended as an option. The installation of the scale inhibition system as a retrofit is another major issue maybe more so then the prodigious electric service needed especially if one is installing multiple point of use electric tankless heaters. Also, I find a warning not to use pre-heated supply water comes with the electric point of use tankless hot water heater.

Apr 21, 2012 9:59 PM ET

Question for Brian Tober
by John Knox

Question about your tankless hydronic system. In addition to the sediment filters, did you install scale inhibition filters and surge tanks?

Apr 22, 2012 2:29 PM ET

Response to John Knox
by Martin Holladay

Q. "What about electric tankless water heaters - Are they, when gas is not an option, a waste of money?"

A. No; this type of heater often makes sense. However, be prepared to upgrade your electric service, because electric tankless water heaters draw very high levels of current (something the electric utilities don't like, especially when everybody in the neighborhood takes a shower at 7:00 a.m.).

For more information on the pluses and minuses of electric tankless water heaters, see All About Water Heaters.

Apr 22, 2012 2:34 PM ET

Response to Terry Goodrich
by Martin Holladay

You wrote, "A simple convection loop was the brilliant solution. ... Stand-by heat loss is nil in the PEX."

I have no idea why you think that a PEX convection loop has zero standby losses. In fact, the PEX tubing filled with hot water will lose lots of heat. That's why PEX tubing is used for hydronic space heating!

Even if your PEX tubing is insulated, the energy lost through this covection loop adds up to a lot of BTUs and a lot of money -- all for the convenience of "instant hot water."

Apr 22, 2012 2:42 PM ET

Response to Ed Horner
by Martin Holladay

I agree with you that you can get different payback results depending on your assumptions of the incremental cost under consideration. Since the Minnesota researchers discuss ranges rather than discrete costs, the payback calculations are subject to criticism.

However, the researchers did a good job of data collection, and explained the basis for their payback calculations. If anyone wants to use a different incremental cost for the equipment, or a different fuel cost, it is a simple matter to determine your own payback period.

In some areas of the country, the cost to install a tankless water heater may be lower, and fuel costs may be higher, than in Minnesota. These two factors will result in a shorter payback period.

Apr 23, 2012 11:44 AM ET

Bosch 125ng in 110 year old house
by William Hall

I installed a Bosch 125NG (standing pilot) in my 110 year old house. I can't estimate the savings over the traditional tank it replaced because two other people moved into the house about the time I installed it, but I wonder about the installation costs from the studies that were quoted. If I had paid full retail for everything, the total would have less than $850. Figuring out if the thimble in the chimney was big enough for both the furnace and the water heater took longer than the actual installation. My actual costs for everything (because the heater was deeply discounted at HD) was $275. I don't know what a plumber would charge for installing this in my house, but it would have to be way less than $2000. A 40 gallon traditional tank heater at that time would have been $600. I guess sometimes you just get lucky.

Apr 26, 2012 11:27 AM ET

Response to John Knox
by Brian Tober

Yes I installed expansion tanks on each closed loop heating system with pressure guages and temp guages also. The pressure relief valve must be 30psi max also for a closed loop setup. For the filters I only have the sediment filters which are pretty good size and the heaters have built in inlet filter screens also. Not sure what you mean by a scale inhibition filter, if you can send me a link on where I can find one that would be great. The filters I use are

Apr 28, 2012 10:59 PM ET

Response to Brian Tober
by John Knox

Here is the link for the scale inhibition filter:
I have been using the AP430SS scale inhibition filter on the cold water inlet for my point of use and whole house electric tankless hot water heaters. I have been using this filter now for over three years and have seen no decrease or change in the output temperature or efficiency of the heaters. I am currently considering installing this filter as part of a closed loop heating system similar to your system but using an electric tankless heater.and copper pipe.

May 2, 2012 3:11 PM ET

AirHTP HW and 10 year Gas lows (like 1982-mid'90s
by JP Jon Pierce

Air HW HT p have come and gone and are back
GT HW heating units with coils of cu in a 40-gal tank lasted over 30 years, usually 17+ years with 1 ton -1.3 ton compressors, even r12, better r22, 1981-
Many posts cover a few GE Whirpool AirTrap, and others have commented "don't like a dip of rfg in DomHW systems"...
Quick REM: How dangerous would it be to see a film of oil on tap water , POE-oil, and get notice to your lips and tounge that you are more oily? What is a manufacturers views on liabilities? -as well?

Any hoo
top of post showed a 4400 kwh/annually? at least what I am looking at. I get 110,ooo KWH for 40 gal/daily x 300 days... or 1100 to 1800 doallars in electricity.
GT DeSuperheaters of various sizes to full condensing-100%, all as hybrids to HVAC-GT, can be found in several systems today using series-flow refrigeration off the compressor hot line, full heat-reclaim, also known as heat-recovery WHILE in Cooling, simultaeously, understood by most I read at GBA -
... MORE than Can be W:W unit separately, and just in place of a little hybrid desuperheater, a full 100% On-Demand coil for dedicated HW
a single HVAC-HW-Reclaim unit with Priority HW HVAC-GT, is another patented name (patents up in the late 90's). SAVINGS have been over 50-percent greater than desuperheaters on GT for comparing to installed extras @ $1100 more, a same 2-4 year roi with MUCH more $$$ in 10 years saved. Just ask if I went out of a point, but this has worked well since 1996 installing a first in my area. DOUBLE Priority is excellent for radiant and instant HW. Air HtP TANKS can be fowled at the HX coil just as any PriorityGT or Desuperheater without and getting to vinegar cleanings, just as MANY instant HW tankless require vinegar flushes (not all claim so).

May 3, 2012 12:04 PM ET

Missed a couple significant points
by Jeffrey Walker

On the tankless water heater article, they overlooked two things:
On a minor point, tankless heaters are less likely to mail in a manner that causes a major flood in your house. The potential cost avoided in such a case, though not definite, could be significant by anyone's standard.

And one major point: The life span of a tankless heater can be expected to double of triple that of a tank-style heater. This point alone places them on relatively equivalent footing, even without all the other benefits.

May 4, 2012 8:16 AM ET

JP, you have me thinking of
by aj builder, Upstate NY Zone 6a

JP, you have me thinking of the NASCAR superheater, its got a 500 HP superblower, yaa if got pedal to the copper I tell yaa, no patent, goes to fast to boil a rabbit, but if yaa git your ears on its a loud one like those coyotes out breathen the night air and maybe scared of the wolves but that may be off topic or not if yaa like ta hunt critters...

Sep 3, 2012 4:15 PM ET

Response to Martin Holladay, GBA Advisor
by Terry Goodrich

Martin - Do the research. Stand-by heat loss of PEX to ambient air is indeed insignificant. Your comment re. PEX used for heating ignores the intimate contact PEX must have with a solid conductor to effectively transfer its heat. Ambient air is actually a pretty good insulator around PEX. Also, you must realize that the added PEX run is only one way; there is already a supply, so you don't need to count a second leg.
Nonetheless, the calculations when properly done, will show that paying for many gallons of waste water down the drain while waiting for hot to flow many times every day, is easily a net cost and water savings. In the area where I live, the sewer bill is calc'ed based on water use; another savings. And why dump potable water into the sewer, when a waste like that is not necessary?

I realize that it probably rankles a GBA Advisor who is a tankless heater bigot to admit it, but sometimes a simple solution like a return convection loop, is not only elegant and "user wonderful", it makes good economic and environmental sense.

Sep 4, 2012 4:56 AM ET

Response to Terry Goodrich
by Martin Holladay

I am not a tankless heater bigot. I have one in my own house.

If the air in your home is cooler than the water in your PEX hot water line, then the temperature of the water will eventually equalize with the air temperature. In other words, heat will flow from the hot water to the air until they are at the same temperature. That's physics.

I certainly agree that a hot-water circulation loop can save energy and water. The best systems use a pump that is controlled by a switch located in the remote bathroom -- rather than running continuously.

Sep 13, 2012 11:20 PM ET

Tax Credits?
by Dave Williams

How come nothing is mentioned about the 30% tax credit? I used this tax credit as well as rebate from my gas company when I installed my tankless. The IRS allows the material and labor to qualify for the tax credit. My incremental cost was significantly less. And you don't have to resize your gas line - you can have the gas company increase the gas pressure. What makes the condensing tankless nice, from an installation standpoint, is the very low temperature from the exhaust allows simple PVC pipe exhaust systems with zero clearance to combustibles.

Sep 14, 2012 4:38 AM ET

Response to Dave Williams
by Martin Holladay

The Federal tax credit for water heaters was good while it lasted, but (to the best of my knowledge) it expired at the end of 2010.

The only remaining tax credits for homeowners are those for ground-source heat pumps, residential wind turbines, PV systems, and fuel cells.

For more information, see Deciphering the Tax Credits and Federal Tax Credits for Consumer Energy Efficiency.

Sep 21, 2012 6:02 AM ET

Edited Sep 21, 2012 6:08 AM ET.

The Difference
by Jimi Anderson

Its not true that installing tankless water heater is waste of money. Last month replaced my old water heater with the electric one and now observing that its saving energy of upto 60% and thus saving 25% of monthly energy bill than before.

Sep 21, 2012 8:43 AM ET

Edited Sep 21, 2012 8:44 AM ET.

Response to Jimi Anderson
by Martin Holladay

The research project discussed in this blog found average energy savings of 37%. Your comments are unclear, so I don't know what your savings are. If you are saving 25% on your fuel costs for hot water, that's a little less than average. If you are saving 60% on your fuel costs for hot water, then your household is at the very high end of the savings range. Families that use a lot of hot water tend to save more than families who use only an average amount of hot water.

Of course, to determine whether your choice of a water heater makes sense from an economic perspective, the total savings have to be compared to the incremental cost of the equipment (the higher installation cost of a tankless water heater compared to a tank-type water heater).

Jan 14, 2013 11:07 PM ET

Like my new tankless
by Rick McMaster

You really have to remember the rebate offered if you consider a tankless. They aren't worth it if you have to buy it outright, but nearly every locality offers some incentive. My gas company and Masssave offered an $800 rebate so this brought my cost down by 25 to 30%. You also have to consider that the tankless systems mostly are warranteed 15 years, versus 8 to 10 for your tanks. Also, my old heater was orphaned, and that can be bad. In fact, it isn't even code in many states. Also consider the price of gas and oil never seems to go down, so using less is always good. If you consider all these things, and you plan on staying in your house, and particularly if, like me, you have two kids and are constantly running your dishwasher and laundry and have four people taking showers, then they pay back before what is mentioned here. But you need the rebate. MA Save will pay up to 2K of a job that betters your energy consuption as well, so you can really cut the cost a lot.

And like the article says, endless hot water. It never runs out, and does not run hot and cold as I have seen some reports suggest. Constant, steady hot water, even while running the dishwasher, laundry and shower all at once. It is smaller too, and off the floor, so also useful to consider if you get water in hte basement.

Feb 26, 2013 12:57 PM ET

Not Marey!!
by Ben Jamison

I did quite a bit of research before settling on the tankless heater that I bought. During my research, I tried to contact Marey. You should too. Try calling. No one EVER answers the phone. So I always left messages. No one EVER returned my call. So, if that happens before the sale, what kind of service do you think you'll get after the sale? Anyway, I ended up with Chronomite from this store: . Try calling Chronomite HQ for presales or tech support. Instant answers. Also, Chronomite is made in USA. I hope that helps.

May 1, 2013 12:17 PM ET

Ease of Install
by Robin Whiteside

I too believe that the payback isn't what you think it will be. However, you skipped one very important upside. Hot water tank heaters are huge and require venting to the outside or roof (in my city, at least). The new models of tankless hot water heaters are the size of a backpack, and the outdoor venting models require no venting. You just slap it on the side of the house and go.

This was a real gift for us, because during our remodel, we gained a closet and lost a very ugly vent on the outside.

The other upside is that they make a casing that slips right in the middle of studs, so you can install the out-door model flush with the outside wall. Killah. And that's even more awesome, because it looks terrific.

Finally, let's throw away these charts showing that one thing costs a dollar three eighty less than or more than something else. You can get tile at Home Depot for 99 cents per square foot, but you don't. You want nicer tile. You can get a perfectly good stove that works for $600. But you don't. You buy a high end one for joy of use, and for resale value. You can drive a Ford Festiva but you don't. You want comfort, safety, and a good looking ride.

Tankless hot water heaters make me happy. Period. You never run out of hot water, you get to go 20 years between units (usually) and if you're buying a house with one, you're going to go Ooooooh that means this is a good house, honey, let's buy it.

So. Anyway. Aesthetics count, that's all. Quality counts. Knowing that something is just better, counts. And Tankless hot water heaters are just plain better than the old invention. Pretty simple.

May 1, 2013 1:07 PM ET

Response to Robin Whiteside
by Martin Holladay

There are two sides to the "ease of install" question. For new construction in a hot climate, it's pretty simple (as you point out) to slap a tankless water heater on the outside of your wall. If you live in a cold climate, though, that's not a reasonable option.

If it's time to replace a failing tank-style heater in an existing house with a tankless heater, it is far simpler (and much cheaper) to install another tank-style heater than to install a tankless heater.

As I pointed out in the article, the tankless water heater usually requires a different method of venting — for example, double-walled vent pipe through a side wall — and that means getting out a big hole saw and running new double-wall vent pipe. You'll usually need to upgrade the diameter of your gas supply line, you'll need to reconfigure the water piping, and in some cases you'll need to call an electrician to put in a new 120-volt electrical receptacle. That's expensive.

Jul 8, 2013 12:46 PM ET

Cost of running tankless water heater
by G C White

We switched from well insulated electric 30 gallon water heater (we never ran out of water for 2 people) to a Rheem tankless powered by propane (we do not have access to natural gas). Electric bill down $30 per month, negligble increase in propane cost; we also have propane furnace. Water heater is installed outside of the house to gain space in small utility room, PNW location. Yes, it was expensive, ($3800) but the additional space gain for storage is great. It takes about 40 seconds to get hot water, about the same as from the tank. Temperature is set at 120 degrees. Have had it almost two years and are totally happy with it. I would spend the money again. Another poster spoke of cleaning the tank/piping with vinegar -- that's not in our maintenace information.

Aug 15, 2013 12:07 AM ET

Built in anti scalding
by Jason Shear

One thing people don't think about is the anti scalding feature on a tankless unit. By this I mean, if you have a remote to control the unit, then you can set it for 100. If you need to run the laundry or dish washer you can temporally turn it up. Most modern showers have anti scalding, but bath room sinks don't. We have 2 small children and we love this "hidden feature" There is an article at on this hidden feature.

Aug 17, 2013 10:12 AM ET

by Oliver Kaven

First off, great site and great insightful posts. I am also thinking about a tankless and after reading the majority of posts here and other articles, it probably comes down to space savings for me. If I needed a new gas line, meter, etc., I would drop the thought of a tankless. One of the concerns about amortization is the the fact that these equations usually assume you stay in your house for 15-20 years to reap the benefits of a tankless. SO, in other words, in a tankless installation, it seems that the majority of your expense is front loaded (cost of the unit and installation) and the benefit shows year after year, versus the tank heater not having a significant upfront cost, but higher operating expenses. So, if you are not planning to spend the next 15 years in your home, the tankless equation may not work in your favor.

Jan 29, 2014 3:13 AM ET

Don't forget the remodel benefits
by Keith H

This has been mentioned by others but I'll mention it as well. In our previous house, we replaced the old dead furnace with a 95% sealed combustion/exhaust unit. That eliminated the use of one side of the typical Y exhaust pipe. When we remodeled the kitchen, the exhaust pipe was either going to be a trimmed column in the middle of the island or the water heater had to move. We moved the water heater to the garage, including building out an insulated closet and installing new exhaust in the garage ceiling. In hindsight, we should have installed a tankless water heater in the crawlspace. The ROI on the labor to move the water heater and build out the closet was pretty much zero. What's my point? In remodel scenarios where energy efficiency is at all the concern of the owner, the water heater might be the last thing on the vertical exhaust stack.

Apr 21, 2014 11:29 PM ET

Edited Apr 22, 2014 12:14 AM ET.

Bunk! Tankless is WAY Better
by Laurel Denver

The thing all these articles miss about the debate is a HUGE ISSUE which is this. You never ever ever run out of hot water with a tankless hot water heater. That difference alone is worth paying gobs more money, and it's not really gobs more. It's just a little. Running out of hot water is one of the most awful feelings you can have, and it's always at a disastrous time. You can not underestimate the value of this.

Another issue these articles skip over is the tax rebate. Local utilities almost always kick in several hundred bucks rebate, and that counts for a lot.

And another issue. Often when you are using hot water, it's water that's been sitting in a tank for goodness knows how long. It isn't very fresh water. So if you are cleaning, or bathing, ew.

You also don't mention that the prices of these units have gone down a lot, and a good model is usually no more than $500-700. So... For new construction, these should be required by law. The fuel savings are worth it for the environment. For remodels, the tax benefit, peace of mind, and fab fact of never running out of hot water--totally makes it worth it.


Oh! And I am adding this later... I just remembered (how on earth did I forget!!) a hot water failure I had about 20 years ago. The thing flooded the garage and basement unit. Every family photograph I had was ruined. The mold smell took years to go away. And my puppy drowned. That's right, I said Puppy. It was horrific. And the most frustrating part was that this unit, an AO Scott unit that was four years old, had the overflow plumbing installed perfectly, yet it still failed.

Sorry to mention the puppy.

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