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Energy Solutions

The Difference Between Storage and Tankless Water Heaters

While offering higher efficiency, electric tankless water heaters usually don't make sense

Rheem's Prestige condensing tankless water heater has an efficiency of 94%. The water heater is rated at 11,000 to 199,000 Btu/hour gas input, has a maximum hot water delivery (at a 45°F temperature rise) of 8.4 gpm, and has a minimum flow rate of 0.26 gpm.
Image Credit: Rheem Water Heating

There are two primary types of water heaters: storage and tankless. In this column I’ll try to explain the differences between these two approaches and offer some guidance on choosing between them. (There are also “hybrid” water heaters with features of both that I’ll cover in a future blog.)

Storage water heaters

Most water heaters are storage models. These are insulated tanks holding 20 to 120 gallons with either electric heating elements or gas burners. The storage tank stratifies with hot water at the top and cold incoming water at the bottom, so that as you draw off hot water (from the top), you get consistently hot water until the hot water is nearly depleted. The “first-hour rating” tells you how many gallons of hot water can be delivered in an hour.

Storage water heaters constantly lose heat through the tank walls. Even though the tank is insulated, the difference in temperature across that insulated wall is large, so even with a lot of insulation the stand-by heat loss is substantial. Gas-fired storage water heaters that have standing pilot lights replenish some of that lost heat with the pilot, but most of the pilot’s heat is lost up the flue.

Tankless water heaters provide constant hot water and energy savings

To address the issue of standby heat loss and running out of hot water, tankless water heaters (also referred to as demand water heaters) were developed decades ago. These are sometimes (especially in other countries) installed at the point of use, say in a bathroom, but in this country they are usually installed centrally in place of standard, storage water heaters.

A great feature of tankless water heaters is that they never run out of hot water — assuming the water heating capacity large enough to supply the needed hot water demands. They also don’t have stand-by losses. Because hot water isn’t stored in a tank, there is no heat loss when the water heater isn’t operating (though there will be some losses through the pipes during use).

A 2008 Consumer Reports article reported that gas-fired tankless water heaters used about 22% less energy than their storage-type counterparts. A 2010 study by the Center for Energy and Environment in Minnesota found that gas-fired tankless water heaters save an average of 36% over storage water heaters. So far, so good.

The size of heating elements

A key advantage of storage water heaters is that the heating element(s) can be fairly small. Because a significant volume of water is stored and because the tank remains stratified as hot water is drawn off, a properly sized storage-type water heater can provide a family’s hot water needs without requiring a very large flow of gas or electricity to heat the water.

Most gas-fired storage-type water heaters have relatively small burners, typically 30,000 to 50,000 Btu/hour (not much larger than the larger burner on a gas range). This means that a half-inch-diameter gas line is usually adequate to supply the water heater. It also means that the air intake (supply of combustion air) can be fairly modest in size.

Gas-fired tankless water heaters, on the other hand, often have much larger burners. A typical whole-house model, sized to allow two showers to be used at the same time or for someone to shower while the clothes washer or dishwasher is operating, will have a burner producing as much as 180,000 Btu/hour; the largest tankless water heaters have burners over 300,000 Btu/hour. Supplying the natural gas or propane to such a large burner requires a larger gas-supply line (typically 3/4-inch) than needed for storage water heaters — not an insignificant consideration.

Along with the large gas line, these tankless water heaters require a lot of combustion air. A small, 125,000 Btu/hour model operated at full capacity requires about 30 cubic feet per minute (cfm) of air for complete combustion, and a large, 180,000 Btu/hour model requires up to 45 cfm of air at full capacity. Such large airflow requirements can limit the options for placement.

Bigger challenges with electric tankless water heaters

An electric tankless water heater large enough to serve a whole house requires a huge current draw. A Seisco Model RA-28 that supplies 2.5 gallons per minute at a 76°F temperature rise draws as much as 116 amps at 240 volts! Most homes have only 200-amp service, and the multiple breakers and wiring required for such large current flows are expensive.

For utility companies, the idea of a lot of customers switching to electric tankless water heaters is downright scary, since hot water loads typically fall during periods of peak morning and early-evening power consumption. Utility companies are required to have capacity available for whatever the demand is, and if a lot of electric tankless water heaters were installed in a service district that would result in a significant increase in those peaks.

Flow rates

Some tankless water heaters have a minimium flow rate as high as 0.5 or 0.6 gallons per minute, meaning that at lower flow rates they won’t come on. This can be a problem with low-flow plumbing fixtures, such as bathroom faucets.

Fortunately, manufacturers are responding to this concern. The Rheem H95 condensing tankless water heater pictured with this blog, for example, has a minimum flow rate of 0.26 gpm, the lowest I’ve seen — though the minimum “activation rate” is somewhat higher at 0.4 gpm.

Higher cost for tankless water heaters

While tankless water heaters save energy compared with storage water heaters, that doesn’t mean they are cost-effective. Both the Consumer Reports and Minnesota study mentioned above reported that the significantly higher cost of tankless water heaters resulted in payback periods longer than the expected lifetimes of the water heaters. Consumer Reports found the cost of tankless models to range from $800 to $1,150 plus about $1,200 for installation, compared with $300 to $480 for storage water heaters and $300 for installation.

The Minnesota study reported a 20- to 40-year payback for the tankless water heaters.

With certain usage patterns, though, the numbers could change. In a vacation home that is only used for an occasional weekend, the standby losses can be a huge percent of the total energy use for water heating, and a tankless model might make more sense. Or, in a commercial building in which a lavatory faucet is far away from the water heater and the hot water demand is very low, a small point-of-use tankless water heater may make sense — even an electric model.

Increased maintenance

On top of the questionable economics, tankless water heaters have significantly greater maintenance requirements than storage models.

Models designed for outdoor installation (where supplying combustion air is not a problem) include sophisticated freeze-protection systems. In places with hard water, scale build-up is a significant problem. If the hardness is above 11 grains per hour, experts recommend installing a water softener, according to Consumer Reports, and special provisions may be needed during installation to allow periodic flushing the heat exchanger coils with a vinegar solution.

The bottom line

The bottom line is that tankless water heaters simply don’t make sense for most whole-house applications. There are exceptions, as noted above, but for the vast majority of residential applications, storage water heaters make more sense.


Alex is founder of BuildingGreen, Inc. and the Resilient Design Institute. Photo courtesy of author.


  1. watercop | | #1

    I take exception
    I agree with the conclusion, but take exception to:

    "Storage water heaters constantly lose heat through the tank walls. Even though the tank is insulated, the difference in temperature across that insulated wall is large, so even with a lot of insulation the stand-by heat loss is substantial."

    Not really. In the case of electric storage tank water heaters the wall loss is less than 10% of total water heater energy use.

    Conventional gas fired storage water heaters DO have very high standby losses, but that has little to do with tank wall insulation but LOTS to do with convective loss up the central flue.

    Presence or absence of a stndby pilot flame makes little difference. A conventional gas fired storage water heater loses 40% of its energy consumption up the flue.

  2. spinoza2 | | #2

    I take exception too
    GBA seems to have this thing against tankless hot water heaters, which from my own experience is totally bizarre. We're going on our tenth year with our Paloma LP gas tankless water heater, and it has worked like a Swiss watch since the day of installation. We paid around $600 for it new (with a $200 installation cost), and it costs us $6-$8 a month for our hot water. It's so small and compact that we have it installed in our bathroom, very close to where we use it (the kitchen is next to the bath).

    Now, compare this with a tank heater: because they are so large, they must be installed in a basement, outside in a cabinet, or some other place typically far away from the point of use. Usually, in these places, tank heaters are highly susceptible to corrosion and rust, and must work overtime because the ambient temperatures are much lower (in winter) than the interior of the tank.

    Most importantly, tank water heaters are an incredible waste of water. Because they typically are located far away from point of use, Americans have simply gotten used to running water for up to several minutes before the needed hot water comes out. In terms of pure waste, for New England (where I live) imagine the difference between several million homes with tank-based water heaters each day letting water run down the drain to get needed hot water vs countries who care about such things (say Germany, for example, which mostly uses tankless water heaters)! Those same several million homes in Germany waste a fraction of the water that Americans waste every day.

    "Green Building"? You should be ashamed to publish such articles.

  3. GBA Editor
    Martin Holladay | | #3

    Response to Roger Brisson
    Your low energy bills are due to several factors -- including especially your wise decision to locate your tankless heater close to your bathroom and kitchen, and to keep your hot water lines very short. That's ideal; good work!

    I'm glad that you have had good success with your water heater.

    Here's what I wrote on the topic: "Tankless water heaters ... 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."

  4. Brian Knight | | #4

    Ashamed? No, applauded.
    Great article! Alex backs it up with two often cited third party studies. I dont think Consumer Reports or the University of Minnesota have anything to be ashamed about either. Where are the third party studies backing up the many claims touted by the tankless industry?

    Personal anecdotes aside, Roger's (and many others) main argument against storage water heaters are the waste of water through lag time. It can easily be argued that there is more waste caused by 'endless' quantities of HOT water which carry a much bigger environmental footprint.

    Lastly, a 200$ installation cost is unrealistic for most, especially for retrofits.

  5. DFMallinson | | #5

    Tankless is my choice.
    In my new green house (HERS rating of 14), in Mass where electric rates are close to 20 cents per kWh, I elected to go with an electric fired tankless water heater (Stiebel Eltron Tempra 24 that requires 100 AMPS @ 240v). The house is small (1,350sf) on a slab so space for a storage tank would be a premium. My 5.4kW solar panel system, among other things, heats my water without the complication of an additional, dedicated, domestic solar hot water system. Gas would have required too much exchange of supply and exhaust air in my air tight house. The net meter works to my advantage. The utility company gives me an average monthly credit of $90. Tax credits, grants and SRECs will pay for the added expenses associated with my green building. Costs aside, our environment needs all the help it can get.

  6. Alex Wilson | | #6

    Electric tankless water heaters
    The solution you've ended up with might work fine if a small number of people employ it, but if many customers in your utility district adopted the same I suspect that your utility company would get very worried. Your water heater draws 24 kW--far more than your 5.4 kW solar system produces in full sunlight. Even though you are generating more kilowatt-hours in a given month than you use, your peak demand is very high and likely falls during the utility company's peak demand periods. Your utility company is required to have that full 24 kW (and more) available whenever you need it. I can't agree that electric instantaneous water heaters make sense--whether it's a "green home" or not.

  7. HRendindi | | #7

    It depends on your house
    The article is good in that the pros and cons are listed. Companies always try to convince one that they have the latest and greatest to offer, but the truth is the choice to go tankless or not depends on many factors. Mr. Brisson has one bathroom and one kitchen which makes putting the tank close to the user easy, but what if you have two bathrooms and two kitchens and a laundry area all in different parts of the house? Then you have to split the difference. we decided to go tankless two years ago. We have a gas fired Rheem and the costs for the unit and installation are accurate to what was quoted in the article. The hot water takes a little longer to reach the faucets now so more water is wasted unfortunately (we do use this water for other things in the house). My wife and I live in a two story 1940 house which has about 1000 sq/ft on each floor. For us the advantages out weigh the negatives of having gone tankless. The space saving, never running out of hot water, and no worry of a tank exploding water all over our basement while on vacation. What's interesting is because a tankless operation is different than having a tank, it changes the behavior of the people using it as well. For example during times that I want just a quick hand wash or a low flow amount of water for rinsing dishes, I usually end up using cold water and have no sense of hardship or inconvenience. Sometimes the low flow threshold has its advantages too. When shaving using hot water, I'll eventually put the faucet low enough that the tank doesnt fire and I can use up the remaining hot water in the line to rinse my shaver or wash my hands. Again, no inconvenience, just a different way of doing things.

  8. wjrobinson | | #8

    7 billion people are never
    7 billion people are never going to save 25 cents a month by shaving while using up inline hot water. Yes, cute for one individual with a great sense of saving quarters.

    Who really even needs hot water or even plumbing? Most of us could collect rain water and work out of empty drywall buckets and not shave.

    Fun discussion

    Green is personal. And green is community.

    I can see the public service commercial... "Save water, stop shaving, every little bit helps".

  9. lutro | | #9

    Usage patterns vary too much for standards
    It's not uncommon that industry standards for measuring energy consumption have too little in common with usage patterns of homeowners, to be useful. Sometimes the standards are poor or intentionally misleading, and often, there is too much variation in individual cases to draw a personally meaningful conclusion from the standard.

    Alex gives the example of a gas-fired storage water heater in a rarely-used vacation home. For all the people who leave the pilot on all year, their energy efficiency percentage will be a small fraction of the standard rated efficiency for the appliance. The prudent people who turn the pilot on when they arrive, and off a day before they depart, will enjoy greater efficiency than the promised numbers.

    In the West, where high mineral content water is common, and water softeners less so, tankless water heaters lose efficiency rapidly. I've read a couple of university studies, which said that the rated efficiency advantage of a tankless heater over a storage heater is overcome within a year by the increased impact of mineral deposition in a tankless water heater. The hypothetical prudent tankless owner will soften their water and descale often, but prudent people are in short supply.

    I appreciate this article, in pointing out that it doesn't make sense to "go by the number" and conclude that the rated efficiency of an appliance is indicative of what a specific homeowner will experience.

  10. bobbomax | | #10

    It all depends...
    First, it's clear the discussion needs to be separated into retrofits and Original Equipment threads- that much is simple.

    Retrofits- maybe not- depends on the rest of the discussion. OE- quite possibly, especially if the dwelling is designed for tankless- good access for make-up air, short runs to points of use, adequate gas supply piping, inside mounting to resist freezing and water supply that's not too hard. Gas is almost a given, except in unusual cases (see Mallinson, above.) Many millions of Europeans and Asians can't be that wrong.

    Still w/ OE, some thinking about actual usage patterns is important, with attention to changing some of those patterns. Clothes washers don't really need hot water and draw enough that they'll do OK for those occasions when hot water is useful- say diapers. Modern dishwashers have built-in electric heaters that make sense in that limited, relatively low-draw application.

    Most users will say that kitchen sinks require hot water, but I disagree. I'm ruling out the various small electrical instant hot water devices for reasons that are obvious to me- I think most of those uses can be satisfied w/ a bit of un-American patience and an electric kettle (e.g., tea) or the stove (making pasta takes 2 minutes longer starting w/ cold water.) That mostly leaves hand and dish washing, both of which can really be done w/ cold water. Some sort of tempering device could help with that- I can imagine an incoming winter water temp of 32.5F in midwinter Vermont.

    That mostly leaves the bathroom. Handwashing aside (Use Cold Water!), most of those uses are relatively high draw- several to many gallons at a time, generally concentrated at morning and bedtime.

    So, in an OE situation, good brand of tankless, mounted near the bathroom w/ relatively soft water and perhaps a cold water tempering device (large, flat {high surface area} tank, perhaps w/ a drain water heat exchanger) seems like a very reasonable choice.

    More on retrofits later...

  11. user-659915 | | #11

    Response to Roger Brisson
    "GBA seems to have this thing against tankless hot water heaters"..
    Not really. GBA quite rightly has a thing against overhyped product. In my experience GBA offers a view of green products and technologies based on the best available science and this article is no exception. Manufacturers of tankless heater have promoted them in such a way that consumers consider them an unmitigated and cost-effective solution for all situations. I'm delighted that your tankless works so well for you but it's not appropriate to extrapolate your experience to a universal benefit from these systems. I'm familiar with the ubiquitous European usage of these systems but circumstances of their use do not transfer automatically to North American conditions. In our design practice we endorse tankless only when the circumstances support it. Some of the factors in consideration:

    • Because of their venting requirements tankless heaters are often harder to locate in close proximity to point of use than electric tank heaters: your situation is admirable but alas not typical. I could show you a photograph of a tankless heater mounted on a wooden railing six feet outside the home - possibly the result of incompetence but the homeowner says 'there was a reason'.

    • We find tankless installationsare are about 2K and up: you can get a top-quality super-insulated fiberglass storage tank like the Marathon, with extremely low standby losses and warrantied for life against corrosion/burst problems, for about half that. And LP is way more expensive than electricity in our area

    • With the increasingly affordable options for PV an electric tank heater offers the opportunity to store your daytime surpluses in a usable low-cost way.

    Again, I'm glad you are happy with your tankless heater.

  12. Boro | | #12

    Bottom Line
    In a perfect world, where we rebuild all the worlds homes, we'd install tankless water heaters. The bottom line is they save huge amounts of embodied energy, and if being "green" is the end goal, this couldn't be more obvious.
    My family lives off grid with a small1K solar array. Our house was designed to be as efficient as possible and has all the advantages of ideal plumbing locations, venting, etc.
    We do have a gas fired tankless water heater that I installed and unlike a storage tank continually burning gas, my family has complete control over when to heat water.
    We have control just by turning the faucet on and off...and we can decide how long we want to run the hot water for.
    Hector & Robert are correct; your routine will change when you are working with a bit of technology designed to be a bit smarter.
    The hot water storage tank could be considered passive, outdated and unengaging.
    We can't consume our way to being green...we have to be a participants, and tankless leads us in the right direction.
    I fully understand the augments and the metrics that favor hot water tanks in certain situations, but the debate will never end if we continue to constantly gauge everything with cost (that's what consumer reports is for) compared to real energy and how much is actually consumed.
    Again, if being "green" is the end goal and a piece of technology helps to provide, shouldn't we embraced it? We could improve upon its shortcomings if we all said "yes."
    A good start would be not to scoff at changing our habits, or saying not possible, and start by being billed for the actually embodied energy we used.
    When it all boils down (pun intended) I think the answer is clear....passive solar hot water with on-demand backup. ;)

  13. user-659915 | | #13

    Response to Dave Cummings
    I applaud anyone embracing a low energy lifestyle but 'embodied' energy doesn't mean what you seem to think it means. Embodied energy is the energy used to manufacture a piece of equipment or a construction material, not the energy it uses in service. If you know of any studies of the relative embodied energy in storage and tankless water heaters please share them.

  14. user-1031655 | | #14

    Somewhat misleading comparison
    When talking about btu/hr usage, the article says that tankless water heaters that can provide hot water for both showering and clothes washing simultaneously can use up to 180,000 btu/hr. But the article doesn't explicitly impose this same requirement on standard hot water heaters. And generally wouldn't this require either two hot water heaters, or a vastly oversized one? Most homes I have been in, you simply don't engage in both activities at the same time. I think this is a misleading comparison made by the author.

  15. Boro | | #15

    Response to James Morgan
    Embodied energy, or "Emergy," is all things.
    Look to the studies of H.T. Odum and work your way up (or down) using the embodied energy concepts. The collective energies of mining, drilling, and refining of fossil fuels sources before they are delivered to your door....before they are burned (or burned at the power plant) are immense.
    Then look at everything around you and use the embodied energy concept as it relates to say manufacturing, growing food, eating, riding a bike, or the energy you used to type the above comment (calories) or read this comment. It's anything and everything!

    "The scale of energy goes from dilute sunlight up to plant matter, to coal, from coal to oil, to electricity and up to the high quality efforts of computer and human information processing." - H.T. Odum

    My point was that if we compare all the energies needed to create one BTU, and if our goal is to burn less fossil fuels (green), we should applaud the device that does so outside of human error, habits, waste, and/ or cost equations.
    I know in the real world these should be factored in suit the public at-large, but just for a moment, let's all agree, that when comparing a tank vs. a tankless, if we could take two identical houses, two identical families, and compared them side by side over the course of a year, the house with the tankless would use less fossil fuels.

  16. Boro | | #16

    Response to Alex Wilson & Don Mallinson exchange
    "Your water heater draws 24 kW--far more than your 5.4 kW solar system produces in full sunlight."

    True the Stiebel Eltron Tempra 24 uses 24 kw but that's over the course of an hour. So yes, his 5.4 kw array would not keep up if he ran a hot shower for an hour.

    So let's say an average shower lasts 10 minutes. 24,000 divided by 60 minutes is 400....400 multiplied by 10 minutes = 4k....seems his array comes out on top.

    And hopefully is array is hit with more than an hour of full sunlight each day!

  17. user-659915 | | #17

    @ Dave - again.
    "if we could take two identical houses, two identical families, and compared them side by side over the course of a year, the house with the tankless would use less fossil fuels.
    No. Depends on the primary fuel (amongst many other things). An electric tank heater running on PV, wind, tidal, nuclear or hydro generated power would use ~ zero fossil fuels. A tankless heater running on propane or nat. gas would be the fossil fuel hog.

    And if the tankless heater encouraged the teenage whelps of the family to endless hot showers - what then?

  18. Alex Wilson | | #18

    Mixing up units
    24 kW (24,000 watts) is the instantaneous consumption of the water heater--it's the amount of electricity needed to power 240 100-watt light bulbs. A 5.4 kW PV array in full sunlight is only going to produce enough electricity to power 54 of those light bulbs, and that won't be enough to deliver the current needed to heat the water at the Stiebel Eltron's rated output. To add time units we get kilowatt-hours (kWh). If that 24 kW water heater were used steadily for an hour it would have consumed 24 kWh of electricity. Operated for ten minutes for a shower, it would consume 4 kWh (24 ÷ 6).

    You are correct that the PV array will produce more than that in an an hour of full sunlight (5.4 kWh), but that doesn't provide close to the needed power for the water heater. This argument demonstrates a benefit of storage water heaters--a small current flow over a longer period of time can heat the water, and because that hot water is stored, you can consume it water at a faster rate than it is produced (until it runs out, that is).

  19. Boro | | #19

    Mixing up Units
    We are in agreement on our calculations and we can agree the large power demand on the utility co. would be ridiculous.
    I think we also understand the difference between power (kW) & energy (kWh).
    I would never run an electric tank or a tankless water heater unless I had the alternatives to back it up fully...and without the grid.

    Apologies if I implied the electric water heater could run directly from the 5.4k PV array & guilty for not being clear on kW & kWh. I mix the two on occasionally since they're typically multiplied by 1
    kWh = kW x number of hour(s)
    I live in a world of PV panels, inverters, and batteries.
    In this case I wanted to clarify for others how much energy the electric heater would consume in 10 minutes rather than what it is rated for. It can be very confusing and misleading.
    I also wanted to clarify that the 5.4k array would "replenish" the energy "consumed" in under an hour regardless of where that energy was stored... be it in a battery or sent back to the grid.

  20. Boro | | #20

    @ James...again.
    I guess I should be more clear....."exactly the same."
    You choose your power source...Maybe I should have said "less energy" and not "less fossil fuels."
    As for the kids...put a timer on the heater. Ha!

  21. spinoza2 | | #21

    Step back and look at the bigger picture
    Okay, let's get back to my original comparison of 5 million homes: all things being equal, if you compare the green "footprint" of 5 million German homes that are using well-installed Stiebel-Eltron tankless water heaters, with 5 million typically installed American tank water heaters, the difference in energy use and water consumption is dramatic, very dramatic (like the per capita energy consumption of American is twice that of Germans). In the Cambridge, Massachusetts duplex I'm currently living in, the hot water tank is in the unheated basement (typical). I live on the second and third floors, so that water travels a long, long way before reaching my bathroom on the third floor, so long that I have to let the water run at least a couple three minutes before I can even step into the shower. Now, in the home I built, elsewhere in Massachusetts, my tankless water heater gives me nice, hot water in less than 15 seconds. The difference in these two scenarios is dramatic, and when you multiply that by 5 million you begin to recognize the difference in efficiency. This is why rational societies have long ago moved over to technologically advanced tankless water heaters for their homes.

  22. wjrobinson | | #22

    Typical US use of water,
    Typical US use of water, tankless is not going to be more green.

  23. daveW123 | | #23

    Sorry, don't agree with most of this article
    First, I have a natural gas tankless - condensing style with 98% efficiency. It has been working well for 2 years. I purchased and installed it. Nothing mentioned in this article about tax credits (30% including labor). And state/local rebates. If you play the game with tax credits and rebates you can make a big reduction in the cost. After all the tax credits and rebates, my material cost was about $400 over the cost of a good conventional tank style gas water heater at the big box store. And I estimate I'll pay back that incremental cost (tankless vs conventional tank) over about 4 years time. Certainly not a 20 to 40 years payback. If I had not installed windows in the same tax year - I could have applied all the 30% tax credit to the tankless and drove the net material costs even lower.

    Many people believe you can buy an Energy Star Water Heater and get the 30% tax credit. Reading the IRS regs, only the tankless water heaters were eligible for the 30% tax credit. The conventional tank water heaters (at about 60% combustion efficiency) did not qualify.

    Second, my 199,000 BTU/hr input gas heater required a new gas supply design. You don't need to re-size the gas lines. You need to talk with the gas utility. In my case, they recommended an increase in gas pressure to a "2 pound set" in the house. You then regulate pressure at the appliance with a gas regulator. My install was inspected and approved by the utility and city. Finding a route for the 3 inch gas air inlet was not a big deal. I run a closed combustion system. The gas utility increased the pressure, rebuilt my gas service (new regulator, new block valves,etc) at no cost to me. Their engineering group argued there are advantages to operating with a higher gas pressure. If you add another gas appliance later (e.g. a remodel requires a larger furnace) this will only involve adding an new regulator - not resizing all the gas lines. And regulating pressure at the appliance results in better operation. You remove the pressure drop as a potential problem in your main gas line in the home and that is a good thing.

    Getting some estimates from plumbing contractors in the thousands - I thought they were too high and they didn't seem to have much experience with tankless. What seemed to drive up this cost was the insistence by many plumbers to resize all the gas lines - which is not needed. And they all wanted to do a wall mount on an outside wall - they did not consider the condensate drain from the exhaust stack. So, a condensate pump just added more cost. I located my tankless to utilize an existing drain and the city approved. I ran a new 3 inch PVC exhaust stack up and out the roof.

    Sorry, I had to laugh when I read the 20 - 40 year payback for a tankless - that has not been my experience - not by a long shot. Maybe the tax credits have expired since I did my install - but they made a big difference in my net cost.

  24. user-659915 | | #24

    Response to Roger Brisson
    The difference in performance between the two systems as you describe it is due entirely to the location of the heater relative to point of use, not whether or not the heater has a storage tank. Plumbing efficiency is a good thing, and I'm glad you are now able to enjoy the benefits of a heater installation close to point of use. Sometimes, because of its small size, that proximity is more available with a tankless heater, sometimes, because of its venting requirements, it is less so.

    Your argument regarding European energy use is also spurious. There are many reasons why per capita energy consumption in Germany is lower than in the US: lower VMT, smaller better insulated homes, higher energy costs etc. etc. Installing tankless DHW universally in American homes would have little to no effect on those numbers.

    Just to be clear, I have nothing against tankless heaters when they are installed in appropriate conditions. I have years of experience with demand heaters in the UK where the low cost of natural gas relative to electricity, the dual function of these units for space heating purposes and their compact size have made them the ubiquitous DHW solution for several decades. I do take exception though when they are billed as a universal 'green' solution to North American conditions which are markedly different. With due respect to the enthusiastic users posting here, they don't always live up to the hype. Hence the need for Alex's thoughtful and well-balanced assessment.

  25. JonathanTE | | #25

    Reply to Dave, comment #19
    Dave, you finished your comment with

    "I also wanted to clarify that the 5.4k array would "replenish" the energy "consumed" in under an hour regardless of where that energy was stored... be it in a battery or sent back to the grid."

    In the case of an off-grid, battery system, then I think you have made your point. However, if I understand correctly, in the case of a grid-connected system, there is no such thing as "replenishment." The utility must provide power in the moment at all moments. When a user draws more than their PV panel produces instantaneously, the utility is burning fuel to provide the difference. Though for the rest of the day the utility might avoid some burning of fuel because the PV system is providing a net contribution from the household, the utility still must build and maintain a production capacity capable of generating the full peak demand. In other words, anything that increases instantaneous peak demand is a signal that the utility must invest in more peak production capacity, which almost by definition can't be wind or solar since neither of those can be trusted to be available at the moment of peak demand.

  26. Boro | | #26

    Re: Jonathan Teller-Elsberg
    Jonathan, Thanks. I was using the lingo similar to what a grid-tie (without battery back-up) salesmen would use, i.g., "no need for batteries....the grid becomes your battery bank."

  27. GBA Editor
    Martin Holladay | | #27

    Response to Dave Williams
    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.

  28. Boro | | #28

    Bottom Line
    Can we agree?
    Let's take two showers with identical ( I mean identical! ) flow rates, temps, etc. One has an average size tank type heater and the other has an average size tankless heater. Both run on propane.
    Let's place them in the same room and have the same person use each shower once a day for identical lengths of time over the course of a year.
    Answer, please, which one would use less propane?

  29. GBA Editor
    Martin Holladay | | #29

    Response to Dave Cummings
    Clearly, the answer to your question is simple. Under those circumstances, the tankless water heater would use less propane.

    However, that doesn't mean that the tankless water heater is a good solution for most American families. Among the variables that your question doesn't account for:
    - the higher cost of the tankless equipment;
    - the higher installation cost for the tankless equipment;
    - a comparison of maintenance costs (especially for homes located in areas with hard water) for the two options;
    - the performance differences between the two options -- especially the fact that tankless units often result in longer wait times or poor performance under low-flow conditions;
    - the possibility that the "endless hot water" capabilities of the tankless unit might result in an increase in hot water consumption.

  30. Boro | | #30

    Response to Martin Holladay
    Thank you. I just wanted to clear the deck.

    Regardless of how much the the tankless industry touts itself as being "green," the fact is, the product does have the capability of being "greener" under circumstances that are not far fact easily had.

    Maybe one of those "don't hate the player," "kill the messenger" type comments is needed here.
    I propose Instead of having the conversation about X vs. Y, only to confuse a layman looking for actual conservation efforts, we should be clear that one has the potential to be more efficient than the other.
    Beyond that, we should start discussing how to make tankless more adaptable and a reality in most homes in order to conserve.

    One common complaint I've heard is the longer shower times. Let's discuss adding a feature to the user interface that could control the run times. Or the heater could even a smartphone app that could instantly dial back the water temps for the teenager who is running a bit long.

    Let's talk about insulating our pipes and lets encourage round table conversations between designers and installers to find better locations for tankless units.
    Lets also discuss our water habits and how we could do more with less.

    In time the costs will come down and the installation will become easier.

    Thanks Alex and Martin...I really enjoy the conversations on this site.


  31. GBA Editor
    Martin Holladay | | #31

    Response to Dave Cummings
    I agree with many of your comments. The thing about water heaters is: there is no single piece of equipment that will be the best solution for all families.

    When specifying a water heater, you have to think. Families that use very little hot water need different equipment from families that use a lot of hot water. Moreover, when it comes to reducing the amount of fuel used to heat DHW, many aspects of plumbing design (and house design) matter more than water heater selection. Many articles on GBA have emphasized these points.

    Again, thanks for posting your comments.

  32. rustyshackleford | | #32

    argument against tankless is simple
    To me, the argument against tankless is simple. The efficiency advantage of tankless is the elimination of standby losses. But standby losses are far less than losses in the piping (mainly from hot-water remaining in pipes after the faucet is turned off); unlike the former, the latter is not included in EF, but I've seen quotes of 15% (here, I think). Obviously it depends on water-heater location(s) and usage patterns, but it seems to be much more than the well under 10% of a modern well-insulated electric storage-style unit (EFs up to 0.95). Thus a greater savings, than cutting standby losses by going tankless, would be to try to minimize losses in the pipes. By improving location, and by providing two or more water heaters. For multiple units, storage-style again has advantages, since the peak loads imposed by multiple tankless units operating simultaneously could be unacceptably high.

  33. greenbuildingcanada | | #33

    That's a good point you make
    That's a good point you make about choosing tankless for a vacation home or in a commercial building where the lavatory is far from the water heater. A product is sustainable only if it's used in a sustainable fashion. So it largely comes down to planning and thinking things through rather than just buying up the latest and greatest thinking it's the best option.


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