The Comprehensive Guide to Tankless Water Heaters

The conventional method of heating water in most households can be quite wasteful. The standard practice involves filling large 40-50 gallon storage tanks and continuously heating them to ensure hot water availability. However, this method often falls short, especially when multiple people need hot water simultaneously. Moreover, the concerns of energy-robbing sediment and potential leaks are always present. This is where tankless water heaters come into play.

Understanding Tankless Water Heaters:

Tankless water heaters, as the name suggests, do not store water but heat it as you need it. This on-demand approach can save 27 to 50 percent of fuel costs compared to traditional tank-type heaters. Furthermore, the absence of a tank eliminates the risk of catastrophic leaks. Since their introduction in the United States in the 1990s, tankless heaters have become increasingly sophisticated, featuring built-in recirculating pumps for instant hot water and wireless connectivity for maintenance alerts.

How Does a Tankless Water Heater Work?

The process begins when you turn on the hot-water tap. A flow sensor detects the incoming water and signals the control panel to start heating. In a gas-fired unit, the control panel activates the fan, opens the gas valve, and ignites the burner.

The heat exchanger captures heat from the flames and transfers it to the water moving through the exchanger’s tubing. The mixing valve tempers the superheated water exiting the exchanger. If the temperature sensor detects any deviation from the desired setting, the panel adjusts the gas valve, the mixing valve, and the flow-regulating water valve accordingly.

Pros and Cons of Tankless Water Heaters:


  1. Compact: Tankless gas heaters are about the size of a suitcase and can be mounted on the wall, saving space.
  2. Safer: They won’t spill gallons of water if a leak occurs, and they can’t harbor Legionella bacteria.
  3. Easy to Winterize: With a compressor, you can drain a tankless heater in a few seconds.


  1. Sensitive to Slow Flow: If there’s too much scale buildup in the pipes or a reduced water flow, these units automatically shut off.
  2. Payback Takes Time: Compared with a tank-type heater costing $400 or so, a $1,000 tankless gas heater may save a household only about $100 per year, depending on its efficiency and the amount of hot water used.

How Tankless Water Heaters Work:

Unlike traditional water heaters that store and heat water in a tank, tankless water heaters heat water on demand. When you turn on the hot water tap, a flow sensor detects the water coming into the heater and signals the control panel to start producing hot water.

In a gas-fired unit, the control panel turns on the fan, which draws in outside air, opens the gas valve that lets in the gas, and ignites the burner. The heat exchanger captures heat from the flames and transfers it to the water moving through the exchanger’s tubing. The mixing valve tempers the superheated water exiting the exchanger.

Cost and Installation:

Prices range from about $170 for small gas-fired units to more than $2,000 for high-output heaters that can supply two showers at the same time. Tankless electric heaters run between $90 and $900. Installation is a job for a professional, as it involves making leak-free water, vent, and gas connections, or upgrading the wiring and circuit-breaker panel.

Maintenance and Lifespan:

Tankless water heaters should be serviced annually, including cleaning or changing water and air filters and checking the burner. Gas-burning tankless water heaters should operate for 20 years or more, two or three times longer than tank-type heaters. Tankless electric units have shorter life spans, on the order of 7 to 10 years.

Pros and Cons:

Tankless water heaters are compact, safer, and easy to winterize. However, they are sensitive to slow flow and the payback takes a while.

New Technology:

Tankless technology is constantly improving. Newer models have higher efficiency, provide instant hot water, and are Wi-Fi compatible.

Electric Tankless Water Heaters:

Homes without a gas line or propane tank can also enjoy the advantages of on-demand hot water by installing tankless units powered by electricity. These units, which heat water with thick copper rods, are quieter and about a third smaller than gas or propane tankless heaters.

Installation Considerations:

Before installation, you and your plumber need to assess the gas line, venting, and water hardness. In many cases, the diameter of the supply pipe has to be increased to 3⁄4 inch. Noncondensing tankless gas heaters use stainless-steel vents that can withstand high exhaust heat. Condensing units have a cooler exhaust, and use less expensive PVC pipes.

New Tankless Water Heater Technology:

Tankless technology is constantly improving. Some of the latest refinements include higher efficiency, instant hot water, and Wi-Fi compatibility. Condensing gas heaters can extract up to 96 percent of a fuel’s heat, thanks to a second heat exchanger that captures much of the exhaust heat before it goes out the vent. Units with built-in recirculation pumps save water and reduce waiting time. Digital connectivity allows you to adjust the temperature and monitor gas and hot-water usage on your phone.


Tankless water heaters are a significant upgrade from traditional tank-type heaters. They offer numerous benefits, including energy efficiency, space-saving design, and enhanced safety. However, they also have their drawbacks, such as sensitivity to slow flow and a longer payback period. Despite these, the continuous advancements in tankless water heater technology make them an increasingly attractive option for homeowners. Before purchasing, it’s essential to consider your household’s specific needs and consult with a professional to ensure a proper installation.

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