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Tankless Water Heaters – Pros and Cons

Tankless water heaters are designed to save water and energy, but they're not for everyone. When considering changing your hot water system over to tankless, you need to weigh the benefits and drawbacks of these new systems.

Consider the Benefits of Tankless Water Heaters:

  • Endless Hot Water – Since water is heated on demand, there is no shortage of hot water and it's always available when you need it.
  • No Wasted Heat Energy – Again, since the water is heated on demand, you're not wasting energy or heat by warming water in a storage tank.
  • Space Saving – Tankless water heaters occupy significantly less space than traditional hot water heaters.
  • Energy Star Savings – Most tankless water heaters come with a federal tax rebate.
  • Durability – Tankless water heaters generally last ten to fifteen years longer than conventional tank heaters.
  • Less Wasted Water – Because tankless heaters are small and can be installed closer to the output point (ie the sink or dishwasher), there's less wasted time and water waiting for a hot current.
  • Energy and Money Savings – Because they're more energy efficient, tankless heaters can save you up to 25 percent off of your water heating bill.
  • Environmentally Friendly – Electric tankless water heaters do not produce any greenhouse gases.
  • Versatile – not only do tankless water heaters come a variety of sizes to fit almost anywhere, some even come with remote controls and multiple settings.
  • No Unexpected Floods – Traditional tank water heaters can sometimes break and spill stored water in your home, causing costly damage.

Although there are many reasons to purchase a tankless water heater, you still need to consider the drawbacks of switching from a conventional water heater to a tankless model.

The Drawbacks:

  • Cost – Tankless water heaters, although they last longer, can cost up to three times as much as conventional models.
  • Electrical Installation – Electric tankless water heaters may require special installation and even an additional circuit in your breaker box.
  • Some Water Waste – Although they do save water, there is still water waste. Depending on the proximity of your sink or appliance in relation to your existing tank, installing a new tankless model may actually waste more water if it's located further away.
  • Multiple Units – One tankless water heater can only accommodate a limited flow. You either need to purchase multiple units to meet your requirements, or limit your hot water use to a single point at any given time.
  • Gas line Installation – If you choose a gas tankless model, you may need to install an additional gas line to accommodate the unit.
  • Greenhouse Gases – Gas powered tankless water heaters produce some greenhouse gases.
  • Venting Gas Units – Gas fueled units also require additional venting which may lead to additional costs for supplies and installation.
  • Limited Use – Tankless water heaters need a minimum flow rate of 0.5 gallons per minute in order to engage the heat exchange.

Budget limitations and costs can make a big difference when deciding on whether or not to purchase a tankless water heater. Keep in mind that approximately 20% of your energy bill goes into heating your water with a conventional water heater. Tankless water heaters, although they cost more up front, can help save you money in the long run and will eventually pay for themselves.

To give you an idea of cost, electric tankless heaters designed to cover the hot water needs of an entire house generally cost anywhere from $500 to $700 and are cheaper to install than gas-fueled units. Whole-house gas models cost between $800 and $2000 but usually heat water faster than their electrical equivalents while also allowing for the greatest cost savings.

If your current water heater is outdated or needs replacing, consider the benefits of purchasing a tankless water heater versus a conventional model. Keep in mind the Energy Star ratings and the potential increase in energy costs over the coming years. The “Energy Guide” ratings on your existing water heater will help you compare the long-term energy and financial savings of a tankless model versus one similar to the one you now own. Keep in mind installation costs of both kinds of heaters and the replacement costs down the road. Remember that traditional tank water heaters last about ten years while tankless water heaters generally last between 20 and 25 years.