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Should you switch to a tankless water heater?

If you’ve ever been the last person to take a shower and ended up standing in cold water, you’ll understand the appeal of tankless water heaters. Not only do these compact appliances supply hour after hour of hot water, but they’re also better for the environment, last longer than tanks, and reduce the risk of water damage in your home. However, they’re not the perfect solution for every home. Here’s how to determine if a tankless water heater is right for you.

What is a tankless water heater?

Tankless water heaters are also called instant or on-demand water heaters. This is because they heat water only when you’re using your hot water taps or an appliance. Tankless water heaters move water past a heating element to heat it right before delivering it to your shower or sink.

Because they don’t require constant energy to keep gallons of water hot in a tank, these heaters are up to 50% more efficient.

Electric vs. gas tankless water heaters

Tankless water heaters are powered either by gas or electricity. Generally, electric models are smaller than gas-powered ones. This means they can be placed closer to the area needing hot water and increase efficiency. If you have a power outage, both models will still allow water to flow, but electric water heaters will no longer be able to heat the water.

The two models have different installation costs to consider. Gas-powered tankless water heaters require good ventilation, which can mean installing new vents and ducts. Electric heaters are generally easier to install since they don’t need ventilation, but they may require an update to your home’s wiring.

Altitude can also be a factor in choosing the right tankless water heater. Gas models start to lose their efficiency at 4,000 feet while electric models remain at peak efficiency.

Tankless water heater benefits

Energy and cost savings

The main benefit of tankless water heaters is their long-term energy savings and cheaper operation. These cost differences can be significant since you’re not expending energy to maintain the temperature of a tank-style water heater. According to Energy Star, a family of four can save an average of $95 annually on their gas bills by using a tankless water heater.

Lower risk of leaking

Since water doesn’t stay in a tankless water heater as it does in a tank, these models aren’t prone to mineral buildup from hard water. In tank-style water heaters, that buildup can lead to corrosion, leaks, or even explosions. With a tankless water heater, you don’t have to worry about a pressure valve exploding. The chance of major leaks causing significant water damage is very slim.

Compact design

Tankless water heaters are significantly smaller than tank-style water heaters. Tankless water heaters are small rectangular units that usually mount on the wall, saving you floor space. Some of them are small enough to be mounted right next to the tap or appliance they’ll heat, such as your shower. Others are designed to be mounted outside for an even greater space-saving benefit.

Tankless water heater cost

Cost-wise, gas and electric tankless water heaters can vary dramatically. You’ll also need to decide whether you want multiple point-of-use heaters, which are designed for use close to the tap they’ll heat up, or a whole-house system.

Propane-powered tankless heaters can be found for less than $100, while good-quality electric heaters start at around $250. These lower-end models are usually single-point heaters.

For a powerful water heater that can supply multiple points of use, expect to spend around $1,000 for an electric heater and up to $1,500 for gas. Keep in mind that these numbers don’t include installation or operating costs.

Solar-powered tankless water heaters

If you live in a consistently sunny area, consider a solar-powered tankless water heater for the ultimate energy-saving setup. These systems cost a minimum of $5,000 including installation, but they pay off in the form of slashed energy bills, tax exemptions, and possible rebates. If a solar setup is the right fit for your home, it can pay for itself in six years or fewer.

Tankless water heater hidden costs

While you’re working out your budget to switch to tankless, there are several factors to keep in mind. If you’re installing your heater in a small space, labor costs will be higher. If your water pressure is too low, you may need to have additional plumbing work done. Plus, you’ll need to factor in the cost of having your old water heater removed. There’s also the risk that your home’s wiring or plumbing may be faulty or insufficient, which can drive up costs.

Despite these possibilities, you should hire a professional to install your tankless water heater. This is not a job that’s safe to DIY. Doing so can even violate your home’s building code or the heater’s warranty.

How to select the right size tankless water heater

The size of the tankless heater you’ll need depends on a few factors. A major one is your home’s location, specifically the water supply inlet temperature and your altitude. Homes in southern California, Colorado, and Iowa will all need a different type of water heater. The difference between your location’s inlet temperature and your water heater's desired set temperature will give you a figure called degree rise, a metric that will help you select the right water heater model for your home.

The other criterion for choosing the right tankless heater is based on the gallons per minute (GPM) your household usually uses. This is figured out by tallying up the GPM of your appliances, sinks, and showers that get used simultaneously. Look for a tankless heater with a GPM and degree rise that meets your needs. This will also help you decide whether you want to install multiple point-of-use heaters or a single whole-system heater.

Tankless water heater maintenance

General maintenance

While tankless water heaters are fairly hands-off appliances, gas-powered heaters need to be inspected annually. No matter what type you have, it’s a good practice to get your water heater inspected every year to prolong its lifespan.

Fortunately, the exterior of your tankless water heater is simple to maintain. Prevent dust buildup and rust by wiping down the body with a nonabrasive cleaner and a soft cloth. Inspect your pipes for cracks, especially in cold climates, to avoid burst pipes and flooding. Finally, test the heater’s pressure valve to make sure it’s functioning correctly.

Water heater descaling

Just like your coffee maker or kettle, your tankless water heater will develop calcium and lime buildup that needs to be cleaned out for optimum performance. This buildup occurs more slowly than in a conventional water heater. It will accumulate less if you have soft water, but it’s still important to maintain it to keep the heating element running efficiently.

Have a plumber perform a descaling treatment three years after installation. If your heater looks fairly clean, you may be able to put off the next descaling for another five years. If not, plan on descaling every three years, and as often as annually if you have hard water.

Descaling can be done yourself once you’ve familiarized yourself with your system, but the process of disconnecting and reconnecting tankless water heaters can be intensive, and a mistake can lead to tainted water, broken equipment, or worse.


Q. What is the downside of a tankless water heater?

A. One major downside to tankless water heaters is the high upfront cost — up to three times higher than traditional water heaters. The heater itself is much more expensive than tank-style heaters, and installation costs are higher due to the need for special wiring and additional vents and ducting.

There can also be a slight lag between when you turn on the tap and when hot water arrives. Plus, while tankless water heaters can supply hot water to a single tap or appliance for several hours, the temperature can fluctuate if you are trying to draw hot water to multiple places at once.

Q. What is the lifespan of a tankless water heater?

A. Tankless water heaters can last more than 20 years, compared to 8-12 years for tank-style water heaters. While their upfront costs are higher than tank-style water heaters, their durability can mean you get more long-term use out of your investment.

Q. Do you need a water softener with a tankless water heater?

A. Since the minerals in hard water can build up and decrease the heater’s efficiency, it’s recommended — and even required by some manufacturers — to install a water softening system at the same time as the heater installation. In some cases, not doing so can even void your water heater’s warranty. You should also flush your heater with a descaling solution annually to remove any buildup.


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Laura Duerr writes for BestReviews. BestReviews has helped millions of consumers simplify their purchasing decisions, saving them time and money.

BestReviews spends thousands of hours researching, analyzing and testing products to recommend the best picks for most consumers.

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