When most Americans think of a water heater, they think of a large tank that holds hot water until they need it. However, tankless or "demand" water heaters, common in Europe and Japan, can be more economical to operate.
Water heating accounts for 10 to 20 percent of the average home's annual energy costs. Tank water heaters waste some of this energy in the form of "standby losses." Because heat is lost through the sides of the tank, even if no hot water is used, the water heater has to run periodically to maintain the water temperature. These standby losses can represent 10 to 20 percent of annual water heating costs.
On the other hand, tankless water heaters only heat water as it is needed. The water heater is activated when a hot water valve is opened, and the water goes through burners or electric coils that heat the water as it passes over them.
Tankless heaters are available in propane, natural gas or electric models. "Point-of-use" models small enough to be installed under a sink can supply hot water to a remote bathroom or a hot tub. They can also be used to boost the water temperature for dishwashers and washing machines, allowing tank water heaters to be set at a lower temperature. Large units installed in a central location can provide all of a home's hot water.
With a tankless water heater, you never run out of hot water. Tankless water heaters' main limitation is that they can't supply enough hot water for simultaneous large uses of hot water - for example, you might not be able to take a shower and wash clothes at the same time, and it might take longer to fill a bathtub. For large demands for hot water, you would need to get a large capacity tankless water heater or use two or more tankless water heaters in parallel. Some experts recommend using smaller point-of-use water heaters for each major hot water demand. You could, for example, install a point-of-use tankless heater for each bathroom, the washing machine and the kitchen.
The capacity of a tankless water heater is measured by how many degrees it increases water temperature at a given flow in gallons per minute. The water temperature depends on both the flow rate and the temperature of the incoming water. The faster the water goes past the heating unit, the less hot the water gets. Most units provide two to three gallons per minute of hot water. You should get a unit that will meet the largest demand that will be placed on it. Showers use up to 3.5 gallons per minute, depending on the type of showerhead, and clothes washers and dishwashers use one to two gallons per minute.
Tankless water heaters cost more than conventional water heaters, but have a longer life expectancy. Prices range from $200 for a small under-sink unit to up to $2,000 for a large-output unit.
Tankless water heaters are particularly well suited for small vacation homes, since they also eliminate the potential problems of leaving a water heater tank in an unused home, and for boosting water temperature in rooms farthest from the water heater.
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