Water Heaters 101 > Tankless
Heaters, Their Limitations,
and Interesting Alternatives

What you'll find on this page: Tankless water heaters are all the rage. They SOUND so good. Sadly, "sounding good" isn't the same as "being good." Learn why.

People often ask us about "instantaneous," or tankless water heaters. Many people believe they are substantially more energy-efficient than tank-type heaters. Usually, they've heard about how much better they are than tank heaters since they heat water only when it's needed and thus, there should be no standby energy losses. And that they are widely used by the rest of the world and have been for years.

The trouble is, this isn't especially accurate. In some situations, they can be a solution, but not, by any means, in all. Let's take it point by point.

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What Do You Really Want?

We ask this question rhetorically, but we already know the answer. Surveys have been done and what people want is: 1. not to have to wait for hot water; and, 2. not to have the hot water run out while they're showering. There is a third corollary: Nobody wants 1 and 2 to cost them an arm and a leg. So read carefully, lest you start feeling a little crippled!

The Risk Factor

Tankless water heater companies have come and gone. When they come, they sell a lot of units. When they go, they leave their customers high and dry: no warranty, no technical support, no spare parts. Some of the ones in the market today abandoned their customers in the past but now they're back.

The Hype Factor

Tankless heaters, then and now are what we call "oversold." That means that consumers are seduced by claims of greater efficiency, greater savings, and perhaps a chance to be "really green" or maybe "really cool." This warms many hearts until their owners realize that they paid a lot more money up front, that their utility bills aren't lower higher than before, that they face expensive service bills and that almost anything, including skipping such service, will void their tankless warranty (Hint: Read the fine print; it ain't so fine). They also tout endless showers, but that's not what most people really want.

Apples and Oranges

There are no standards by which to compare the efficiency of tankless heaters to that of tank heaters. Tankless manufacturers tend to make comparisons that make their products look good, such as with a tank heater with one inch of insulation, although tanks are available with up to three inches of insulation -- a big difference.

Or they may claim efficiencies based on a 35-degree rise in water temperature -- which is half or less of real-world conditions in many parts of the country.

And government Energy Factor ratings are based on tests that have nothing whatsoever in common with real-world usage, something like the EPA's mileage ratings (your mileage may vary -- oops...will be totally different).

Initial Cost

The sad fact is, it's hard to cheat the laws of physics. If you heat water, gas is going to be burned or electricity is going to be used and (unless you find a condensing heater) it's going to cost the same to heat a given amount of water, no matter whether you do it with a tankless device or in a water heater. Tankless heaters typically are priced several times higher than old-fashioned water heaters. Condensing heaters, both tank and tankless, are significantly more efficient, but also so expensive that you'd have to use a lot of hot water to come out ahead.

A recent price comparison between a 40-gallon tank heater that can provide two showers at once and a tankless that can do the same showed $328 against $989. Those are the prices of the units off the shelf. Installed costs run something like $600 for tank heaters vs. $2,500 for tankless -- more, perhaps, if you are retrofitting. That is a serious thing to take into consideration because it's going to take a very long time to save enough on energy bills -- if that's even possible -- to make up the premium you pay right at the outset. And your tankless heater, being rather complex, may well break long before then.

There's another issue. A typical tank-type heater is about 40,000 Btu. To get the equivalent, it's often necessary to use a 160,000-Btu tankless. That might require a bigger gas line, and will need a bigger vent, perhaps a pricey one made of stainless steel, and the added expense to have it installed. If your setup is electric, you might need heavier-duty wiring to accommodate a tankless heater, with the same issues.

Flexibility

With a tank water heater, it's possible to wash the dishes and take a shower at the same time. Or do two or three other tasks simultaneously. With tankless heaters, that is usually difficult or impossible. Special attention has to be given to flow rate and the amount of heating done. To do two or more things at once, you might have to get an even bigger tankless device. If you want only a trickle of hot water, a tankless heater probably won't even turn on. Beyond that, there can also be temperature fluctuations that can make taking a shower an ordeal. The temperature can cycle five degrees too cold, then just right, then five degrees too hot.

The Cold-Water Sandwich

Then there's the dreaded "cold-water sandwich," which occurs when the tankless heater shuts off after a task. There is still hot water in the piping and if you turn on hot a few minutes after the first task, that will start to flow out, followed by the sandwich -- cold water flowing past the tankless heater before it is triggered into coming back on. Adding a storage tank can resolve some of these problems, but most people go with tankless because they want to get rid of tanks. If they add a storage tank, tankless efficiency goes way down -- and their costs increase still more!

Oh, and by the Way, They're Not Instantaneous!

How long do you think it takes to get hot water flowing once you open a hot tap? With a tank heater, since water has already been heated and is simply sitting in storage, it begins flowing immediately. Now if your tap is some distance from the tank, this says nothing about how long you wait before you feel the heat. That's a different issue that also applies to tankless devices. But how long do you think it takes before the tankless heater starts sending hot water your way? Would you believe 10-15 seconds for gas-fired tankless? A flow sensor "wakes up." Then a fan turns on, then the burner fires. Only then does water start to heat. Tank heaters are the true "on demand" product here. Remember what we said about hype.

Reliability

Tankless water heaters have lots of parts and intricate controls. The more complicated the device, the more to go wrong. In colder climates, care has to be taken to completely drain them if they'll be out of use or they'll be damaged by freezing. In hard-water areas, they are prone to "lime up" and that seriously lowers their efficiency. In fact, there is a post on Dec. 31, 2006 in The Tank about just such a problem. With tank heaters, the minerals in hard water settle in the bottom, where they can be more easily flushed or vacuumed out.

Additionally, sediment in the bottom of a tank type heater has been shown to have little effect on performance. Even with heavy sediment buildup, efficiency is seldom reduced more than five percent because most of the heat exchange happens in the flue(s), not in the tank bottom. Upkeep costs must be factored into the tank-vs.-tankless equation as well. Tankless heaters are essentially mini boilers and need attention more than tanks do.

Again, read the fine print (maybe we should say small print) because you're likely to find that your warranty is voided if a qualified technician doesn't service your unit frequently -- and those service calls are going to get expensive fast -- often more than a hundred dollars a pop.

And remember: This whole site is about servicing tank water heaters, which are far simpler than tankless. It's a major chore to get people to do it. Mostly, they forget about their water heaters until those flood the garage (or worse!). Are you going to break that mold and religiously service your tankless heater? If not, better stay with tank heaters. They're cheaper, simpler and far less likely to cause you grief.

Energy Savings

Unless the pilot light in the tankless heater is kept off when the heater is not in use, it does not perform much better than a well-insulated tank-type heater. The real place you'll lose heat with both types of heaters is from the pipes. Every time you use hot water, it heats all the metal plumbing between the heater and the faucet and then all that heat radiates away. A tankless heater would be superior if it could be installed at each faucet (although that could get very expensive). Venting issues usually preclude gas tankless heaters from being used that way. Insulating all the piping will reduce standby heat losses with both kinds of heaters.

Oh, and by the way, tankless controls use electricity and they're on all the time.

Now, to be fair, electric tankless are a bit better than gas tankless. A lot of the bugs have been worked out. If you happen to live in a part of the U.S. where the utility rates give electricity equal footing with gas (unlike here in California), then an electric tankless might serve you -- if you can get past the initial cost and service issues. Because electric tankless still "lime up," and the sediment has to be cleaned out periodically or they may fail.

Warranty and the Rest of the World: More Apples and Oranges

Tankless makers may claim that units in Japan typically last 10-15 years. Trouble is, the units sold in Japan are not the same as the ones sold here. Japanese have a different culture, different use patterns and different expectations from their heaters.

As to the tankless units being sold here, nobody is sure what their life will be because they haven't been around long enough for anyone to be sure. That may be one reason why tankless makers are so eager to void your warranty for the least infraction (Let's say it again: Read the small print).

The Bottom Line

We work to keep things simple and understandable. We try to make equipment easier to live with. In general, our take on it is that tankless doesn't accomplish these goals.

There is a lengthy exchange between a tankless representative and ourselves in The Tank on Dec. 26, 2006, that goes over many of the key issues. It's titled "Tankless water heaters: what tank manufacturers don't want you to know."

And somebody who said many of the same things, but in a different format. This is a YouTube clip and it's quite amusing unless you sell tankless water heaters for a living! http://www.youtube.com/watch?v=vffdymvjluk

Water Heaters 101 > Tankless Heaters, Their Limitations, and Interesting Alternatives

Water Heaters 101 > Tankless
Heaters, Their Limitations,
and Interesting Alternatives