Can a tankless water heater really save you money when considering the initial costs?

The biggest promise that is given of tankless water heaters when making the change from a storage water heater is that they will save on energy consumption as they provide hot water only when used, removing the stand by energy consumption that the old storage type water heaters have. So if hot water is only needed for 10 minutes during the day, you'll pay only for that time, not for 24 h constant water heating.

The biggest critic against this promise has been the total amount of the initial cost of a tankless water heater. Even if it's obvious that tankless water heaters will make savings in the yearly energy consumption, it has been calculated that the units price and the cost of the installation causes the yearly energy savings to break even with the initial investment only after several years making the purchasing of tankless water heater questionable. In such articles/ studies where this matter has been discussed, the cost of a tankless water heater with the installation has been estimated to be in average $2,000 - $3,000, while the storage water heater has been estimated to be around $1,000 with the installation.

Tankless water heaters are not a new invention. Rather, they've been around for decades but not just in so large scales in the US than in the rest of the world. However, during the recent years the technological developments, governmental aids, and huge increases on the demand of more energy efficient products have brought new units that offer high efficiency rates with an affordable price tag to the North American markets as well. These days, a tankless water heater, whether a gas or electric, can be bought below $450 (e.g. Marey products). Also, the installation of the units in many cases can be done by the user itself, which would reduce the total cost, but even with a professional installation the total price in average should stay below $1,000, which is one third of the given estimation. This means that these articles/ studies that raises the initial cost of the tankless water heaters to be the main issue, or the biggest argument not to make the change for a more energy efficient product, has become void as the prices are almost equal with the storage type water heater. So the idea of "high cost new technology" has come to its end in the water heating markets, as the costs of the old and new technology are now very comparable, allowing the energy savings to be immediate.

Water heating counts 30% of the homes energy consumption in United States, so we are talking of a large portion of household’s energy costs. Storage type water heating is an old technology that has struck its roots to the North American water heating markets years ago, and thus there are many authors still holding on to the old consuming values. However, as consumers get more aware of new energy efficient ways to reduce the energy consumption and become greener, the trend of the change on-demand water heaters increases substantially. Like in any industry, eventually the old technology makes way for the new one, and the water heating industry is no exception.

Comparison of Energy Consumption by Time: Tankless vs. tank water heater, 10 min use of hot water

How to Choose a Tankless Water Heater for Your Use?

When purchasing a tankless water heater, it is important to know the factors that effect to the size of the unit, so that the correct unit for the specific need would be purchased. The top five most relevant ones are the principal need, the type of the unit, incoming water temperature, use of multiple faucets at the same time, and the point of installation.

1. The principal need

What kind of need the water heater needs to fill up? Whether the unit is for basic household’s water heating need, for outside use e.g. camping, outside shower or pet care, or for summer cabin use, it all effects to the units type and size. Purchasing too big unit, might cause functional problems, not to mention the extra money spend for no good reason. Also, a unit that might need electricity or ventilation might not be the most convenient one in a certain situation, so to really find out the principal need and use is the first key factor.

 

2. Electricity or gas? One point- or whole house heating?

You can find from the tankless water heater markets units that are for one point- or whole house heating need, running with electricity or gas. When choosing the electric one, it is important to find out the needed voltage and amperage of the heater so that the heater can be actually installed to your home and the maximum capacity can be taken out if needed. When the unit’s capacity gets higher, the need for more power increases as well.

For the gas heaters, it has to be decided whether to use natural gas (NG) or Liquid Propane (LPG). The gas heater differs from the electric ones by its need of ventilation, as the gas has to be directed outside of the living area. So it is important to find out beforehand how the installation of the exhaust pipe has to be done for that gas unit so that it can be installed properly for the use. However, there are also portable gas tankless water heaters that do not require exhaust pipe as they are designed for outdoor use.

3. Incoming water temperature

The effect of the incoming water temperature to the unit’s size is quite obvious and very important, but is easily forgotten in the purchase moment. The tankless water heater heats the incoming water instantly to the set out coming water temperature. If the incoming water temperature in the usage area is low, the heater needs to be able to provide higher temperature increases so that the set out coming water temperature would be met. If the incoming water temperature is already high, the heater does not need to work that hard. So roughly said, in the northern areas, where the incoming water temperature is low, the capacity requirements of the tankless water heater becomes higher and vise verse in the southern areas.

4. Using multiple faucets at the same time

As the incoming water circulates through the unit to the usage point, the water pressure also has a significant role for the tankelss water heaters capacity requirements. When the water pressure need is higher, for example multiple faucets running at the same time or the faucet is using high water pressure and is turned on to the highest level, the water circulates faster through the unit giving the unit less time to heat it. A general rule is that a higher capacity unit is needed when the water pressure need is high - e.g. multiple users in the household using hot water at the same time.

The capacity of the different types of units can be compared by the temperature increase in a certain water flow rate (gallons per minute - GPM). For example, if a unit gives a maximum increase of 65F in 1.5 GPM, and your incoming water temperature is 45F, you can expect to have a good shower in a total of 110F, which is normally used temperature for a hot shower. If you would be using two showers at the same time with the 1.5 GPM water flow, the capacity need for the unit would equal to 3.0 GPM, which gives lower increase to the incoming water temperature with the same settings in the unit, and this affects to the out coming water temperature.

5. Point of installation

The point of installation is also important factor. Normally the tankless water heaters are recommended to be installed as close as possible to the point of use, as this reduces the possibility for the water to cool in the way from the unit to the faucet. Tankless water heaters actual size comes now in handy, as some of them are so small that they can be installed for example below the bathroom sink or to a small closet and thus give better energy efficiency. This is not possible with the old tank water heaters, as they normally take so much space that are needed to be installed to the basement or larger areas.