How does a tankless water heater work?

A tankless water heater heats water only while it is flowing. There is no tank of hot water waiting in the basement. Open a hot tap and the heater fires; close it and the heater stops. The trade-off is that it can heat only so many gallons a minute, so it is sized to your busiest moment rather than by tank gallons.

What happens when you open a hot tap

ENERGY STAR describes the sequence for a gas unit: "When a hot water tap is turned on in the home, cold water is drawn into the water heater. A flow sensor activates the gas burner, which warms the heat exchanger."^[1] From there the water circles the heat exchanger and leaves at the temperature the heater is set to, while combustion gases go out through a dedicated, sealed vent.^[1] The Department of Energy's Building America guide adds the other half: when the flow stops, the heater shuts off.^[5]

An electric model works the same way with a heating element in place of the burner.^[3]

Why it uses less energy than a tank

A tank heater keeps its whole tank hot around the clock, and heat leaks out between uses. Most of a tank heater's day is spent just keeping stored water hot. That standby time can account for 96% of a storage heater's operating time each day.^[3]

How much a tankless heater saves depends on how much hot water you use. The Department of Energy's Energy Saver guide says that for homes that use 41 gallons or less of hot water a day, gas on-demand heaters can be 24% to 34% more energy efficient than conventional storage tank heaters, and 8% to 14% more efficient in homes that use around 86 gallons a day.^[4] Our answer on whether a tankless heater is worth it weighs that against the higher installed cost.

Gallons per minute, not tank gallons

Where a tank is sized by how much it holds, tankless models are rated by how many gallons of hot water they produce per minute (GPM).^[2] To size one, a plumber adds up the hot water your household runs at the same time. ENERGY STAR's average figures are 2.5 GPM for a shower or bathtub, 3.3 GPM for a clothes washer, 2.2 GPM for a kitchen or bathroom sink and 1.3 GPM for a dishwasher.^[2]

The second number is the temperature rise: how many degrees the heater has to add to the incoming water. A heater set to 120°F with 50°F water coming in has a temperature rise of 70°F.^[6] The colder the water coming in, the fewer gallons a minute the same heater can deliver at that setting. ENERGY STAR notes that output capacity partly depends on the groundwater temperature, so colder climates generally need higher-capacity heaters.^[3] In Virginia that usually means sizing for winter, when the water coming in from the main or the well is coldest.

That is the real limit on "endless" hot water. The Building America guide gives the example: if people try to take two showers, start laundry and wash dishes at once, the hot water may not be as hot as they want.^[5] If you tend to use hot water in several places at the same time, you may need two or more tankless water heaters to keep up.^[4]

The minimum flow that switches it on

A tankless heater needs enough water moving through it to know a tap is open. Noritz says: "Most units have a minimum flow rate activation of .5 gallons per minute (gpm)."^[7] Rinnai's gas models need at least 0.4 to 0.6 gallons per minute through the hot side to ignite and 0.26 gallons per minute to keep running.^[8] A trickle of hot water at a bathroom sink may not be enough, and that threshold explains most cases of water going cold in the middle of a shower.

Gas and electric models

Heating water on the fly takes a lot of power at once. The Building America guide compares them: "Typical burners for residential tank-type water heaters are often 30,000 – 50,000 Btu/h while tankless water heaters typically have burner capacities of 120,000 – 200,000 Btu/h."^[5] That is why the gas supply matters: a tankless heater might need a ¾-inch branch gas line where many tank heaters need only ½-inch piping.^[5] Even natural gas units need a 120-volt outlet for their controls, sensors and electric spark ignition,^[5] so they stop in a power outage.

Gas units come in two kinds. ENERGY STAR explains the more efficient one: "An ENERGY STAR certified gas tankless water heater uses a secondary heat exchanger to use 9 percent less energy than a conventional gas tankless water heater."^[1] Pulling that extra heat out cools the exhaust until it condenses, so these condensing models need venting through a vertical PVC pipe and a condensate drain.^[1]

Electric tankless heaters skip the gas line and the vent, but the Building America guide notes that electric versions provide less hot water flow than gas-fired units and can create high peak loads for electric utilities.^[5] The Energy Saver guide adds that electric storage tank and electric tankless water heaters are not ENERGY STAR eligible because they are already highly efficient.^[4] For a fixture far from the main heater, a small point-of-use unit like the one above can be installed near the fixture.^[3]

What a tankless heater does not change

It does not make hot water arrive instantly. ENERGY STAR's bulletin explains that a large amount of hot water can sit in the pipe between the heater and a distant fixture, cool down, and run down the drain while you wait.^[3] Some systems add a recirculation pump to keep the line warm, but the Building America guide points out a catch: a recirculation pump that shuts off once the pipes are hot also shuts the burner down, so a small slug of cold water can pass through before the burner relights.^[5]

It also does not escape hard water. With no tank, minerals do not settle in a pile; they coat the inside of the heat exchanger instead. In hard-water areas, scale can build up in the heat exchanger, reducing capacity and efficiency, and in extreme cases it can cause the heater to fail completely.^[5] See how often a tankless heater should be descaled.

When to call a licensed pro

Installing or servicing a tankless heater means work on a gas line, a sealed combustion vent, a water connection and an electrical supply, all on one appliance. A replacement can need a larger gas line, a new vent through the wall, a condensate drain and an outlet the old tank never had.

In Virginia, that work is licensed, and installing one needs a permit. Virginia's building code requires a permit before work on equipment the code regulates and on fuel supply systems, and its exemption for replacing appliances in houses does not cover equipment fueled by gas or oil.^[9] Under the Code of Virginia, no individual may work as a tradesman without a licence, and a tradesman is anyone doing electrical, plumbing or heating, ventilation and air conditioning work for the public for pay.^[11][10] Ask any installer for its licence number and check it on DPOR's record before work starts.

Columbia Gas of Virginia tells its customers: "If you smell gas, think you have a gas leak, have carbon monoxide symptoms or have some other emergency situation, go outside and call 911 and then call us,"^[12] meaning the gas company. Our answer on what to do if you smell gas covers the rest.

Find a licensed installer

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