Is a tankless water heater worth it?

A tankless water heater is usually worth it when three things line up: you have natural gas or propane, your household's hot water use is moderate, and you will stay in the house long enough for lower energy bills and a longer life to repay a higher installed cost. It is a harder case for a very large household, for an all-electric house, or when the switch means a new gas line and venting on top of the heater.

What you gain

Lower energy use. A tank keeps water hot all day whether you use it or not; a tankless heater fires only when a tap is open. 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.^[1]

How you use water matters as much as how much. A single-home Building America field test, in an existing home occupied by two people,^[2] found that tankless efficiency tracks the size of each draw more closely than total daily use: savings are smaller on short draws and come close to the rated efficiency at draws of 10 gallons or more.^[2] In that house, "The greatest energy savings occur at a daily use quantity of about 50 gallons."^[2] That is one house, so take the pattern rather than the number: a household of quick hand-washes saves less than one of steady showers. The Energy Saver ranges above are the broader guide to how much.

A longer life. "Most storage water heaters last 10-15 years, while tankless water heaters can last more than 20 years."^[1] Over a long stay in one house, that can mean buying one tankless heater instead of two tanks.

No tank to run dry. The Building America guide puts it simply: "One can theoretically shower forever because there is no tank to drain."^[3] Back-to-back showers do not wait for a tank to recover.

Space. A wall-mounted unit frees the floor a tank stood on, and gas units are often vented out a side wall rather than up a chimney.^[3]

What it costs you

Flow, not volume, is the limit. A tankless heater makes only so many gallons a minute. 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.^[3] 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.^[1] Our answer on how a tankless heater works explains the sizing.

A higher installed price. The Department of Energy's Building America guide says the initial installed cost of a tankless water heater can be 1½–2 times as much as that of a tank-type water heater.^[3] Read that as a rough, dated ratio: the average industry costs in the guide come from an analysis from 2012, and it notes that tankless water heater costs have fallen as the systems have become more popular.^[3] The heater is part of the price. The rest is the house: most tankless gas heaters need at least a ¾-inch gas line from the street, where ½-inch is typically enough for a tank heater,^[3] and a replacement for a tank heater will likely need a new vent pipe, and the ideal spot is on or near an outside wall.^[3] Even natural gas units need a 120-volt outlet for their controls, sensors and electric spark ignition,^[3] so they stop in a power cut. See what a tankless installation costs in Virginia.

Descaling. Hard water does not go away because there is no tank. Rheem explains: "Tankless water heaters can have mineral deposits form inside the heat exchanger, restricting water flow and forcing the unit to work harder."^[6] Virginia Cooperative Extension is blunt about hard water in general: "Hard water can also reduce the efficiency and life span of water heaters."^[7] If your water is hard, budget for periodic descaling or a softener; see how often a tankless heater needs descaling and whether you need a water softener.

Quirks at the tap. A tankless heater needs a minimum flow to fire, so a trickle may stay cold, and some setups with a recirculation pump send a short burst of cold water between two hot ones.^[3] Most of these are fixable; see why a tankless heater goes cold in the shower.

Gas, electric, or neither

For whole-house use, gas is where tankless makes its strongest case. 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.^[3] If natural gas is not available, the guide suggests considering a heat pump water heater instead.^[3]

Among gas units, condensing models cost more but use less fuel. ENERGY STAR says: "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."^[5]

A quick way to decide

Tankless is likely worth a quote if:

• you already have natural gas or propane at the heater, or near an outside wall;
• your current tank is old enough that you will replace it soon anyway;
• your household runs out of hot water with a tank, or wants the floor space back;
• you plan to stay in the house for many years.

It may not pay off if:

• your house is all-electric with no room in the panel;
• your household often runs several showers and appliances at once and would need two units;
• your water is very hard and you do not plan to soften it or keep up with descaling;
• you are likely to sell within a few years.

When to call a licensed pro

Choosing tankless is a decision you make; sizing and installing it is not. ENERGY STAR advises that you plan ahead for your next water heater replacement, because your installer may need time to order the right model and the job may take longer than a standard installation.^[4] It also suggests you get cost estimates in writing and see whether the company will obtain a local permit if one is needed.^[4] Noritz adds: "Make sure the installer you choose is a licensed professional and has knowledge of tankless water heaters."^[8]

In 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] Check any installer on DPOR's License Lookup^[12] or read how to check a contractor's licence. Virginia's Board for Contractors also advises: "It is advisable to get at least three written bids or estimates using identical plans and specifications so you can compare prices and contractors."^[9] Ask at least one bidder to price a like-for-like tank replacement as well, so you can compare the two choices directly.

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