Should You Choose a Tankless Water Heater?

Tankless water heaters, widely used in Europe and Japan, are increasingly popular in the United States as energy costs rise.  For the right situation, they can save hundreds of dollars per year and providing an endless supply of hot water.  For the wrong one, they can be an expensive mistake.

Tankless water heaters work by heating the water as it passes the heating elements on the way to its destination.  This method has many advantages over the traditional storage tank, but it also has hidden costs.

Tankless water heaters use less energy than other forms of water heating because they heat water only when it is used, so there is practically no standby loss.  But they are expensive to install, often require costly retrofits, and with their moving parts, they have shorter lifespans and are more prone to breaking down than a traditional direct tank water heaters.

Your Fuel Source Matters

If you’re considering a tankless water heater, most likely, your alternative is a traditional direct tank water heater.  You are an excellent candidate for a tankless water heater if you are on electricity or even propane.  These expensive energy sources drive up the costs of hot water.  Even if you have to have the amps to your house increased or a larger gas flue installed to accommodate a tankless water heater, you’re likely to recoup the money in energy savings in just a few years.  If you have natural gas, though, you will see little savings.  A tankless water heater is expensive to install, and with modern ultra-insulated tanks, you won’t save enough on gas by avoiding the standby heat loss to justify the cost.

How Much You Use It Matters

Have a weekend house or a vacation home?  These are great places to use a tankless water heater.  Since you’ll only be using the water occasionally, your other alternative is to have a direct tank that stays on all the time, wasting energy, or turning the tank on when you arrive, heating up 30 gallons or more before you can use the hot water and leaving that same amount to cool when you leave.  In addition, vacation homes don’t often have many different places where hot water can be used at one time, so they tend to not need huge systems.

How Much Water You Use At Once And The Temperature Of Your Cold Water Matter

Because tankless heaters heat your water as it flows through, the faster the water flows, the less heating it can provide.  This is usually calculated as a temperature rise, which is how many degrees it heats the water.  When you look at the specifications of a tankless heater, you’ll usually find two numbers:  what the maximum flow is that you can have and heat the water by 35F, and what the maximum flow that you can have and heat the water by 45F.  Occasionally, you’ll find the max flow for a temperature rise of 77F instead of one of these, or even a chart that shows the temperature rise at many different flow rates.

How much temperature rise do you need?  It depends on your winter water temperature.  In Phoenix, a 35F would be plenty year-round.  In Dallas, a 45F rise at maximum expected flow would be fine.  In most of the country, though, that would leave you feeling distinctly chilly—a 55F rise would be better, or in some places, even 65F.  If you live in Alaska, the only way to use a tankless water heater would be to put them in line, one after another, to get enough of a heat rise!

We’re going to calculate some values for a house is in Pittsburgh, where the water temperature is 58F.  A 35F rise would leave you with water that is 93F, which is the temperature of a therapy pool—in other words, it would feel cool to the skin.  Even 103F, a temperature rise of 45F, wouldn’t be enough for people who like truly hot showers, though it would feel slightly too warm for a baby.  55F would be perfect for a nice, hot shower, and it would provide water hot enough for your washing machine and dishwasher to work as expected, so we’ll go with that.

The next choice you need to make is whether you want point-of-use tankless heaters or a whole house water heater.  Point-of-use heaters are only feasible if they use electric heat.  If you’re on propane or natural gas, these heaters aren’t practical because every heater needs its own flue.  Point-of-use water heaters provide almost instant hot water, and you can size them to fit the needs of a single room.  In a bathroom, you would size the unit for the use of the shower or tub at full blast, or 4 gpm if there is a tub or 2.5 gpm for only a shower (or both shower and tub if there are separate units—which would be 6.5 gpm).  In a kitchen, you should size it for the use of the dishwasher and a sink, or about 2 gpm.  A laundry room unit should also be sized for a maximum flow rate of 2 gpm.  Point-of-use reduces potential conflicts between many different fixtures drawing on hot water at once. If the water heater serves only your bathroom, it doesn’t matter how many other people are using hot water when you want to take your bath!

The disadvantage of a point-of-use system is that you must buy many different units and pay for the installation of each, and you need a location to install the unit such as in a sink cabinet for each installation.  The price for multiple units can also be quite high.  Fortunately, electric point-of-use are fairly easy to change out as a do-it-yourself project once the initial installation takes place.

Can’t use point-of-use everywhere, but you’re on electric power?  Whole-house electric tankless heaters do not provide enough heat in most parts of the country for a family in the winter time, but you can choose to zone your tankless units instead.  One could handle the laundry room and the kitchen, while another services two bathrooms with only showers and a third is installed for a bathroom with a tub/shower combination unit.

If you are on natural gas or propane (or can feasibly convert to one of these), you should install a whole-house unit.  To determine the size you need, add up the maximum flow rates for each of the fixtures you might have running at the same time.  For instance, an average household might want consider that two people might be bathing while either the dishwasher or the washing machine is running.  So you might estimate that you’ll be using 4 gpm to fill the tub, 2.5 gpm for the shower, and 2 gpm for the washing machine, bringing your entire maximum flow rate to 8.5 gpm.

This is where you must confront another unpleasant truth of tankless heaters.  Even the top-of-the-line gas and propane powered units are very rarely powerful enough to yield a 55F temperature rise at 8.5 gpm, which would be enough to give that Pittsburgh house a toasty hot shower.  An average house, with average usage and average winter temperatures, would generally need to be split into two zones to always provide on-demand hot water with typical usage.  If you want to provide for less typical cases, you’d have to add even more.

Endless Hot Water, Money Savings, or Both?

If your primary motivation for choosing a tankless water heater is to save money, you might be willing to make some lifestyle modifications so that your family can use a single heater that produces a comfortable heat rise at around 6 gpm.  That’s enough for two showers, for one bath, or for the dishwasher or washing machine plus one shower or bath.  In the summer time, you would be able to use more water at once.

One important point to remember is that tankless water heaters have many more moving parts than tanks and are much more subject to corrosion and to wear.  You can expect a tank water heater to last 15 to 30 years, if it’s well maintained and the anode rods are replaced regularly.  But you should only count on a tankless heater to last 7 to 15 years.  If you have highly corrosive water, it will last even less.

One final point that some people overlook is that tankless units require a certain minimum flow rate to kick on.  If you like to keep a tiny trickle of hot water going to keep your bath warm, you won’t be able to do this with a tankless water heater.

If your primary motivation is to simply have more hot water all the time, you should either invest in point-of-source tankless heaters or simply buy a tank water heater large enough that it might well be endless.

Should You or Shouldn’t You?

Whether a tankless heater is a smart choice for you depends on where you plan to use it.  It’s perfect for vacation homes and for many houses on electric or propane heat in the warmer parts of the United States.  Outside of this use, it really depends on the particulars of your circumstances.

This post was written by
Jenny Lang is an author, wife, homeschooling mother, investor, and pennypincher extraordinaire. She writes about smart financial living at the Frugal Guru Guide. Keep an eye out for her upcoming book, the Frugal Guru’s Guide to Everything Auto. Find her on Google Plus

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