This guide has complete information for researching your tankless water heater purchase whether you’re unfamiliar with these products and want to learn the basics or you’re looking for targeted information about choosing the right on-demand water heater for your purposes.
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- What is a Tankless Water Heater
- Pros and Cons of Tankless Water Heaters vs. Storage Water Heaters
- Gas vs. Electric Tankless Water Heaters
- Whole-house vs. Point of Use Tankless Water Heaters
- Gas Water Heaters: Condensing vs. Non-condensing
- Understanding GPM Flow Rates and Temperature Rise
- What Size Tankless Water Heater Do I Need
- What Is Proper Efficiency Rating For Gas Tankless Water Heater
- Top Tankless Water Heater Reviews
- Tankless Water Heater Costs
- Tankless Water Heater Installation Costs
What is a Tankless Water Heater
The simple answer is that these units don’t have a storage tank like traditional water heaters. They don’t make hot water and store it until needed. For this reason, they’re also known as on-demand water heaters. Water isn’t heated until a hot-water tap or appliance using hot water like a dishwasher or clothes washer is turned on.
You have two key choices about tankless water heaters:
- Whole house vs. Point of use (whole-house vs. point-of-use): Whole-house tankless water heaters supply an entire home or building, just as tank storage water heaters do. In fact, in large homes and buildings, multiple units can be linked together to supply the hot water demanded. Point of use water heaters are installed to provide water for just a single faucet or room, such as a bathroom. Most gas units are whole-house models; most electric units are point of use.
- Gas vs. Electric: As with traditional water heaters, tankless heaters can heat with an electric coil or with a gas burner fueled by natural gas (NG) or liquid propane (LP).
See the pros and cons of whole-house vs. point of use and gas vs. electric below. But first, we discuss the general pros and cons of tankless water heaters.
Pros and Cons of Tankless Water Heaters vs. Storage Water Heaters
Tankless water heaters have several attractive features, but they aren’t without drawbacks you should consider before making your decision. Here are the pros and cons of on-demand water heaters compared with traditional tank storage water heaters.
Tankless water heater pros:
- They use less energy, so cost less to run: Tankless water heaters are more eco-friendly because they heat water only when needed. Utility costs are lower, as a result. How much can you save on utility costs with a tankless water heater?
According to the US Department of Energy, tankless water heaters reduce energy use by about 14% to 50% depending on how much total hot water your home uses per day.
The operating cost of water heaters with tanks is much higher because a tank full of 30 to 50 gallons in most homes is kept hot. If the water isn’t used, it cools off to the point the heater must reheat it. If you’ve ever heard your water heater running in the middle of the night when no hot water is being used, you understand the problem. This wasted energy is called standby heat loss.
- They deliver continuous hot water: When a tankless water heater is sized properly, it will provide hot water for as long as needed to all the fixtures it serves. You can take a shower while the dishwasher and clothes washer are running, for example, without the water going cold. See the section below titled Sizing a Tankless Water Heater for your Home for the details.
- You have nearly-immediate hot water with point of use tankless water heaters: Most point-of-use models are installed within a few feet of the outlet they serve. They generate hot water with remarkable speed, so hot water is available within a few seconds. If you use water that is metered, a point of use water heater reduces water costs, since you don’t waste water waiting for it to warm.
Note: Most whole-house tankless heaters do not provide this benefit. If, for example, you replace a tank water heater with most tankless models, installed in about the same location, hot water will take just as long to get to the faucet. This problem is overcome in some top-of-the-line tankless water heaters equipped with an internal pump that keeps water in the unit or in the pipe leading to the unit warm, eliminating the delay. Keep in mind, though, that when the unit is running periodically to keep water warm, you have the same standby heat loss problem as storage tank models, though not on as large a scale.
- Compact size: Not having a tank saves a lot of space. In fact, most are light enough to hang on a wall. No floor space is required.
- Longer life and warranties: With proper maintenance, a tankless water heater can last 20 years, though the best warranties are 12 or 15 years. Maintenance is the key (see the Cons next).
- Higher home sale price: A whole-house tankless water heater, especially a gas unit, is an attractive selling point to potential buyers looking for an energy-efficient home.
Tankless water heater cons:
- They are expensive: While tankless units, especially gas models, have lower operating costs, their equipment and installation costs – your upfront costs – are much higher. Starting with the equipment, tankless water heater prices are 50% to 300% higher than storage tank water heaters for comparable water demand.
- Installation costs can be high too: Tankless water heater installation costs are higher than for conventional water heaters for one or more of these reasons, depending on the unit:
- Large-capacity electric water heaters require running a 240-volt line (though they don’t need venting, so that lowers install costs).
- Gas water heaters require a separate vent, rather than tying into the furnace vent. Condensing units can be vented horizontally through a wall, which reduces cost, but condensing tankless heaters are more expensive. Non-condensing tankless water heaters must be vented through the roof. The difference between condensing and non-condensing tankless water heaters is covered below.
- Large gas units have 199,000 BTU burners, twice the capacity of the average gas furnace. As a result, some require the installation of a ¾” gas line rather than the standard ½” used to supply a gas furnace.
- Maintenance: Storage tank water heaters produced in the last 15 years require little maintenance. If your water is hard, draining the water heater annually to rid it of mineral deposits will lengthen its life. That’s an easy DIY job. If the water goes through a softener before the water heater, even that’s not necessary. Maintenance for a tankless model is more involved. The fittings are disconnected, the unit is drained, and a cleaning/de-liming solution is cycled through them. Many homeowners hire a professional for the job.
How often does a tankless water heater have to be cleaned? According to Noritz America marketing manager Jason Fleming, “There’s no set time frame to service a tankless water heater. It all depends on the hardness of the water. In a very hard-water area, this could mean servicing the unit once a year, but in an area with softer water, you might go four to five years without any maintenance.” While still a disadvantage, it’s not as big a problem as some report. Having a water softener will help.
- Repair costs are higher: Tankless water heaters are more complex than tank-style models, so there’s more that can go wrong. While total longevity might be greater, tankless water heater maintenance and repair costs are higher.
Gas vs. Electric Tankless Water Heaters
Here are our pro tips for deciding whether to choose a gas or electric tankless heater.
Reasons to choose a gas tankless water heater:
- Gas heat is cheaper: This is a general principle that should guide your decision-making for water heaters, clothes dryers, ranges and furnaces. Operating costs are lower for gas than for electric nearly everywhere. Some manufacturers boast that their electric models are “100% efficient” or close. This simply means that they use all the electricity inputted to make heat. However, at the power plants where that electricity is generated, fossil fuels are used quite inefficiently, in most cases. The per/BTU cost of gas is lower than the cost of electricity. That’s the bottom line.
- You need a whole-house unit for a medium-to-large household: Gas units are much cheaper to operate, but their installation cost is higher. If you have three or more people in your household, you’ll recoup the higher installation cost of a gas unit in 5-10 years.
- If you live in a chilly climate: When you consider the necessary rise in temperature between ground water and heated water, a topic covered below in Understanding GPM Flow Rates and Temperature Rise, electric whole-house tankless water heaters won’t generate enough hot water capacity for most homes in cooler climates.
Reasons to choose an electric water heater:
- You need one or two point-of-use units: The most cost-effective use of an electric tankless water heater is to supply hot water to a single faucet or bathroom, especially when it is newly added and an existing water heater doesn’t have the capacity to handle the extra demand. Examples are adding a bathroom, installing a utility sink in the garage or building an outdoor kitchen. The primary reason for using an electric water heater in these cases is the much lower installation cost compared with a gas water heater that requires running a gas line and venting the unit. Electric 120-volt water heaters easily make use of existing wiring. Many of them plug into a standard electrical outlet. This isn’t a solution when you want a large volume of hot water quickly, as when filling a jetted tub or adding hot water to an outdoor pool. A gas-fired tankless water heater is usually needed for such purposes.
- You have a whole-house unit, but don’t like waiting for hot water: If you don’t like waiting for hot water, and wasting water down the drain, at a tap that is a long way from a central water heater, here’s a solution. You can install a point of use electric model at the tap. It will provide near-immediate hot water until heated water from the central water heater hits the unit. Then, its thermostat will shut off the electric heating coil, and hot water from the central heater will simply pass through it.
- You need a whole-house unit for a small-to-medium household in a warm climate: When the unit doesn’t have to raise the temperature of incoming water more than 40 degrees, the unit will provide a flow of gallons per minute (GPM) near its rated maximum capacity. For the largest electric units, this is 6 GPM or more. Still, these models require a 240-volt line and dedicated circuit. They use a lot of electricity and generate high utility costs. A gas unit will have a higher upfront cost but much lower operating costs. If you plan to live in the home 5-plus years, a gas unit might be a more cost-effective long-term choice.
Whole-house vs. Point of Use Tankless Water Heaters
When you need hot water for multiple locations, one large whole-house unit costs less than two or more point-of-use tankless water heaters. You can ask your plumbing contractor to price the job both ways – one central tankless water heater or multiple point of use units.
Gas Water Heaters: Condensing vs. Non-condensing
When you choose a gas tankless water heater, you’ve got an additional option to consider: condensing or non-condensing heating. When natural gas and propane are burned, the exhaust gases are highly acidic and therefore corrosive. The exhaust contains water too. The difference in these types of water heaters is whether the acidic water condenses within the unit and the exhaust vents or is too hot to condense. Here’s a brief explanation with pros and cons of each.
Non-condensing tankless water heaters: These units offer efficiencies in the mid-80s to about 90%. An 84% efficient unit, for example, transfers 84% of the heat made in combustion into the water while 16% of the heat is lost in the exhaust. Since so much heat is lost, their exhaust gases are too hot to allow moisture to condense.
- Pro: Lower cost for the unit
- Con: Uses more fuel, so higher operating cost
- Venting: Through the roof, so installation cost is higher
- Cost range: $475-$1,525
Condensing tankless water heaters: These units are up to 98% efficient. They achieve the higher efficiency with a secondary heat exchanger that transfers heat into the water from exhaust gases, so it’s not just the burner supplying heat. The exhaust gases are cooler because of this process, cool enough to allow moisture to condense within the unit or the exhaust vent when the surrounding air is humid. Because exhaust gases are so acidic, the use of stainless steel within the unit is required to prevent corrosion.
- Pro: Uses less fuel, so lower operating cost
- Con: Higher cost for the unit
- Venting: Through a side wall, so installation cost is lower
- Cost range: $775-$2,200
Because of the corrosive properties of the condensed moisture, there is some evidence that condensing units don’t last as long, despite the use of stainless steel.
Understanding GPM Flow Rates and Temperature Rise
Now, let’s cover a critical issue related to how much hot water a tankless unit can make for your home. It depends on the temperature of the water that flows into your water supply from the municipal water system. The colder your incoming water is, the less hot water the unit can produce.
First, we’ll define 4 terms:
- Maximum Gallons per Minute of hot water: Shown on most specification sheets as Max GPM, this is how much hot water the unit has the potential to produce per minute. The Max GPM of hot water is based on how many watts (electric units) or BTUs (gas units) the water heater produces. Electric units range from about 0.5 to 4.0 GPM. Gas units range up to about 10 GPM.
- Temperature range: Tankless water heaters have thermostats, just as tank-style units do. Most tankless heaters have settings from about 85 degrees to 140 degrees.
Caution: Keep in mind that water above 120 degrees can produce serious burns from scalding. We recommend settings from 105 to 120 degrees maximum.
- Inlet water temperature/incoming water temperature: This refers to the temperature of the water entering your home. The ground temperatures map below shows how it varies across the continental US during the coldest months of the year. If you have a well, the temperature map is accurate only for water that sits in the pipe from the well head to your home for an hour or more. Because of geothermal heat, water deep in wells is 50 to 60 degrees regardless of the location in the continental US or the time of year.
- Rise: The rise is the difference between the temperature of the incoming water and the temperature setting on your water heater. For example, if your incoming water is 60 degrees and you want water that is 110 degrees, the rise is 50 degrees. The higher the rise in temperature required, the lower the number of GPM the unit can produce.
Let’s use the popular gas-fired Rheem RTGH-95 tankless unit as an example. Its full specifications are listed at the top of the second page in the link, but you don’t need to go there for this example. We’re going to pull some of the data from the Features column for our demonstration.
- Temp Range: The thermostat can be set to temperatures from 85F to 140F.
- The flow must be at least .40 GPM for the heater to fire (Activation GPM), and must run steadily at a minimum of .26 GPM to continue heating. To the left, you see the total potential BTU output to be 11,000 to 199,900 BTUs. The water heater’s burner will modulate within this range to produce the BTUs needed to maintain hot water flow. For example, if you’re filling a tub from a 3-gallons per minute faucet, the water heater will likely fire at full 199,900 BTU capacity. If you’re running hot water from a low-flow sink faucet, the unit will operate at about 33,000 BTUs.
- GPM @67° Rise Max.: If the incoming water is quite cool and needs to be heated 67 degrees for your desired temperature, the unit can produce only 5.7 GPM.
- GPM @45° Rise Max.: When the temperature of the water only needs to be increased 45 degrees, 8.5 GPM of hot water can be achieved.
- GPM: If the incoming water is quite warm, as it is in the desert Southwest, then the rise is just 25-40 degrees, and the unit might be able to produce the maximum GPM of 9.5 gallons of hot water per minute. On the other hand, during a Fargo, ND winter, the water temperature will have to be increased by more than 80 degrees to reach 120F, so the unit won’t produce even 5.7 GPM.
Next, we’ll explore how this affects the size of your tankless water heater.
What Size Tankless Water Heater Do I Need
Even if you’ve skipped our technical explanations, this section offers guidance for what size tankless water heater you need for your home. The table we’ve created and shown below will be useful.
Here’s an explanation of the data:
- Left column, line 1 – Default GMP: This is the typical number of gallons per minute for the 5 water outlets.
- Left column, line 2 – Targeted Temp: This line gives typical temperatures desired for these fixtures. Note that with a whole-house tankless water heater, you can’t set different temperatures for each outlet. The water heater heats all the water to the same temperature.
- Left column, lines 3-10: These lines show incoming water temperatures from the groundwater temperature map and how many BTUs of heat (K=1,000) needed at each fixture to raise the incoming water to the target temperature. Note that as the incoming water temperatures rise, less heat is needed to reach the target temperature.
- In lines 11-18, the kW replaces BTU, since the section is about electric water heaters.
You can determine how large your gas or electric tankless water heater needs to be with a quick 2-step process:
- For municipal water, find your incoming water temperature on the map. (If you have well water, use the 57-degrees line in the table as a close estimate wherever you live).
- Use the BTU or kW requirements to add up how many of either you’re likely to need when multiple outlets are using water at the same time.
As we’ve been implying, a household in a cold climate will need a water heater with more capacity than the same household in a warm climate. Here is an example of a home when it’s possible three sources of hot water will be used at any time – perhaps someone taking a shower, the dishwasher running and someone washing their hands. Let’s put the household in three different cities and use the winter groundwater temperature map and our table of BTU usage to determine what size gas tankless water heater each need. 1,000s of BTUs are in the parentheses.
- Traverse City, MI with 42-degree water: Shower (85K), dishwasher (55K) and sink (55K) = 195,000 BTUs
- Springfield, MO with 57-degree water: Shower (60K), dishwasher (40K) and sink (40K) = 140,000 BTUs
- Laredo, TX with 72-degree water: Shower (42K), dishwasher (29K) and sink (29K) = 100,000 BTUs
You can take the same approach with electric models. When you do, you’ll see their shortcomings, especially in cold climates.
Gas tankless units range from about 95,000 to 195,000 BTUs, and electric models range from about 3.0kW to 36kW.
Note: Label’s/Specification’s BTUs and Kw are exaggerated.
As you browse tankless water heaters, you’ll notice that the specifications give a maximum kW (electric) or BTU (gas) rating. This is total heat the unit can produce. However, not all the heat created transfers into the water. In gas heaters, for example, some of the heat is lost in the exhaust gases. The specifications also list the efficiency of the unit.
Electric water heater efficiency is listed as efficiency or thermal efficiency, and the rating is usually somewhere between .95 (95%) and .99 (99%).
Gas water heater efficiency is listed as EF (Energy Factor) or UEF (Uniform Energy Factor). EF is the old method of rating efficiency. The ratings are typically 2-3 percent higher than the UEF, which was implemented in 2017 by the US Department of Energy to produce more consistent ratings across the industry.
To determine how much heat is transferred into the water, multiply the total kWs or BTUs by the heater’s efficiency. For example, for a gas tankless water heater, here’s the equation:
BTU capacity x UEF = BTUs of hot water
Let’s consider a model like the Rinnai RUCS with a maximum BTU rating of 160,000. Its UEF is .90, or 90%.
160,000 BTUs x .90 = 144,000 BTUs of heat get transferred to the water.
144,000 is the number you want to know when finding a unit that will supply enough BTUs of heat to handle your hot water demand when you total up the demand at each fixture.
What Is Proper Efficiency Rating For Gas Tankless Water Heater
What efficiency rating is right for you? This section explores the range in condensing and non-condensing gas tankless water heaters and how efficiency affects your buying decision. The differences between condensing and non-condensing units are more significant than just efficiency ratings. Differences in unit cost, installation cost and potential durability should also be considered. Be sure to review the section in this guide entitled Gas Water Heaters: Condensing vs. Non-condensing for a full understanding of your purchase options.
Efficiency Range in Tankless Gas Water Heaters: The efficiency rating of a gas tankless water heater measures how much of the heat the unit creates is transferred to the water versus being lost in the exhaust gases. The range is .79 to .97, and that approximately 18% difference can make a significant impact on how much energy a water heater uses in a year. It can also affect the size of the unit you need, an issue fully explained in the section in this guide called What Size Tankless Water Heater Do I Need.
Operating Cost Comparison for Condensing vs. Non-condensing:
Let’s use EnergyGuide label information to compare the operating costs for two Rinnai models with 9.8 GPM capacity.
- Rinnai RUC98 with .92 UEF: Annual average operating cost is $172 for the natural gas model and $417 for the propane model.
- Rinnai RL94 with .81 UEF: Annual average operating cost is $199 for the natural gas model and $482 for the propane model.
- The Difference: $27 per year for natural gas; $65 per year for propane.
Model Cost Differences: Condensing tankless water heaters cost about $125 to $800 more than non-condensing models depending on their features. This does not include units with built-in recirculation pumps. In our example, the Rinnai RUC98 cost is $1,585 and the RL94 cost is $1,450, a difference of just $135. However, if the RUC98 is compared to the base model Rinnai V94 (another 9.8 GMP, 0.81 UEF unit with a cost of just $865), there’s a difference of $720. To help explain the cost differences, the RUC98 and RL94 have WiFi and can be used with a recirculation pump, though neither has one onboard. The V94 has neither of these features.
Payback Period and the Impact of Features: The time it would take to recoup the higher cost of the RUC98 versus the RL 94 is 2 years for propane and 5 years for natural gas. When the RUC98 is compared to the cheaper V94 with fewer features, the payback period is almost 27 years for natural gas. That V94 isn’t made in a propane version.
Durability: Tankless water heaters can be expected to last 12 years with heavy use and hard water to 20+ years with lighter use and softened water. Maintaining the unit as recommended by the manufacturer is also crucial for durability.
Here are the major brands of gas tankless water heaters and the efficiency ranges for their condensing and non-condensing models:
|Ecosmart||0.95 EF||0.82 Only EF|
Note: Bosch and EcoSmart have not published updated UEF (Uniform Energy Factor) efficiency ratings as required by law since 2017. The UEF rating of a tankless water heater is typically 1% or 2% lower for non-condensing models and 3% or 4% lower for condensing models than the EF (Energy Factor) rating.
Bottom Line: If installing the most eco-friendly equipment is your goal, then a condensing water heater is a “must.” If cost alone is the deciding factor, here are our recommendations: The longer you plan to stay in your current home, the more a condensing tankless water heater makes sense. This is especially true if you don’t have a vent stack installed through the roof that could be used by a non-condensing unit. Also, obviously, if you don’t have access to natural gas and must use propane, then the payback period for a condensing unit makes it more attractive. Finally, in our estimation, if the unit you’re considering is replacing a non-condensing water heater, either tank style or tankless, the cost-effective decision is to buy a non-condensing model.
Top Tankless Water Heater Reviews
There is much more detail about specific product lines in our individual tankless water heater brand reviews for all the top brands:
- Navien Reviews
- Rinnai Reviews
- Rheem Reviews
- Noritz Reviews
- Takagi Reviews
- Ecosmart Reviews
- Titan Reviews
- Bosch Reviews
Tankless Water Heater Costs
Again, there’s more cost information for specific models in our brand reviews. Each model with pricing is given. General pricing, based on capacity, features and efficiency:
- Gas tankless water heater cost: $800-$2,200, for units under 200,000 BTU, the upper end for most residential heaters.
- Electric water heater cost: $250-$1,000.
Tankless Water Heater Installation Costs
Installation costs vary greatly based on the scope of the work. Here are common scenarios and what you can expect from installation estimates.
- Electric point-of-use water heater when 120-volt outlet is available: $150-$285
- Electric point-of-use water heater when 120-volt outlet must be added: $275-$500
- Electric whole-house water heater when 240-volt outlet is available: $325-$600
- Electric whole-house water heater when 240-volt outlet must be added: $475-$725
- Gas whole-house water heater when using the same vent: $600-$950
- Gas whole-house water heater with a new vent: $900-$1,450
The Importance of Proper Installation
Since we’re discussing installation, we should emphasize how important it is to hire a qualified and experienced installer for the work.
For safety, it is essential that an electric unit is wired correctly to eliminate the risk of shock or fire. Gas units must be plumbed, installed and vented properly to safeguard against gas leaks and carbon monoxide leaks. Both can have deadly results.
Beyond safety, the optimal performance and durability of the system require that it be installed correctly.
Take time to find an installer with experience installing the type of unit you’ve selected. If you’d like free estimates from top installers in your area, they are available using our Free Local Quote offer. The contractors that use the service are pre-screened for the experience. They are licensed and insured, and they know they are competing for the work. A qualified installer will be able to answer your questions about brands and models, and they can offer advice on the best unit for your household’s hot water needs.
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