Tankless Water Heaters 101- Lower Gas Bills With Tankless?

Hello again.  Thanks for checking in.  I think you will like today’s topic.  Today we are going to start cutting through all the marketing hype and find out exactly what tankless water heaters do and don’t do, what the pros and cons are of installing them and talk about how to decide if they make sense for you.  I’ll probably split this topic into two or three installments.  After I previewed my initial draft it was just way too long.

Also, now is a good time to go ahead and say that we will be discussing gas (or LP) tankless heaters.  Electric tankless heaters really make no sense  99% of the time.  They just don’t do the job in most cases and usually require extensive (and expensive) rewiring.  Electricity is really a fairly expensive way to heat water in most cases.

In the last couple of years the tankless water heater manufacturers have really stepped up their promotional campaigns and spent some big bucks building consumer awareness and interest in their products.   Tankless water heaters have been portrayed as providing huge energy savings and endless hot water.  How much of this is true?

Let’s talk about enrgy savings first. It is a fact that tankless water heaters are rated almost 50% more efficient than a standard tank type gas water heater.  I say gas because most electric water heaters are more efficient than than most gas water heaters.  That’s because there is no energy wasted up the flue pipe common to all gas water heaters.  The problem is that, at least for now in most places, the electricity required to operate a water heater costs more than either natural gas or LP.  So even though it takes less energy, the energy used costs more.

The reason tankless heaters beat tank type in efficiency is because there is no energy used keeping a tank full of water hot.   The only time any energy is used is when hot water is actually being used.  As soon as the faucet is turned off the heater stops heating the water.   This is one of the big selling points for tankless water heaters.

So it’s not hype, tankless water heaters really are more efficient, but the payback period that is often stated in marketing literature is probably based on the best case scenario.  In the real world, the more frequently hot water is used the smaller the gap in efficiency between tankless and tank type water heaters.  This is because there is less “non use” or “temperature maintenance” energy use as the frequency increases of “hot water usage events” (a fancy way of saying a hot water faucet was turned on).   Basically, if you are using hot water any type of heater will be using energy. It takes the same amount of BTUs to heat a gallon of water in either type of water heater.  In plain English,  the more often you use hot water the less a tankless will save you on your gas bill.

So…more efficient, yes.  How much more, it depends.

See, I told you this was getting way too long.  Next time we will talk about why some people have actually seen their gas bills go up after installing a tankless water heater.


Bryan Stevens

Copyright 2008 Bryan Stevens

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4 comments to Tankless Water Heaters 101- Lower Gas Bills With Tankless?

  • Kevin Murphy

    Hi Bryan – good article. At the end you mentioned that “Next time we will talk about why some people have actually seen their gas bills go up after installing a tankless water heater.”

    Did you ever cover this topic in a follow-up? If so I can’t find it on the site. I installed a Navien NR 240 A and my bill went up and I’m beside myself. Any help?


  • Not getting into the discussion between tanked and tankless water heaters, the biggest loss is the time it takes for the hot water to reach from the tank and the most distant bathroom, usually the master, and you have to wait to get hot water for a shower. Of course, you can install a pump that keeps the hot water in the pipes at all time and available practically instantaneously when you turn the faucet on. Not a problem with the tankless system, but not saving energy. Code should require that a pump be installed when the distance and time involved are unreasonbly long; it costs approximately $500 to do it after the construction is finished, maybe less if you do it during construction.
    Could you write something about what you think about this idea, the different pump systems available and the alternative solutions? Thank you.

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