Tankless Water Heaters

Monday, October 26th, 2009

Hello again from Olson Defendorf Custom Homes.

Today we are going to discuss tankless water heaters, and if one right for you.

Water heating is the third-largest expense in most homes, accounting for up to 25% of a home’s expenses. In some cases, that percentage may even be higher, which means energy-conserving hot water solutions also could result in big cost savings.

Currently, the most popular energy-efficient option for water heating is a tankless water heater. Unlike a traditional tank that heats a reservoir of water 24 hours a day, a tankless unit activates only as needed. When there is a demand for heated water, cold water travels through the tankless unit, where a gas burner quickly heats it to the preset temperature.

Tankless water heaters have proven popular in Europe for years. Like many other construction technologies, tankless water heater usage in the United States lags behind the rest of the world.

So why don’t we have more tankless systems in the US?

Price is the major factor tankless water heaters haven’t taken off in the US. Even though the annual operating costs can be half that of a conventional system, a tankless water heater can initially cost twice as much for materials and installation.

Below are some pros and cons for both systems.

Proven technology - The straightforward system has been around for years and works well.
Low product cost and low installation cost - A basic 40-gallon gas tank can be purchased for less than $500. Installation is fairly simple.
Inexpensive replacement cost - If and when a water heater goes bad, the system can easily replaced with a similar unit for less than $1,000.
Energy Star tanks are now available - As of this year, the Energy Star program certifies conventional high-efficiency gas water heaters, so it’s possible to save energy and money.
Conventional tanks are always on - No matter how energy efficient it is, a storage tank cycles on a regular basis to heat and reheat water at a preset temperature, using energy to heat the water whether a homeowner needs it or not.
Big and bulky - Most storage tanks take up precious real estate in a mechanical or laundry room, especially in smaller homes.
May be inadequate - Depending on the capacity and household hot water needs, a conventional storage tank may not be able to meet demand. If not sized correctly for peak demand, tank water heaters will run out of hot water.
Less versatile installation - The unit needs a fairly large space for installation and cannot be located outside the home.
Less durable - The life expectancy of a conventional hot water tank is only about 10 years.

Saves energy
 - The unit only operates when there is a demand for hot water, which can reduce its energy cost by about 25% annually.
Highly efficient - The most efficient storage tank has an energy factor of about .67, but, according to Energy Star, some tankless units have energy factors as high as .95.
Reliable - If a unit is sized properly, a gas tankless heater can deliver a continuous supply of water at a preset temperature.
Compact size - The typical tankless heater is about the size of a small suitcase, which takes up significantly less space than a conventional tank.
Durable - It has a life expectancy of 20 years or more.
Versatile - The unit is easy to zone and it can go almost anywhere in the house. It also can be installed outside on a wall.
Tankless units cost about twice as much as traditional storage tanks
 - A typical tankless unit can easily top $1,500.
Installation is expensive - In addition to the high product cost, installation for the unit and the necessary piping can be pricey. They also need very good venting, which is also expensive.
Retrofit is pricey and complicated - Unlike a traditional tank, retrofitting a home with a tankless unit is difficult and expensive.

Lastly, even though a tankless water heater saves energy in heating costs, it has an unintended consequence with the continuous supply of hot water. If you have a tendency to take long showers, you can negate all of your “green” activities by using more water than you normally would use.

In a continual effort to consume less and conserve more, Troy and I recommend tankless water heaters to all of our customers. If you can get over the initial higher price, you get the benefit using less energy (saving the environment and your monthly operating costs), and an added bonus of continuous hot water. Just be careful on your 30 minute showers!

We would like to thank Ecohome magazine and Nigel F. Maynard for their contribution to our blog.