Have you been thinking about purchasing a tankless water heater? They have many benefits over traditional tank-style water heaters, however, there are drawbacks and limitations that you should to be aware of when you're deciding which is the right choice for you. Tankless systems are also known also as on-demand water heaters because they're designed to deliver hot water only when needed, rather than holding the water in a tank like a traditional heater. Tankless water heaters are also very energy efficient, and because of their compact design, they can fit into small spaces and don't require any floor space. Quick Navigation Tankless vs Traditional Water HeatersPro's and Con's of a Tankless Water HeaterHow to Buy a Tankless Water HeaterBuyers Checklist Tankless vs Traditional Water Heaters Both tankless and traditional water heaters deliver hot water, but how they operate is totally different. A traditional tank-style water heater can only provide the amount of water that's stored within it's tank. If you need more hot water than a traditional water heater has available, the hot water flow will become cold. The heater won't be able to heat the water fast enough to cover the household demand.However, a tankless water heater isn't limited by the size of a tank. When hot water is needed within the house, cold water begins to flow thru the tankless and within seconds it's delivered to the tap as hot water. These units can deliver a seemingly endless stream of hot water!Here's a look at the differences between a tankless and a traditional water heater:Tankless Water HeaterA Tankless water heater will heat the water only when there there is a demand.A large up-front investment is necessary to purchase and install a tankless unit.Frequently modifications are necessary for installation.Tankless units are designed to be repaired and they often see service lives of 20+ years if properly maintained.Proper sizing is critical for a tankless to meet the household hot water demands.They have a compact design and therefore do not require floor space.They are very eco-friendly. Saves water, energy and money.Traditional Water HeaterA traditional water heater stores hot water within it's tank.They are economical to purchase and install.Tank storage capacities ranges from 20 to 80 gallons.The average service life is 8 to 12 years.They require a relatively large area as well as floor space.A leaking water heater is frequently the clue that the unit should be repaired or replaced. What About The Future?A common question is, "will tankless eventually replace traditional water heaters?" Although, it's true that tankless units have gained popularity in the United States, they are actually very common in Europe and Japan. One can argue that they are the future. However, there are limitations that will, at bare minimum, slow their growth. The initial purchase price of a quality unit, as well as the installation costs can be significant. In addition, many homes are not designed to provide the amount of power needed to operate the unit, thus requiring the homeowner to make upgrades to their energy source, thus increasing the installation costs even higher.As technology improves, one can expect the prices will drop and some of today's hurdles will easily be overcome. One can also anticipate that demand will only increase as more and more homeowners want to take advantage of the environmental, economical and convenience of an on-demand system.New home construction is already adapting to the demand as they build homes with the electrical requirements necessary to operate a tankless. If a on-demand system isn't installed immediately, it will be much easier for the homeowner to add one later. Pro's and Con's of a Tankless Water Heater The Pro's of Going TanklessEndless Supply of Hot Water - When sized correctly a tankless water heater is capable of delivering an unlimited supply of hot water. Fresh Water - If a traditional water heater isn't properly flushed, your hot water will likely be sitting in a tank with rust and mineral scale. A tankless unit will heat the incoming water on-the-spot and send it to your shower immediately!Operating Costs - A tankless water heater can deliver exceptional savings on your utility bills because the unit is only operating when hot water is needed. Standby heat loss is eliminated since the unit doesn't hold the hot water within a tank like a traditional heater. Service Life - If properly maintained, a tankless water heater can operate for 20+ years!Replaceable Parts - Tankless water heaters are designed so that the parts can be replaced. If a part wears out a replacement part can be installed. Compact Design - On-demand systems are designed to be mounted on a wall and they require far less space than traditional units. Many models are even designed to be installed outside.Peace of Mind - When a traditional water heater ages, the tank rusts from the inside out. Frequently, your first clue will be a puddle of water surrounding your heater. You won't need to worry about floor damage with a tankless since water is not stored in a tank. The Con's of Going TanklessCapacity - There won't be a tank to draw from, so if your tankless unit isn't able to meet the household hot water demand, the "hot water" won't be hot. In some cases homes need to have 2 large units installed to meet the demand. Other times homeowners choose to install a small point-of-use unit to service a bathroom. Proper sizing is a must with tankless water heaters.Initial Cost - A quality tankless unit could cost as much as 3x's more than a traditional water heater when you add in the installation expenses. Expensive Venting - Expensive special venting material is required for gas fueled tankless units. Power Upgrade - Many homes aren't able to meet the electrical requirements necessary to operate a tankless water heater unless an upgrade to the power source takes place.Output Limitations - This can't be stressed enough. A tankless water heater must be sized correctly or it won't be able to meet the household's hot water demands. The unit will only be able to deliver as much hot water as it can heat on-the-spot . . . it doesn't have the benefit to draw on a storage tank for reserves. How to Buy a Tankless Water Heater There are a number of things you should consider when selecting a tankless water heater. With less room for error without a tank to fall back on, it's important to accurately assess your household hot water needs. Here are a few important considerations:1 - Energy Efficiency and SavingsSaving money is often a top motivation for transitioning to a tankless system. But be aware that the more hot water you need, the less savings the system can deliver. Still, in the area of energy savings, a tankless should out-perform a traditional water heater. As your household's hot water needs increase, the efficiency and savings of a tankless system decrease. A water heater's energy efficiency is measured in terms of Energy Factor (EF) ratings. The EF rating measures the efficiency of an individual unit, which will allow you to easily compare the efficiency of one model to another. Here are some things you should know regarding EF ratings:The EF rating is the measurement of a water heater's overall efficiency.The useful energy that is coming from the water heater determines the EF rating.The number is divided by the amount of gas or electricity that went into the water heater to heat the water. The EF rating is based on the amount of hot water produced by a single unit of fuel consumed. Look for a high EF rating: The higher the EF rating, the more efficient the water heater. More information can be found at: energystar.gov. Electric tankless systems have a higher EF rating than gas systems. This is because the cost of gas is less expensive than electricity. An electric system may be more energy efficient, but a gas unit will deliver lower fuel bills. The federal energy efficiency standards saw major changes in 2015, which forced manufacturers to make changes and increase prices of traditional water heaters to comply. The increased size and price of the new units that has taken place since the changes, have made tankless units even more desirable. 2 - WarrantiesAs with most appliances, warranties vary from manufacturer-to-manufacturer. In addition, there are also different requirements necessary to activate your warranty coverage.It's not uncommon for manufacturers to require the tankless unit be registered and in addition, be professionally installed for the warranty to be eligible. Many companies have extensive information, including warranty info, on their websites for each model in their line-up.When you compare warranties, it's a good idea to look for companies that stand behind their product thru the coverage they provide. Here are some common ranges:Heat Exchanger - 10 to 15 yearsParts - 2 to 5 yearsLabor - 1 year3 - Properly Sizing Your TanklessSelecting the right size for your household's hot water needs is a very important step to purchasing a tankless. This may seem like an overwhelming and difficult task, but it's actually relatively easy. We'll take you thru the process step-by-step.There are 2 important factors needed to size a tankless water heater. Once you determine these factors, you'll be able to determine the right size to meet your family's hot water needs.Temperature Rise - The difference between the incoming ground water temperature and the heated output temperature.Flow Rate - The amount of water a tankless water heater is capable of heating at any given time measured by gallons per minute (GPM). "Tankless or demand-type water heaters are rated by the maximum temperature rise possible at a given flow rate. Therefore, to size a demand water heater, you need to determine the flow rate and the temperature rise you'll need for its application (whole house or a remote application, such as just a bathroom) in your home."The US Department of Energy How to Size a Tankless Water Heater Step 1 - Determine Your Home's Peak Demand Flow Rate Calculate the Gallons Per Minute (GPM) of each hot water device you'll use at any one time. Here are some general guidelines to follow:Kitchen Faucet: Older faucets 3.0 - 7.0 GPM : 1992 Standard 2.2 GPMBathroom Faucet: Older faucets 3.0 - 5.0 GPM : 1992 Standard 2.2 GPMShower: Older shower heads 4.0 - 8.0 GPM : 1992 standard 2.2 GPMConsider any other appliances, such as washing machines and dishwashers, you may use during peak times.example: 1 shower (2.2 GPM) + 1 bathroom faucet (2.2 GPM) = peak demand: 4.4 GPM Step 2 - Determine Your Home's Temperature Rise Determine the Temperature Rise by subtracting the ground water temperature (water entering your house) from the desired output temperature (hot water temperature). A few considerations:The temperature rise will change with the seasons. Incoming water during the winter will be colder than the incoming water in the summer.The speed and flow of a tankless unit is impacted by the temperature of the incoming water. example: Ground water temperature 50 degrees <minus> output temperature 120 degrees <equals> a temperature rise of 70 degrees F (120 - 50 = 70).Your tankless will need to heat the incoming water 70 degrees (temperature rise) to reach your desired temperature of 120 degrees. Step 3 - Select the Tankless Model that Best Meets your NeedsNow that you know your needed Flow Rate and your Temperature Rise, you can use this information to select your tankless unit. This is the language that manufacturers use to properly size their models. A few things to consider:Gas fueled tankless units tend to produce a higher flow rate than electric units.A good rule of thumb: The average tankless water heater can deliver between 2 to 5 GPM of hot water. 4 - What Type of Fuel? Gas or ElectricIf you are building a new home, you'll want to take a close look at the pro's and con's of each choice. The fuel you choose will play a major role in the size and energy efficiency of your unit. It will ultimately determine your annual operating expenses.However, if you are replacing a traditional or tankless, it's probably best to stay with your current fuel source since switching can be a major expense. Natural gas, propane and electricity are the most common choices. Tax credits and rebates are available in many states if you install a tankless water heater. Check to see if there are any incentives in your area by clicking HERE. Gas Fueled Tankless Water HeatersGas fueled units are more complex than electric fueled tankless units. Therefore, there are more things you need to consider. Here are the most critical: Installation:Fuel Supply Line - Tankless water heaters generally require a larger gas fuel line than traditional heaters. Is your fuel supply line capable of handling a tankless that demands up to 200,000 Btu/h? Venting - Gas fueled tankless systems require expensive Category III venting. This is because condensation develops inside the vents and can be very corrosive. Venting can be easily added, but it does add to the installation costs. Ignition System:There are 3 types of ignition systems available on tankless water heaters. Generally, the more expensive the unit, the more complex the ignition system.Standing Pilot Light - Burns constantly.Direct Ignition - Delivers a spark when water flow is detected. Hydro-Power Ignition - When water flows into the tankless, it activates a small turbine which ignites the burner.Non-Condensing CombustionThere are 2 types of non-condensing tankless water heaters. Both require category III venting. Direct Vent - Draws air from outside into the unit for combustion.Power Vent - Draws air from inside the house into the unit for combustion.Condensing CombustionA condensing tankless extracts the heat from the exhaust and does not require venting. Outdoor Tankless Water HeatersAn outdoor gas tankless water heater is an excellent choice for warmer climates. They do not require venting and they are frequently less expensive to install. Read our full buyers guide on Gas Tankless Water Heaters. Electric Fueled Tankless Water HeatersElectric on-demand systems are more simplistic than gas unit. Because of their less complex design, when there are problems they are easier to diagnose and repair. They are also more energy efficient, require less maintenance and generally have a longer service life.However, many homes aren't equipped with the necessary power for the unit to operate. In which case, expensive upgrades are required to the home's electrical supply. Since no exhaust gases are produced thru combustion, venting is not necessary.Read our full buyers guide on Electric Tankless Water Heaters. Buyers Checklist Fuel Checklist Are you considering switching from a gas fueled water heater to an electric model? (or visa versa). Be sure to do your research as this is an expensive switch to make. What type of fuel do you have access to? Natural gas, propane and electricity are the most common choices.If installing an electric unit, will you have enough electrical power to operate the tankless? Or will you need to upgrade your electrical system?If installing a gas fueled unit, do you have the right size gas supply line? Frequently it's necessary to upgrade the gas supply line during installation.Unless you are purchasing a condensing gas fueled tankless or an electric unit, be prepared to install category III venting.Electric fueled units don't emit green house gases, and they are far more energy efficient than gas units. Climate Checklist The temperature of the incoming water varies from area to area. This will make a difference in the performance the unit can deliver (cooler water = lower GPM). Remember, the cooler the incoming water temperature, the higher the GPM rating you need to purchase. Incoming water temperature is cooler in the winter and warmer in the summer. When selecting your unit, you should purchase a more powerful water heater that can get results during the winter. An outdoor unit may not be appropriate in your area, especially if you live in a cold climate. Safety Issues and Requirements Many manufacturers require their tankless units to be professionally installed in order to validate the warranty. Having your new tankless professionally installed will ensure that it will be eligible for the manufacturer warranty. Plus, you can rest at ease that all the necessary requirements and building codes were met.Some manufacturers have detailed installation instructions. Still, we strongly recommend hiring a professional to install the new water heater.