Tankless water heater manufacturers advertise instantaneous hot water, endless showers, and energy savings. Are these advertisements accurate? Not 100%. Before making the decision to switch to the tankless design, consider the following points:
A tankless water heater actually takes 10-15 seconds longer to get hot water to a faucet, no matter how far the faucet is from the unit. After water starts flowing through a tankless unit, the unit senses water flow, starts the combustion process, and then begins heating the water. In contrast, a tank water heater stores hot water continuously and provides hot water immediately when water starts flowing.
A tankless unit may prevent you from running out of hot water if they are sized properly. It all depends on how much water will be used at the same time. These units are sized by flow rate (gallons per minute). If the flow rate is calculated correctly, it will provide your demand.
According to the Department of Energy, a tankless water heater can cost $100 less per year to operate compared to a conventional gas 40-gallon tank heater. Most of the savings come from not having to maintain hot water in a tank. With a projected service life of 20-years, the savings over the 20-year period are expected to total $2,000.
The replacement installation cost for a gas 40-gallon conventional water heater averages $900 according to Angie’s List. A tankless unit costs approximately $3,000 ($2,100 more) due to the high energy requirements of the units. These unit need approximately 160,000 BTUs versus 40,000 BTUs for a conventional tank water heater. Tankless units have to heat the water in a very short period of time and need the high heat requirement. This means your gas piping and probably your exhaust line may need to be upgraded. Tank water heaters last between 10-15 years and tankless units are expected to last 20-years if maintained properly. This is an estimate since they are fairly new in the U.S. They also require more maintenance to operate well.
In summary, the bottom line on replacing a conventional water heater with a tankless model are: