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Tankless “On Demand” versus Traditional “Tank-Style” Hot Water Heaters – What’s the Scoop?

Walk down the plumbing aisle of any Lowe’s or Home Depot these days and there, set amidst the GE tank water heaters and mounted tightly to a plank of plywood, you’ll see what looks to be a large white or gray box with a smalll digital control panel inset.  What you’re looking at is a high-efficiency alternative to the traditional tank-style water heater, called a tankless or on-demand water heater.  Though used for years in Europe and Asia, the on-demand water heater is just now coming into favor in the USA.


Small tankless heaters can be installed to serve a dedicated plumbing fixture, or a larger system can be installed to serve an entire house.  As the house or fixture demands hot water, cold water is flushed through the copper heat exchanger, where it is heated by 25,000 – 380,000 BTUs (depending on the system) before being delivered to the appropriate plumbing fixture. 


Pros and Cons of Tankless Systems



Energy-Efficiency & Cost Savings:  Because an on-demand system only fires up when hot water is requested and not to maintain a reservoir of hot water, it is more efficient than traditional hot water heaters. 


How much more efficient?  One large manufacturer of both types of systems rates its most-efficient tank-style system at a .63 energy factor, while its tankless system is rated at .78. 


What kind of savings does that equate to?  In his nationally-syndicated column Ask the Builder, Tim Carter did comparative math and reported that for his family of five, he might save about $7.00/month on the efficiency differential and maybe $2.00 on the cost of keeping the reservoir heated, for a total of about $9.00/month or $108 for the year.


Smaller Footprint: This is one of the more attractive benefits in my book.  I’d love to get rid of that hulking, round, leak-prone monster that lurks in the corner of my garage.  A tankless unit mounts tight to the wall in a compact package.



High Equipment and Installation Cost: An on-demand system will cost 2-3 times as much for the equipment alone.  And if your home is being retrofitted, you may find that expensive power venting duct work is required to install the system.


Hot Water Demand Issues: Due to its limited output, a tankless system is ideal for steady usage and small usage requirements, but only the highest-output units can keep up with large spikes in usage (ex. 2 showers & dishwasher running concurrently).  If you’re prone to use several plumbing fixtures concurrently, an on-demand system may not be your best option.  This issue is amplified in areas where the cold water input is particularly cold, such as mountain locales, because the system cannot adequately cope with the extreme temperature differential and the high demand concurrently.


The ‘ideal’ candidate for a tankless system is new construction, where the duct work can be installed at time of build, and where the homeowners intend to occupy the premises for several years to recoup their installation costs.  Of course, some may be willing to pay the premium for making the environmentally-sound decision.




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