Benefits of a Tankless Water Heater

Heating water accounts for up to 30% of the average home’s energy budget. Tankless water heaters provide hot water only as needed. Therefore, they avoid the standby heat losses associated with storage water heaters and can be up to 40% more efficient than traditional water heaters. According to the Environmental Protection Agency’s (EPA) Energy Star Program, tankless water heaters save the typical family more than $100 per year on utility bills compared to a standard storage model. Individual savings vary greatly due to the size, age, and efficiency of the water heater being replaced.

How They Work

Tankless water heaters heat water on demand without the use of a storage tank. When a hot water tap is turned on, cold water travels through a pipe into the unit. A gas burner heats the water. As a result, tankless water heaters deliver a constant supply of hot water. You don’t need to wait for a storage tank to fill up with enough hot water. However, a tankless water heater’s output limits the flow rate. Typically, tankless water heaters provide hot water at a rate of 2–5 gallons per minute.

Higher Upfront Costs

Tankless water heaters cost more than conventional storage water heaters. The units normally cost $2,000 to $4,500, compared with $500 to $800 for the regular storage-tank types. Tankless models need electrical outlets for their fan and electronics, properly sized gas piping and gas meter, and appropriate ventilation system. Professional installation is necessary for tankless water heaters. Additionally, some municipalities may require permits and inspections from Building Code Officials.

Other Benefits

With up to a 20 year service life, most tankless water heaters last 2 -3 times longer and are significantly smaller in size (about the size of a carry-on suitcase) than traditional tank water heaters, thus reducing the amount of material that ends up in landfills. The primary components of tankless water heaters – including the copper heat exchanger and stainless steel burners – are recyclable. And with a tankless model, the risk of tank leaks and water damage is virtually eliminated. The compact design of tankless water allows flexibility with installation so it can be located closer to fixtures and appliances, saving on water consumption because the “wait” time for hot water is reduced.

When using a traditional tank-style water heater, rust and scale build-up can collect in the interior of the tank, where the hot water you use day-to-day for bathing and drinking is stored.  With tankless water heaters there is no tank to store water, so you’ll always experience fresh, clean hot water because the unit heats water on demand as it passes through the unit.

Tax Credits

Beginning 2023, the expanded version of 25C, now called the Energy Efficient Home Improvement Tax Credit (under the Inflation Reduction Act of 2022) will provide up to $2,000 in tax credits for qualifying high efficiency water heaters as well as credits for electrical upgrades. Unlike the existing program, the expanded 25C tax credit has generous annual limits (not lifetime limits), meaning that the same customer could receive the credit for qualified energy efficient upgrades annually. This expansion will extend the program out to 2032.

Problems or Complaints

Many consumers confuse the tankless water heaters with terms such as instantaneous or continuous. Although tankless models will begin heating the water almost instantly, consumers will continue to encounter the initial cold water that is left in the pipes just like storage water heaters. Another common complaint is that most models have a minimum flow rate before combustion occurs and may not ignite when just a trickle of hot water is needed for shaving. Additionally, all tankless models have electronic controls which mean you’ll lose hot water during a power outage.
Tankless water heaters have many attributes that make them a standard in green and energy efficient construction. They are significantly more energy efficient and have a long life expectancy. If you are considering building or remodeling, a tankless water heater will provide many years of trouble-free service.

Scott Allred is the owner of Precept Construction LLC. He can be reached at or 286- 6811. Please visit our website at