Tankless Water Heater Pros and Cons

A tankless water heater is sometimes called an “on demand” water heater because it does not store ho water, but rather heats water right at the faucet only when you need it. Most water heaters are large cylinders that have a heating element and a water source attached. The large cylindrical part of the water heater is the tank.

A tankless water heater by contrast is constructed of the heating element only.

The much smaller size of the tankless water heater when compared to a conventional water heater is one of the first pros of choosing to go tankless. Tankless water heaters do include a huge cylinder that has to be awkwardly carried down the basement stairs. Conventional water heaters often begin to leak from their large cylindrical tanks when they begin to wear out, causing mess and even damage to anything that is in the immediate vicinity.

This kind of leakage is not an issue with a tankless water heater. Sediment issues and issues of water purity that can become a concern with a conventional water heater are similarly not a problem with a tankless water heater.

The most important advantage of choosing a tankless water heater is that a tankless water heater will save between 30% and 50% on electricity when compared with a conventional water heater. That savings translates to about $100 a year for an average household.

On the down side, unless a tankless water heater is fitted with a specialized pump so that only hot water runs out of the tap, it takes a minute for the heating element to heat the water after you turn it on. This means that you waste more water with a tankless water heater. In some areas where water is more difficult to come by than electricity, this can be a significant drawback, and will add to the amount of time it takes to see a return on your tankless water heater, since the initial outlay will include the cost of the pump.

The initial expense of investing in a tankless water heater is another significant drawback. Although prices are often advertised that start as low as $500, a $500 tankless water heater is not likely to provide enough water for an average household. The initial expense is more likely to run into four figures with a tankless water heater, which means it could take ten years to see significant savings after factoring in the cost of purchase and installation.

Installation costs can be another issue with tankless water heaters. Since tankless water heaters have how-powered burners, they often have special venting requirements that necessitate professional installation instead of do-it-yourself installation. This can add as much as $1000 to the cost of the tankless water heater itself.

Tankless water heaters also only heat one faucet at a time. For households that routinely have two hot water sources going at once (such as washing clothes and washing dishes), it may be advisable to install more than on tankless water heater, which adds again to the initial cost.

Tankless water heaters are capable of supplying continuous hot water however, so even though you may need to install more than one depending on your usage needs, with a tankless water heater you never have the problem of “running out” of hot water that you often get with a conventional hot water heater that stores already heated water in a tank.

On the positive side, tankless water heaters may qualify for a $300 federal tax credit and the future looks good for additional credits to encourage the installation of these units, so if you decide to go with a tankless water heater, you may be able to offset some of the costs through tax credits.

The bottom line when it comes to the pros and cons of tankless water heaters versus conventional water heaters is to take all initial costs into account, including installation and an accurate appraisal of how many units you will need and how much you can expect to save per year. Then factor in any energy credits you can claim to offset the expense, and make your decision.