Should I Change My Water Heater to a Tankless?

When discussing my inspection findings to my clients, I am amazed at how many make the same statement when we get to the water heater. "I'm going to change it to a tankless".

On demand tankless water heaters have gained much popularity in recent years and over time, more and more will be installed in new construction. But the question is, is it a good idea to replace a tank water heater with a tankless? There are many things you need to consider before deciding to do this.

Does your home have gas service?

If your home is total electric with no gas service, this may stop you in your tracks when it comes to deciding to change to a tankless water heater. There are electric models on the market, but the problem is the huge amount of electrical current they use when they turn on to heat the water. On an average size home, the electrical consumption could be as high as 150 to 200 amps. This is the same amount of electrical capacity of the entire home so it is likely that you would have to upgrade the electrical service to accommodate an electric tankless heater. Instead of replacing an electric tank water heater with a tankless, you may want to first consider improving its efficiency. One way is to install a water heater blanket if it is installed in a garage or other area that gets cold. This will keep the tank warmer and will result in fewer heating cycles that the it goes through and in return will use less electricity. You can also install a timer to the electrical wiring. This way, you can set the timer to disconnect power to the heater during the night when you are asleep and come back on before you wake so you are not paying to heat the water during the night. Do not expect this to save a huge amount of electricity since the heater will have to heat an entire tank of cold water before you get up in the morning versus having the heater maintaining the water temperature. If you are going out of town for a length of time, consider turning the circuit breaker off to the heater so you are not paying to heat the water when you are not at home. Another way to save money on an electric tank heater is to simply turn the water temperature down. Just open the lower compartment lid on the tank and adjust the thermostat down to 110 – 100 degrees.

Size matters.

Tank heaters are sized by how many gallons of water the tank holds while tankless heaters are sized by gallons flow per minute (GPM). If you install a tankless heater that is too small, your hot water flow will severely decrease when multiple plumbing fixtures are turned on simultaneously. A professional plumber experienced with tankless water heaters should be able to tell you which size of a heater to purchase.

What are the costs involved versus the savings ?

Gas tankless water heaters do save on gas consumption but how much? Many tests have been performed to determine this and tankless heaters were found to be about 22 percent more energy efficient on the average. This comes to $ 70 about – $ 80 per year on savings. Now let's calculate what it would cost to remove the tank water heater and install a tankless. First consider the price of a high quality tankless water heater being around the $ 800 – $ 1000 range. Then there are the costs of the installation. Most all tank water heaters have ½ inch gas piping to supply gas to the unit but due to the high gas consumption a tankless heater consumes, the piping will need to be upgraded to ¾ inch piping. Another installation consideration is the exhaust vent flue piping. Because of the very high temperatures produced by the tankless heaters, special flue piping will need to be installed, usually stainless steel. So the costs of the installation could run $ 800 on the low side and up to $ 1100 or more depending on the home's construction.

Now for the math.

As an example, the cost of installing a tankless heater was $ 1900 and the yearly savings on the gas was $ 75. This means it would take 25 years to break even and considering that the life expectancy of a tankless heater is 20 years at the most, it does not make sense.

Something else to consider when deciding to buy a tankless water heater is if you live in an area prone to power outages. Even though gas tankless water heaters heat water using gas as its fuel, it does use a 120 volt circuit to operate the electronic controller. If the electrical power goes off, you will not have hot water as you would with a gas tank water heater.

To sum it up, if you are building a new home from scratch or performing major home remodeling, installing a tankless water heater may be a good choice but when it comes to replacing a tank water heater with a tankless, the return on the investment costs is just not there.