Tankless Water Heater Pros and Cons: A Comprehensive Guide

Tankless water heaters — which are also known as instant water heaters — warm water with high-powered gas burners or electric coils. This process creates hot water rapidly and delivers it directly to your faucets or shower, on-demand. This system varies from traditional water heater tanks, which stores warm water in an insulated tank and reheats it as needed, slowing the heating process.

These unique processes mean homeowners will find differences in everything from overall cost to safety between the two systems. If you’re asking yourself “are tankless water heaters worth it,” read this comprehensive list of tankless water heater pros and cons and decide if a tankless water heater is the best solution for your home.

Energy Usage and Water Abundance

Advantages: The most attractive feature for tankless water heaters its ability to cut energy costs for homeowners. This is particularly desirable as heating water is usually the second highest utility bill for homeowners in the U.S., being beaten only by the heating and cooling of a house itself. 

Consumer Reports states tankless water heaters are roughly 22% more efficient than water heaters with tanks. This equates to nearly $150 off your energy bill each year. Furthermore, propane-powered tankless water heaters emit approximately 50% less CO2 emissions than water heater tanks, which will help reduce your carbon footprint. 

Drawbacks: Unfortunately, energy efficiency may come at the cost of lifestyle efficiency when it comes to tankless water heaters. Because of their size, and instant heating techniques, tankless water heaters don’t hold enough hot water for cross-over usage. For example, if you were running the dishwasher and showering at the same time, you might run out of hot water. Actually, Consumer Reports states that inconsistent water temperature is one of the biggest buyer complaints when it comes to tankless water heaters. 

Tankless Water Heater Lifespan

Advantages: Tankless water heaters lifespan can reach as high as 20 years compared to only 10 years for a tank. By reducing your monthly bills, and decreasing the number of tanks you’ll purchase over your time as a homeowner, a tankless water heater might be a more cost-effective investment. 

Drawbacks: Tankless water heaters require special attention to maximize their lifespan. For example, without a proper setup for a tankless heater, your HVAC contractor will need to:

  • Rework your gas lines
  • Add additional venting
  • Custom retrofit your home

This allows for proper installation of your water heater to ensure long-lasting performance for years to come.  

Additionally, homeowner’s will often be on the hook for additional components, like water softeners, to optimize their tankless water heater and ensure the tank functions properly for the long-term.

Total Cost of a Tankless Water Heater

Advantages: Because tankless water heaters are both more efficient, and have a longer lifespan than traditional water heaters, homeowners may eventually find the return on investment a favorable one. If a tankless water heater saved you $150 on your energy bills for 20 years, you’d wind up saving $3,000 on bills alone. And, because water heater tanks need to be replacements twice as often, the total savings on equipment over the years may also add up quickly. 

Drawbacks: Without installation costs, tankless water heater and traditional tanks are comparable to one another in price. However, because installing a tankless water heater requires specialized service, it makes a tankless water heater far more expensive — upfront — than a traditional water heater. 

Consider comprehensive pricing, which includes:

  • System
  • Permits
  • Installation materials
  • Labor 
  • Removal of an old unit

Combining these factors, you can expect to pay an average of $1,500 to install a tank water heater. A tankless water heater, on the other hand, will cost an average of $3,971

Tank vs. tankless water heater: Which wins out?

As with many home projects, determining if a tank or tankless system is right for you depends on your situation. 

How large is your home? Insulated tanks typically hold 30-50 gallons of water, making them quite a large appliance for your home. Tankless water heaters are smaller, which make them easier to store in small homes.

How many inhabitants are in your home? Tankless water heaters are especially useful in homes that use a limited amount of hot water, like vacation homes that aren’t used throughout the year, or those who only have one or two primary residents. Meaning, a tankless water heater may not be the best solution for a family of four, who all competes to get ready in the morning.

How often are you home? Tankless water heaters are slightly safer than traditional tanks, especially for homeowners who aren’t around often. Because they only operate when warm water is required, compared to water tanks that are practically permanently on, there are fewer safety risks to consider.

Need help deciding which tank is best for your home?

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