How Tankless Water Heaters Work News & Opinion

How Tankless Water Heaters Work


While many different types of water heaters currently exist for consumers looking to either replace or install one, nothing has generated as much excitement in the US as the new tankless models. I say in the US because tankless systems have pretty much been the norm in such places Japan and much of Europe.  This is due to the fact that they take up much less space – a consideration that is very important in many countries. These water heating system, which as the name implies don’t utilize a tank to store heated water, provide on-demand hot water to either a whole house or a local tap or appliance. While they cost, on average, about twice as much as conventional water heaters, government tax credits and local utility company rebates make them a bit more affordable than you might think. When you factor in how much more efficient they are over conventional tank-based systems, you may recoup your money within just a few years.

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How It Works

This type of water heater uses a heating element (called a heat exchanger) to heat the water instantly as it flows through a network of twists and turns until it makes it way to the outlet. Unlike a conventional water heater, the lack of standing water in a tank means that the heat isn’t lost over time (standby loss) as the hot water sits waiting to be used. These systems are fairly new and claim to be more energy efficient since the water is only heated when needed (the system is “flow controlled” in that the heating only occurs when the hot water is activated and pulled through the system.) That means that when the water isn’t being used it isn’t being heated and the device is essentially off. Here is what the system looks like on the inside:

gas tankless water heater

Gas tankless water heaters use natural gas to heat the water in the heat exchanger for distribution throughout the house.

electric tankless water heater

Electic tankless water heaters require power from 60-amp (or similar) breakers in order to heat the water using electric heating elements for distribution throughout the house.

As you can see, the gas and electric tankless systems are different, with gas being powered by natural gas or liquid propane and the electric version requiring an electrically powered heating element system. Both systems are available as a whole house solution or as a smaller station designed to heat water for a single room or appliance. While the systems are different in how they heat the water, the concept is the same. Cold water comes in, is heated by the heater as it passes through, and then travels out the hot tap into your home. The system turns on when the flow rate rises above a set threshold (typically a little more than a trickle, but not full blast).

There has been some discussion that tankless systems don’t actually provide instantaneous heat, since the system has to heat the water on the fly and “push out” the cold water from the pipes before it reaches the tap. Brilliant argument – except for the part where a tank-based water heater has to do the same thing… and keep the water hot in the tank whether you are using it or not. In truth, people who complain about how long it takes the hot water to reach the tap have forgotten that the conventional water heater had nearly the same issues. But with a tankless system you can do one better – you can bypass the hot water line and insert a “point-of-use” model at a location such as a sink. This will supply instant hot water without having to pull from a main supply location which may be located a distance away from where you want your water.

Electric vs. Gas Tankless Systems

The differences between gas and electric water heaters are significant. At first blush they look very similar (especially in size and from the outside) but it becomes readily apparent that these products heat the water in very different manners. While gas units require ventilation for the emissions they produce, electric tankless water heaters do not. Since the gas-based models need to ignite in order to heat the water this will come by means of an electrical (110V) circuit or, as in newer models like the Bosch series, water flow will power the electronics needed for ignition (this is actually very cool and means that no electricity is needed for these gas units). Water-flow activation is extra-cool in that it also means you don’t lose your hot water when the power goes out. This is critical since, unlike a tank-based system, if the system shuts down the hot water disappears almost instantly.

Electric models do not run off standard 110V or even 220V lines. Instead, they require a series of circuits rated to 50-60 amps or more. This means that unless you’re doing new construction, you may have difficulty retrofitting an existing home to use an electric tankless system. Just to give you an idea, you’ll need #8 wiring for a 50A circuit, and #6 wiring for a 60A circuit. A typical electric whole home tankless water system will require two or three 50A or 60A circuits and at least 200 amp service to the home.

Because they aren’t as efficient, and are more difficult to retrofit, we don’t recommend the electric type as much for existing homes, though if you can meet the requirements and do not have gas service there is absolutely no reason (except perhaps the added upfront costs) not to take advantage of the convenience and potential cost savings.

What Kind Do I Need?

Aside from the decision of gas vs. electric, you’ll need to evaluate the flow rate you’ll want to achieve in order to meet the needs of your household. For those looking to simply supply a “point-of-use” tap you can buy a small electric model and place it underneath the sink, bypassing the normal hot water inlet. For a whole home application, however, you’ll need to do some math. Here are some basic guidelines for running your calculations, but you may need to do some testing or research to get the exact numbers for your application:

  • Bathroom faucet
    Low-flow faucets use anywhere from 0.5-1.5 GPM (Gallons Per Minute). Most fixtures installed after 1992 are set at 2.2 GPM. Faucets that pre-date 1992 can have anywhere between 3-5 GPM.
  • Kitchen faucet
    Standard post-1992 faucets are set to 2.2 GPM. Faucets that pre-date 1992 can use between 3-7 GPM.
  • Shower
    Recent “low flow” rates can fall between 1-2 GPM. The post-1992 standard is 2.2 GPM. Earlier than that faucets could be anywhere from 4-8 GPM.

So the equation is to simply add the flow rates together (in GPM) of what you expect to simultaneously use. If you have all standard post-1992 fixtures, you may want to expect 2 faucets and a shower. That would be:

2.2 + 2.2 + 2.2 = 6.6 GPM

So you’d want to find a tankless hot water heater that could handle 6.6 GPM. The other thing to consider is the expected water temperature. Down south you don’t need to heat the water as much as up north during winter. Each hot water heater gives different flow rates based on how much the water needs to be heated. Keep this in mind as you do your math.

They Will Pay ME to Buy One?

With recent 2009-2010 government rebates, home owners who replace their hot water heaters this year and next can receive up to a $1500 tax credit towards the cost of product and installation of a tankless water heater. The tax credit is pretty straightforward:

  • Purchase a qualifying tankless water heater. This tankless system must have an Energy Factor >= 0.82 or a thermal efficiency of at least 90%. Currently all Energy Star compliant tankless water heaters qualify.
  • Check to see if you have used any of this credit previously for replacement windows, insulation, roofs, etc – the tax credit is a maximum of $1500 for 2009-2010 purchases.
  • Include the installation costs associated with the new tankless water heater and calculate your savings. 30% of the tankless water heater plus installation is eligible.

It’s also important to check with your local gas and electric company for additional rebates. For example, my local gas provider will give me $450 if I replace my conventional gas water heater with a tankless system. If you had a similar offer in your district your savings would look something like this:

  • $1200 (cost of tankless water heater) – $400 (30% tax credit) – $450 (energy conservation rebate) = $350

You’d have even more savings if you paid to have the unit installed, since up to 30% of the installation is also available to you as a tax credit. At that price it’s almost ridiculous NOT to replace your hot water heater with a tankless system.

Hopefully this helped you to not only understand a little more about how tankless water heaters work, but also how to determine whether a tankless system is right for you – and which one you should purchase for your home.

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