Many different types of water heaters exist today for consumers looking to replace or install one. However, there is nothing quite as exciting as a tankless water heater in the US. I say "in the US" because tankless systems are almost the norm overseas. In fact, in Japan and much of Europe, no tanks were the norm. This mostly has to do with how little space they take up. This consideration is important overseas, where people don't have as much living space. So how do tankless water heaters provide on-demand water for a single sink or an entire home?
What is an Instantaneous Water Heater?
These water heating systems do not use a tank to store hot water. They provide on-demand hot water for the entire house, local taps and even appliances. Tankless water heaters can cost, on average, about twice as much as conventional water heaters. However, government tax credits and rebates from local utility companies may help make them more affordable. Considering how much more efficiently they operate than traditional tank-based systems, you'll likely pay for yourself within a few years.
Tankless water heaters use a heating element (called a heat exchanger). This allows them to heat water instantly as it flows through the tortuous network. Unlike traditional water heaters, there is no standing water in the tank. This means they don't lose heat over time (standby losses) while hot water is waiting to be used.
This makes tankless water heaters more energy efficient, as the water is only heated when needed. The "flow control" system only heats up when hot water is needed at the tap. At that point, it generates heat and pulls it through the system.
When water is not in use, it is not heated. The device is basically off.
Gas systems typically utilize natural gas delivered from a city or county to heat water that passes through a heat exchanger. Alternatively, you can use propane from a local tank if the hardware supports it. Here's the internals of a gas water heater:
Electric water heaters use an electric heating system to heat water. These systems often require multiple high current circuits to successfully heat water for an entire home. Some of it reminded me of the inside of a fancy coffee maker — but with more components, bulk, and technology.
Whole house heating or local heating?
As you can see, gas and electric tankless water heaters work very differently. Because gas tankless water heaters run on natural gas or liquid propane, you can more easily retrofit them when needed—as long as the home has a natural gas supply. Both gas and electric tankless heaters can be used as whole-house solutions or smaller "point-of-use" systems. Smaller single-use tankless water heaters heat water for only one room, faucet, or appliance.
These larger and smaller systems essentially work the same way. Cold water enters and is heated by a heat exchanger as it passes through. It then flows from the hot water tap into your home. When the flow rate exceeds the set threshold, the system will automatically turn on. Usually, anything other than a trickle on the hot water line will activate the heater.
There is some discussion that tankless systems don't actually provide instantaneous heat, since the system has to heat the water on the fly and "push" the cold water out of the pipes before it reaches the tap. That seems like a reasonable argument – except for the part where tank based water heaters have to do the same thing. However, it must also keep the water in the tank hot whether you use it or not.
In fact, those who complain about how long it takes hot water to reach the tap forget that traditional water heaters have pretty much the same problem. With a tankless system, you can do even better. You can bypass hot water lines and insert "point of use" models at places like sinks. This provides instant hot water without having to pull from a more distant centralized location.
Reasons Not to Buy a Tankless Water Heater
We love the idea of a tankless water heater. But if your home wasn't designed for this – it probably isn't the best choice. For example, your house may be larger but your electric water heater is aging. If you replace that tank with a tankless water heater, you'll still need to run water all the way from your home to the furthest faucet. Many water heaters do not support hot water recirculation systems. This means you can run it for a while before the hot water actually gets to where you need it.
You'll also need to consider the electrical requirements for your entire home electric tankless water heater. Larger homes may require three 60-amp circuit breakers to power the tankless water heater. That's going to add a lot of electrical infrastructure if you don't have enough room in the panel to support it!
With a gas tankless water heater, the decision seems simpler. These do save money over electric tank systems in most cases. You just need to make sure you have a gas supply.
The best water heaters, though, will probably end up being hybrid models from AO Smith or similar companies that operate much like traditional electric water heaters, but are 3-4 times more efficient.
How Do Electric vs. Gas Tankless Water Heaters Work?
There are significant differences between how gas and electric tankless water heaters work. At first glance, they look very similar (especially in size and appearance). Soon, it became apparent that these products heat water in very different ways. While gas appliances require ventilation to vent the emissions they produce, tankless electric water heaters do not.
Gas-based models require ignition to heat the water. This is usually done through an electrical circuit (110V). Some newer models use the flow of water to "power" the electronics required for ignition. This is actually pretty cool and means no electricity is needed to operate these gas models. Water flow activation also means you won't lose hot water during a power outage. This is critical because unlike tank-based systems, if the system is turned off, the hot water will disappear almost immediately.
Electric models don't use standard 110V or even 220V lines. Instead, they require a range of circuits rated at 30-60 amps or higher. Unless you are building new construction, you may have difficulty retrofitting your existing home to use an electric tankless system. Just to give you an idea, a 50A circuit needs #8 wiring and a 60A circuit needs #6 wiring. A typical whole home tankless electric water heater requires two or even three 50A or 60A circuits and at least 200 amps of home service.
Because they are less efficient and more difficult to retrofit, we do not recommend electric types for existing homes. However, if you can afford it and don't have gas service, you might want to consider taking advantage of its convenience and potential cost savings.
What kind of tankless water heater do I need?
In addition to deciding between a gas or electric tankless water heater, you'll need to evaluate something called "flow rate." In order to meet the needs of your household, you need a sufficient supply of hot water. That means enough hot water for every tap on demand. For those who just want to provide a "point of use" faucet, you can buy a small electric faucet and place it under the sink. This bypasses the normal hot water inlet. However, for a whole home application, you'll need to do some calculations.
Do the math to understand what size tankless water heater you need
Here are some basic guidelines for running calculations, but you may need to do some testing or research to get exact numbers for your application:
- Bathroom Faucets <br>Low flow faucets use 0.5-1.5 GPM (gallons per minute). Most fixtures installed after 1992 are set at 2.2 GPM. Pre-1992 faucets can have anywhere between 3-5 GPM.
- kitchen faucet
The standard post-1992 faucet setting is 2.2 GPM. Pre-1992 faucets can use 3-7 GPM.
- Shower <br>The nearest "low flow" rate may be between 1-2 GPM. The post-1992 standard is 2.2 GPM. Before this time, the flow of the faucet may be between 4 and 8 GPM.
Use the following equation to add together the flows you expect to use at the same time (in GPM). If you have all the standard post 1992 fixtures, you probably need 2 faucets and a shower. That would be:
2.2 + 2.2 + 2.2 = 6.6 gallons per minute
So you want to find a tankless water heater that can handle 6.6 GPM. There's more to this equation than…
Understanding Growth Rates
Another thing to consider is the expected water temperature. In the south where we live, there is no need to heat the water in winter like in the north. Each water heater provides a different flow rate based on the amount of water that needs to be heated.
This requires you to have at least a basic understanding of temperature rise. When you see the words "Temperature Rise," it means there is a difference between the temperature of the incoming water and the temperature you want it to come out of your tankless water heater. Tankless water heaters always flow with a specified temperature rise. This marks the maximum GPM of hot water that the tankless water heater can deliver on demand for a given temperature rise.
Seeing a tankless water heater rated at 6 GPM with a 10 degree rise in temperature won't do you any good. Instead, try to understand all the factors. You'll need the following information (preferably with a nice diagram that lays it all out for you):
- Inlet temperature
- Desired or Specified Temperature Rise
- kW/Volt (electric models)
- Peak current draw (electric models)
- Circuit Breaker/Wiring Required (Electric Models)
Use this information, along with your desired GPM flow rate, to determine how much you need to increase the water temperature. Then, incorporate it into your math equations.
Rebates and Incentives
Back in 2009-2010, the government rebate provided tax credits for homeowners who replaced their water heaters. In fact, you can save up to $1,500 on the product and cost of installing a tankless water heater. Most local tax credits and rebates are still available. These tax credits are usually pretty simple:
- Check the Energy Star website for current rebates and incentives.
- Buy qualified tankless water heaters that are Energy Star rated.
- Check to see if you've used any Energy Star or appliance credits before to replace windows, insulation, roof, etc. Some tax credits have caps and limits.
It's also important to check with your local gas and electric company for additional discounts. For example, my local gas supplier will give me $300 if I replace my conventional water heater with an energy efficient model. If a similar offer is available in your area, your savings could look like this:
- $1200 (cost of tankless water heater) – $300 (energy saving rebate) = $900
At this price, you may still be hesitant to replace your water heater with a tankless system. However, when cost savings are factored in, the numbers look even better. Over a 10-year lifetime, you can save thousands of dollars in hot water bills. Don't forget to investigate these cost reductions, too.
Hope this helps you answer the question: How do tankless water heaters work? We also hope we've helped you learn how to decide if a tankless system is right for you. Which product you buy for your home depends entirely on your needs and the support you and your home can provide.