Issues > Just Ask! > How Do I Choose a Tankless Water Heater?

How Do I Choose a Tankless Water Heater?

Updated June 13, 2006

A reader asks The Green Guide:

Do you all have any information on tankless water heaters? I'm looking for an unbiased review of the different major (gas) brands, but I don't think Consumer Reports has reviewed any of the tankless ones (please correct me if I'm wrong). Thanks again for any info.

Margo Duesterhaus

The Green Guide responds:

Water heating uses up to 25 percent of the energy in U.S. homes and is the second largest energy expense in U.S. households, according to the U.S. Department of Energy (DOE), so it's definitely worth it to invest the time and effort in researching different water heating options. In fact, the DOE points out in its guidelines for selecting a new water heater that most people don't get to do their homework before buying one, because they are usually forced to make a quick decision when their current heater fails unexpectedly. Storage Tank models are the most popular water heaters in the United States today. A typical tank heater stores anywhere from 20 to 80 gallons of hot water. The water is heated up slowly and stored for later use. As water sits in the tank waiting to be used it often loses heat and has to be reheated to maintain a pre-set temperature. "Standby heat loss" occurs as energy is lost from warmed water sitting in a tank and not being used. As long as there is hot water in the tank you can use hot water appliances simultaneously. However, once the tank is emptied there is no hot water available until it refills and reheats.

Tankless water heaters, on the other hand, heat water as needed and provide water continuously. They first began appearing in the United States about 25 years ago. Tankless models, also known as "demand" or "instantaneous," are common in Japan and Europe. As their name implies, they do not have a holding tank. The heating process begins when you turn on a hot-water tap. Cold water travels through a pipe into the unit, and either a gas burner or an electric element heats the water up quickly. And according to Richard H. Karney, Energy Star program manager for the DOE, tankless water heaters "do save energy because they eliminate parasitic energy losses in the tank."

Before you go out and buy a tankless water heater, though, it is important to understand the technology's limitations. While manufacturers say that tankless heaters don't run out of hot water, they can only supply a set volume of hot water at once, so it's hard to run a dishwasher, washing machine and your kitchen faucet at the same time. Each model has a "flow rate," which is measured in gallons per minute (GPM). You can get plenty of continuous hot water at one time as long as your water use is within the limits of the system's flow rate. And Karney points out that in other countries where tankless heaters are more popular, the houses are much smaller and distribution is much smaller.

Tankless heaters are generally more expensive than their conventional counterparts but are said to make up for the higher sticker price with increased energy savings (though how long it takes to make up those costs is subject to debate). You might not get as much energy savings with gas units powered by pilot lights so if operating costs are important you should consider an electronic ignition, but check to make sure it is compatible with your appliances.

Products

The market for tankless water heaters is small but growing. In 2005, they made up about two percent of all water heater sales. Because the technology is relatively new in this country, it is hard to get objective information about individual heaters, and the Energy Star program still hasn't yet rated any water heaters, either with or without tanks. Even so, gas- and propane-powered tankless water heaters qualify as energy-efficient appliances under the Energy Policy Act of 2005. To find a more efficient heater, ask about its Energy Factor (EF). This number takes into account standby losses, cycling losses, and how efficiently the heat from the energy source is transferred to the water. The higher the number, the more efficient the heater. If you purchase a unit with an EF of .80 or higher, you may be able to claim a federal tax credit of up to $300. Since ground water temperatures vary from location to location and by season, when shopping it is essential that you know how many degrees you'll need to raise the water's temperature and that you ask vendors to calculate a flow rate (measured in GPM) based on that number. Each manufacturer bases its flow rates on different temperature rises, so make sure you get the correct number for your needs. The less heat needed to get to the desired temperature (usually 120 degrees Fahrenheit), the more water available at any given time. Builders Websource provides comparison charts of major brands (www.builderswebsource.com).

The following models can work as the sole water heater for your house and allow more than one point of use at a time:

Rinnai: Continuum 2532FFU, suggested retail price $1140.00. Flow rate: 3.87 gpm with a 77 degree rise, EF: .82 (natural gas) and .87 (propane). The company says it services three points of use 866-746-6241, (www.rinnai.us, 866-746-6241).

Noritz N-063S, suggested retail price $999, Flow rate: 4.1 gpm, with a 75 degree rise, EF: .81. The company says it can run two showers at the same time and maybe a dishwasher (www.noritzamerica.com, 866-766-7489).

Bosch's AquaStar 250 SX Model, suggested retail price $1,299, Flow rate: 3.5 gpm based on a 77 degree rise; EF: .85. Company claims it serves two outlets at the same time (www.boschhotwater.com, 800-503-5028).

Paloma's PH-28R models, suggested retail price $949, Flow Rate: 2.5 gpm based on a 65 degree rise, EF: .82. The company says it can operate two showers simultaneously in cold climates, three in warm (www.palomatankless.com, 805-278-5499).

When selecting a tankless water heater:

Because the cost of gas is generally lower than electricity, gas tankless systems are usually cheaper; they also tend to have higher flow rates than electric systems. (www.fpl.com)

Compare and contrast flow rates of the different models you are considering. To calculate your peak demand, make a list of how many hot water devices you expect to have open at one time and add up their flow rates. Figure at least 2 gallons per shower, about 1 gallon per faucet, and about 1 to 2 gallons per dishwasher and clothes washer you want to have run at the same time.

You'll also have to find out your incoming water temperature (ground water is warmer in the summer), and the desired outgoing temperature. Call a local plumber to determine your ground temperature or rely on the manufacturer. Once you figure out your peak demand, incoming water temperature, and desired outgoing temperature, choose a model that meets your peak flow rate and temperature rise needs. Remember manufacturers calculate flow rates based on different temperature rise requirements, so make sure you get the proper GPM for your temperature rise needs. (fpl.com, builderswebsource.com).

Consider the size of gas line and vents needed to run your tankless heater choices and the costs associated with conversion.

Find out what the servicing needs are, who is available to service it, and if replacement parts are readily available.

Alternatives

If you decide to stick with a conventional water heater there are plenty of ways to reduce its energy use. The Department of Energy makes the following recommendations:

Insulate your heater and hot water pipes with kits available at hardware stores and building supply stores. Your local utility company may provide these at a discounted cost. Follow the manufacturer's instructions and don't cover the thermostat when insulating your heater.

Lower the thermostats on your water heater to 120 degrees Fahrenheit.

Install a timer on an electrical water heater that can automatically turn the hot water off at night and on in the morning. The DOE says a simple timer can pay for itself in less than a year.

Install a heat trap above the water heater. A heat trap is a simple piping arrangement that prevents hot water from rising up the pipes so it will minimize standby losses.

Drain a quart of water from your hot water tank every three months to remove sediment that prevents heat transfer and lowers the unit's efficiency.

If your water heater is more than ten years old, it probably has no higher than 50 percent efficiency, according to the DOE. Consider replacing it with a new, higher-efficiency model. Look for the EnergyGuide label required on storage water heaters. They indicate either the annual estimated cost of operating the system or energy efficiency ratings.

Resources:

The DOE provides consumer fact sheets at www.eere.energy.gov/consumerinfo

www.builderswebsource.com

Major Gas Tankless Water Heater Manufacturers:

Bosch, www.boschhotwater.com

Noritz America, www.noritzamerica.com

Paloma Industries, www.palomaindustries.com

Rinnai Corporation: www.rinnai.us

Takagi Industrial Co. USA, Inc., www.takagi-usa.com