It’s no wonder tankless water heaters are becoming a staple of green building. Unlike tank-type water heaters that keep gallons of water at usable temperatures 24/7, tankless heaters provide hot water on demand, saving energy and money. In fact, the Department of Energy estimates that tankless water heaters can be 24% to 34% more efficient than tank units. According to Jack Banker, manager of tankless sales for Rheem, homeowners can save about 20% to 25% on their heating bills.
This technology isn’t new—it’s been in use in Europe, South America, and Asia for decades—but the units have only recently begun to gain traction in the United States as Americans look to cut energy costs. Technology is catching up with demand, too, as vendors are responding with whole-house tankless systems that offer capabilities beyond the capacity of early point-of-use units.
Efficient Options
The basic operation of tankless water heaters is fairly straightforward: When someone opens the hot side of a fixture, water flows into the tankless unit and past a sensor that triggers the heater to bring the water to a pre-set temperature for delivery to the fixture. The quick recovery rates on tankless water heaters allow them to operate on demand, and as long as that fixture is asking for hot water, the tankless unit will continue to heat and deliver it.
Not long ago, availability of tankless units was limited to small-capacity point-of-use systems, which would only provide enough hot water for the location where it was installed, such as a for a bathroom or kitchen sink. Now the majority of manufacturers offer whole-house systems, which can provide enough hot water for large homes with multiple bathrooms. As a result, the tankless water heater industry has grown on average about 25% per year since 1999, says Mat Katz, retail marketing manager for Bosch.
Over the years, vendors of tankless water heater units have improved their products’ performance by merging gas condensing and tankless technology, adding direct-vent technology, and integrating temperature and carbon dioxide sensors. In addition, the units have gotten more compact and more efficient.
The efficiency of tankless water heaters depends on a variety of factors, including the design and the fuel source. Gas units are about 80% to 85% efficient because residue heat is lost through the vent pipe, while electric units are nearly 100% efficient because they convert almost all the electrical energy they consume into heat. However, some homeowners prefer gas tankless water heaters because they are said to heat water more quickly. (A common complaint of tankless technology is that users must wait a few seconds for the ambient-temperature water to be expelled, the temperature to rise to the set point, and the hot water to flow through the sensor. Some vendors are circumventing this problem by allowing their systems to be installed with a circulating pump.)
Whether the best option is to go with a gas or an electric tankless water heater also depends on fuel prices and availability of natural gas in a particular area. The desired location of the tankless water heater plays a role as well. Electric tankless water heaters can be installed closer to the point of use, even for whole-house models, which can reduce the wait time for hot water; a gas unit must be installed where it can be connected to a gas line and vented outdoors. Some of these gas units offer direct-vent technology, which pulls combustion air from outside the home and discharges it through an outside vent. As a result, the tankless water heater unit isn’t discharging conditioned air from inside a home to the outdoors.
A range of capacities is available for both gas and electric models. Some units are designed for homes with multiple bathrooms, while others are suitable for smaller homes with a single shower.
Green builders also can select the most efficient models based on national recognitions and standards. Energy Star recently established a residential water heating program to recognize gas, whole-home tankless water heaters with an energy factor (EF) of 0.82 or better, gas condensing units with an EF of 0.80, and electric heat pump water heaters with an EF of 2.0. So far, however, Energy Star has not recognized electric tankless water heaters, which typically have an EF of 0.98 to 0.99 compared to 0.91 to 0.95 for an electric tank unit, because it is still a small market and the energy savings are too low, according to Energy Star.
Builders also can earn two points toward LEED certification if the gas unit has an EF of at least 0.80 or an electric tankless unit has an EF of 0.99. The National Green Building Standard awards points for whole-house tankless units that are either direct-vented or power-vented to improve indoor air quality and minimize contamination from combustion byproducts.
All of that efficiency, however, comes at a price. Banker estimates that most tankless water heaters cost two to two-and-a-half times more than a traditional tank model. Federal and local tax incentives and rebates, along with incentives available from many utilities, can help offset the sticker shock.
While the return on investment depends heavily on water usage and energy prices, homeowners can expect to recoup their initial investment in about four to six years. In addition, the life span of a tankless water heater is two to three times longer than a traditional water heater.
Infrastructure & Installation
While both gas and electric tankless water heaters are generally considered more energy efficient than tank models, builders should note that tankless units actually consume more energy than tank water heaters, but for shorter periods of time. To accommodate these significant surges of energy, gas units must be connected to a large gas line and electric models require extra breakers to support the heating modules in the system.
“I think the infrastructure to support them is the biggest challenge when you’re using this technology compared to a conventional tank,” says Aaron Siegel, vice president of sales and marketing for Eemax. “Everything else is a gigantic plus.”
Unlike 200-pound tank water heaters, tankless units can be installed virtually anywhere. Most tankless units weigh only 40 to 60 pounds, and some are so compact they can fit in a closet or in between wall studs.
Space savings and efficiency are the top reasons Mike Moon of Urban Renaissance Group is installing tankless units in the Walnut Hill Townhomes in Tennessee. “I find buyers understand that tankless water heaters are an upgrade and add value over conventional water heaters,” he says. “This helps differentiate our product from the competition.”
Tankless water heaters currently comprise about 4% of the total U.S. water heating market, but the demand is growing. Over the last eight years, the industry has increased 20% to 40% a year, according to Rinnai. In addition, the Department of Energy estimates that Americans can save 78% in utility costs, avoid 4.2 million tons of carbon dioxide emissions, and achieve energy savings of 3.9 billion kWh and 270 million therms of natural gas by using high-efficiency tankless water heaters in five years.
As more builders look for energy-efficient technology, tankless water heaters may one day be the norm, rather than the exception, in homes nationwide.
Amy Fischbach is a freelance writer based in Overland Park, Kan.