How Do Tankless Water Heaters Work?

The idea behind a tankless water heater is pretty simple. Instead of storing water in a tank and heating it to a specific temperature, a tankless system heats the water as it passes through the unit. As long as demand levels do not exceed the heating capabilities of the water heater, an indefinite amount of hot water can be used when a tankless system is properly installed.

Not every homeowner is a good candidate for a tankless system. The best tankless water heaters support homes that use 41 gallons of hot water or fewer every day. Once installed, homes with this level of hot water use can save 40% or more on their water heating costs.

Even if you use 80 gallons of hot water or more, you may be able to save around 10% each month on your water heating costs.

How Tankless Water Heaters Supply Hot Water

A tankless system will directly heat water without using a storage tank, though most systems can work with a tank-based system to provide immediate and reserve levels of hot water.

When someone in the home turns on the hot water tap, cold water will be supplied to the tankless system. The water travels through a pipe or through cylinders that are accessible to the unit’s heating element or burner, depending upon the type of water heater it happens to be.

That is why a tankless water heater supplies endless hot water. There is no need to put the water into a storage tank to have it heated.

Limitations on the Tankless Design

The biggest limitation to the tankless design for water heaters is the amount of water that can be heated at any one time. This is measured by a gallons-per-minute rating. Most units supply between 2-4 gallons of hot water every minute. The tankless water heaters at the upper end of the industry offer an output of 5-7 gallons per minute.

The flow rate will dictate how much hot water is received at the requested temperature. An entry-level model that supplies 2 gallons of hot water per minute can support one shower, or two sinks, but not simultaneously.

Even the largest models in the industry today cannot supply enough hot water for simultaneous use in larger families.

If you were to take a shower, run the washing machine, and run the dishwasher simultaneously, you may not be able to have the correct temperature of water supplied.

To overcome the gallons per minute limitations, some homes have found that installing multiple tankless water heaters can have many benefits. It can also come with additional installation costs. Some homes may not be equipped to handle the amperage of two systems either.

When to Consider an On-Demand Tankless Water Heater

Families with 6+ members in the same household should consider having an on-demand tankless water heater supply hot water for the most-used item in the home. Having one water heater for the bathrooms, and another suppling other hot water needs, can reduce maximum flow rate issues that are sometimes experienced.

If there is a remote bathroom on your property, then a separate tankless system may be useful. Examples might include a treehouse equipped with running water, a barn, or a shop.

Homes with a hot tub or sauna may also wish to consider installing a second tankless system to meet the occasional high levels of demand that are possible.

A secondary tankless system can also act as a booster for specific appliances, like a washing machine or a dishwasher, that is not used all the time, but requires large amounts of hot water when it is used.

A tankless water heater can also be used as a booster for solar hot water heaters or some of the newer tank-based water heaters as well.

Should I Make the Investment into a Tankless Water Heater?

Tankless water heaters maximize energy savings for smaller households that use 41 gallons of hot water or less each day. In such a situation, the tankless system would be up to 34% more efficient than a tank-based water heater, creating savings of up to 40% in the costs of heating water.

If each outlet receives an Energy Star tankless system, energy savings of more than 50% can be achieved.

Most tankless water heaters are rated to last for 20 years or more because of how they work. There are fewer risks for leaks, lower replacement costs, and lower utility bills associated with this investment. If you can handle the initial investment cost, then the purchase of a tankless water heater may make sense.

If your tankless system isn’t working, take a look at our troubleshooting guide here.

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Greg Mattson

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