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Do Tankless Water Heaters Save Money?
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Plumbing 06/4/18

Do Tankless Water Heaters Save Money?

Tankless water heaters offer tremendous benefits such as endless hot water, space savings, and increased operating efficiency, but homeowners often ask, do tankless water heaters really save money?

Tankless water heaters are on-demand water heaters that heat water as it is used. Because they do not store water and heat continuously, tankless water heaters offer many benefits.

One homeowner favorite benefit is endless hot water. For households with large or extended families, it is common to run out of hot water, usually in the middle of a shower when you need it most. A tankless hot water heater provides an ever-flowing stream of hot water.

Tankless water heaters have a heat exchanger that heats the cold water as it enters the unit and continues as long as hot water taps are being used. Once the system is no longer being used, it shuts down wasting no energy on heating water to sit and wait in a storage tank.

Sizing of tankless water heaters is also a big selling point. Traditional tank water heaters are big and bulky taking up space in garages and indoor spaces. A tankless water heater is about the size of a suitcase and can be installed in both the interior and exterior of the home. Many homeowners enjoy the freedom of clearing up space for storage and aesthetics.

One of the most common reasons homeowners’ begin thinking about switching to tankless hot water heaters is because of the energy efficiency. Tankless water heaters are approximately 30 percent more efficient than tank style heaters. Because tankless water heaters do not store and heat 40 plus gallons of water continuously, they are only using gas as the hot water is needed.

One question homeowners ask when researching energy efficiency is will they see a return immediately? The amount of money saved on energy bills will depend on use. If tankless water heaters are used heavily, then the energy usage costs may even out as compared to a tank style heater initially. But, one thing homeowners do consider is the wasted energy. As tank style heaters heat water, there is some amount of waste due to loss of heat and continuous heating.

Homeowners can compare their current usage and compare to the energy efficiency ratings on the models of tankless hot water heaters they are researching.

Another cost-saving possibility with tankless water heaters comes in their warranties. Tankless warranties come standard with 12-year warranties. Most tank style warranties are standard at 6 years. If homeowners purchase two traditional water heaters versus one tankless water heater, the cost will be less, even with tankless water heaters initial investments.

Plus, tankless water heater components can be replaced over the years. Unlike a traditional water heater that has to be fully replaced once it is broken, many tankless components can be repaired making the life of the tankless longer than standard warranties.

How Much Do Tankless Water Heaters Cost?

The initial investment of a tankless water heater will cost homeowners more than a traditional water heater. The cost is higher because of the unit cost and installation methods.

Tankless Water Heater Unit Cost

Depending on the flow rate needed, tankless water heater units can cost up to twice as much as traditional storage tank heaters. Flow rate is important because tankless water heaters can provide endless hot water but restrict how much hot water can be used at once.

Installation Cost

Tankless water heaters are also more difficult to install. Tankless hot water heaters can take half a day to a full day to install and often require larger gas lines to handle the larger output of gas. This adds labor and materials cost to the tankless installation that would otherwise not be an issue for traditional water heaters.

Do Tankless Water Heaters Provide Instant Hot Water?

Tankless water heaters are not the same as instant hot water heaters. The water still has to pass through the tankless unit to be heated and travel to the tap. Depending on the location of the tap, tankless water heaters can take longer to deliver hot water. Many homeowners opt to install recirculation pump along with their tankless water heater to make hot water available quicker.


While professional plumbers recommend performing a flush of all hot water heaters, it is especially important to perform annual maintenance on a tankless hot water heater, especially in San Diego.

San Diego has some of the worst water in the nation and is considered hard water. Hard water can cause many plumbing issues, but the hard water deposits could damage the internal mechanisms of the tankless water heater causing it to fail.

An annual tankless water heater flush will help to prolong the life of the water heater, but will cost more in maintenance fees, although homeowners can perform a flush themselves. While a relatively simple process, it does require time and patience. Many homeowners do not feel comfortable doing it themselves.

How Much Can Tankless Water Heaters Really Save?

Consumer reports and energy Star ratings estimate between 70-100 per year in energy savings for tankless water heater normal use. If tankless water heaters last beyond their warranty at even 15 years, that’s an average of $1200 in savings. Add in the cost of a second water heater and you can count on much more over the life of your tankless. Even if annual maintenance is performed, homeowners can see some savings. However, added along with the many benefits of tankless water heaters, cost savings is not the only consideration.

Making the switch to a tankless water heater has many advantages and is an investment in your home and lifestyle. Depending on your family needs and ultimate goal, cost savings may not be the reason to go tankless. But, whatever a homeowner invests in hot water, calling a licensed plumber should be the top priority. A professional plumber will ensure that the installation is safe and to plumbing code and that homeowners have all of the information they need to make the best decision.

Bill Howe knows that water heaters, especially tankless, are a big investment. That’s why all water heater estimates can be performed for free. Our specialists will walk homeowners through all options and provide a detailed quote for the best brands in the industry.

For your free estimate, call Bill Howe at 1-800 BILL HOWE (245-5469) today.


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