How to Choose the Best Tankless Water Heater

How does a limitless supply of hot water for your home, increased energy efficiency and lower fuel bills sound? That's the promise of tankless water heaters. Long popular in other parts of the world, tankless or "on demand" water heaters, first appeared in the United States about 30 years ago. Today they account for 8% of new water heater sales and that figure is growing. Before you add your name to that list, learn how to choose the best tankless water heater.

How they work
Water heating is the second largest energy expense in U.S. households, accounting for 20% to 25% of the energy used in an average home. Conventional water heaters store water in a big tank whether you need it or not. As the water cools, which is known as standby heat loss, it must be reheated and the fuel meters start to spin.

Tankless water heaters eliminate standby heat loss by heating water on demand when you open a faucet or turn on a dishwasher or washing machine. Turning on the tap turns on the tankless water heater, which passes cold water from outside through a heating element that heats the water to a preset temperature. The result is a continuous, virtually endless supply of hot water. When you no longer need the hot water, the tankless water heater shuts off and waits for the next request.

Types of tankless water heaters
Tankless water heaters are physically smaller than conventional water heaters and are generally wall mounted. There are two types of tankless water heaters: point-of-use and whole-house. The type(s) you choose depend on your intended use.

Point-of-use water heaters are designed for dedicated use, meaning they supply a single faucet, shower or appliance. Point-of-use tankless water heaters are smaller than whole-house models and fit easily in a bathroom vanity cabinet or linen closet.

Whole-house tankless water heaters will heat water for all needs throughout the house. These tankless water heaters are larger than point-of-use heaters and are best situated in basements, garages or, depending on the climate where you live, outside.

Size
Tankless water heater size is the most important consideration in the buying process, but it's also the trickiest. Choosing wisely makes the difference between being in hot water or being left out in the cold. In order to determine the proper size tankless water heater for your home, you and your plumber have to do a little homework.

Tankless water heater size refers to its capacity, or the ability to raise the temperature of incoming water at a certain flow rate. Flow rate is measured in gallons per minute (GPM). No matter which type of tankless water heater you're considering, you'll need to determine the volume of water the unit needs to heat (flow rate), the temperature of the ground water entering the unit and the desired temperature of the water flowing into your home.

It's best to calculate your flow rate with a plumber to get the most accurate figures. On average, faucets use approximately 1 GPM, showers 2GPM and dishwashers and washing machines use 1 to 2 GPM. If you have a large home or a large family, and your required flow rate exceeds that of the largest available whole-house tankless water heaters, you can install two or more units to operate in parallel.

The temperature of the ground water entering your tankless water heater will depend largely on where you live. Ground-water temperatures are much colder in Michigan than in Georgia, but these temperatures remain relatively constant through the year, despite the seasons. Consult your plumber or ground-water temperature charts provided by tankless water heater manufacturers to learn what yours is.
Power

Tankless water heaters can be fueled by gas (natural or propane) or electricity. Your fuel choice will affect the heater's price, cost to operate and flow rate.

Gas tankless water heaters are generally larger than electric units and cost more initially, but since gas is cheaper than electricity, gas-powered tankless water heaters are less expensive to operate. They can also generate larger flow rates, making them a more effective whole-house choice. If you're considering a gas-powered tankless water heater, choose a model without a pilot light to save energy and reduce operating costs.

Electric tankless water heaters are less expensive up front but cost more to operate. They also have lower flower rates than gas-powered units, so they're better suited for point-of-use needs unless your home's required flow rate doesn't exceed its power.  To maximize energy savings, look for tankless water heaters with modulating controls that increase or decrease the amount of energy required to heat the water depending on the flow rate.

Installation
Replacing a traditional water heater with a tankless unit is two to four times more costly than installing another conventional water heater, because you'll need to upgrade existing gas lines or electrical wiring to supply the energy the tankless water heater needs.

Gas-powered tankless water heaters usually require a direct-intake vent to provide air to the large burner, and a larger-than-average flue to vent the increased volume of combustion gases. The new flue won't fit where the old water heater's flue did. Some tankless water heaters don't need a flue and vent through a sidewall using a blower. However, if your old water heater shared a flue with your furnace, you'll have to replace the dual-use flue with a new one to safely handle furnace-only combustion gases.

Electric tankless water heaters are a little less expensive to install. Electric tankless water heaters require four times the power of conventional heaters, so an electric tankless water heater will almost certainly require its own circuit or circuits and, possibly, a higher capacity electrical panel.

As costly as this sounds, a tankless water heater will last up to 20 years-twice  as long as conventional water heaters. Add in their energy efficiency and lower operating costs, and you could see lifetime energy savings of as much as 40% and cost savings of up to 50%.

Efficiency
Although all tankless water heaters are more energy efficient than conventional units, some models are more efficient than others. Look for the tankless water heater's Energy Factor (EF), which measures both heat loss and how efficiently heat is transferred from the source to the water. The higher the tankless water heater's EF, the more efficient it is.

Electric tankless water heaters have higher EFs than gas-powered models. Look for electric tankless water heaters an EF of .80 or higher, and you'll not only be getting an efficient water heater, but you might qualify for a federal tax credit in the bargain.