Tankless Water Heaters: Energy Efficiency, On Demand

Posted by Tom Kelly on April 25, 2016
Tankless Water Heaters: Energy Efficiency, On Demand
In tankless water heaters, the cold water travels through a pipe into the unit, and either gas or electricity heats the water on demand.

Homeowners are growing increasingly conscious of their carbon footprint and taking steps to go green, both by retrofitting existing structures or by installing more energy-efficient appliances and fixtures. Something homeowners might not be thinking about, however, is how much their water heater affects their total energy use – in fact, most people don’t think about their water heater at all; it gets installed in a closet and forgotten about as long as it’s working.

But even if a homeowner never thinks about their water heater as long as they’re getting a warm shower out of it, it’s still using energy to heat water 24 hours a day, 7 days a week – even when no one is actually in the shower. All this unnecessary energy use adds up: Water heating is the second-highest expense in a home, accounting for about 18 percent of a utility bill after heating and cooling, according to

An option contractors can present to homeowners that will improve their carbon footprint by saving energy and water—as well as help them pocket some extra cash in the long run—is a tankless water heater, which heats water directly without the use of a storage tank. When a hot water tap is turned on, cold water travels through a pipe into the unit, and either gas or electricity heats the water.

A global water heater study from Persistence Market Research recently showed that tankless water heaters are greatly expanding in popularity in North America; in fact, the study predicts that by 2020, the market in North America could surpass $4.3 billion.

The Truth about Tankless

Tankless heaters have a few key advantages for residential homeowners, and one of the most attractive is the long-term savings. The initial investment in a tankless water heater is greater than that of a conventional storage water heater, but tankless water heaters will typically last longer—they have a life expectancy of more than 20 years, compared with 10 to 15 years for conventional heaters. They also have easily replaceable parts, which can extend their life by many more years.

Tankless water heaters have lower operating and energy costs, which can offset its higher purchase price. Homeowners also can recoup some of the initial cost via tax credits for residential energy efficiency and installation costs. There also may be Energy Star incentives and rebates available depending on region of the country.

A homeowner wanting to go green will be as interested in the energy and water savings as the financial value. The United States Geological Survey Water Science School estimates that the average person uses about 80 to 100 gallons of water per day. Going tankless can greatly reduce that amount.

According to, for homes that use 41 gallons or less of hot water daily, tankless water heaters can be 24 percent to 34 percent more energy efficient than conventional storage tank water heaters. Even in a home that uses more than twice that—86 gallons per day—a tankless heater can yield an eight percent to 14 percent energy savings. A homeowner can achieve even greater energy savings of 27 percent to 50 percent by installing a tankless water heater at each hot water outlet.

Tank-style water heaters’ efficiency—already lower than a tankless heater—decreases over time due to sediment buildup. As a result, a homeowner pays higher utility bills that continue to increase over the life of the tank heater.

And there’s no need to worry that a home won’t have enough hot water without a storage tank. Even though the tankless water heater is saving energy by not keeping water constantly hot, it will zap water to the right temperature on demand—no more worrying about running out of hot water if there are multiple people showering in a row or if the dishwasher is running, as long as the homeowner has purchased the appropriately sized heater for his or her needs.

The water will also be fresher: Because of the on-demand nature of the heaters, hot water isn’t sitting in a 50-gallon tank for an extended amount of time.

Not to be forgotten is the extra space a tankless heater can give a home or condo. Tankless heaters are generally small and wall mounted, meaning they take up a much smaller footprint than a regular heater, which usually needs its own closet. Models designed for outdoor installation free up even more space.

By presenting the advantages of a tankless water heater to a homeowner, a contractor can give customers higher-end options for heating water that are better for the environment—and save them some money over the long term as well.


Tom Kelly is the Applications, Training and Technical Services Manager at Bosch Thermotechnology Corp. Bosch Thermotechnology is a leading source of high quality cooling and heating systems, including tankless, point-of-use and electric water heaters, floor-standing and wall-hung boilers, Bosch and FHP geothermal heat pump systems as well as controls and accessories for every product line.

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