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Do Tankless Water Heaters Save You Money?

by The Mind Blown

A tankless water heater is a type of appliance for space heating, and it saves money in the long run because you only pay for energy as you use it. And, since they rely on gas or electricity, they don’t require much maintenance and last much longer than the average water heater. 

Some manufacturers claim that their tanks can last generations without needing to be replaced! So, if you’re considering purchasing one (or replacing your current water heater), read the following information to find out if this appliance will actually save you money:

1. Energy Efficiency

Did you know that 70% of all household hot water use happens through showers? If so, it’s no wonder so many people are interested in upgrading their old-fashioned water heaters for tankless models.

What are the energy efficiency ratings for tankless water heaters?

Tankless water heaters have an Energy Factor Rating (EF) used to measure how much energy it takes to produce hot water compared to a traditional 40-gallon storage type heater. The higher the number, the more efficient it is in terms of gas or electricity use.


The average EF rating for most tankless models is 0.83, which means it’s 83% efficient at converting gas or electric current into stored hot water. It’s important to note that not all of this energy is transferred directly into heating your home because other factors are involved, such as preheating the cold intake water and standby losses which can be up to 15% or more.

So, while it’s true that tankless water heaters are energy-efficient, the EF rating doesn’t necessarily mean you’ll see a drastic reduction in your utility bill.

2. Operating Costs – Gas Vs. Electric

EcoSmart ECO 11 Electric Tankless Water Heater, 13KW at 240 Volts with Patented Self Modulating Technology

If you like the idea of heating your water with gas but aren’t sold on the idea of having an electric-powered device inside (or outside) your house, don’t worry! There is still an option for you!

The EcoSmart ECO 18 Tankless Water Heater is one example of a tankless water heater that saves homeowners money by using both gas and electricity to power its heating element. It’s also estimated that you’ll save between 30 – 50% on gas or electricity costs by switching to a tankless water heater.

3. Installation Costs

Although you can install one yourself, it’s highly recommended that you hire a professional plumber because tanks are heavy and difficult to maneuver without the proper tools. The average installation costs anywhere from $300 – $1,000 for most models.

But keep in mind that you’ll also need to purchase an electrical outlet if this is your chosen heating source. And depending on the layout of your home, there may be other factors involved with installing a tankless water heater, so be sure to read all of the product literature before making your purchase!

4. Low Water Temperature Issues

If you’ve ever tried taking a shower with water that comes out of your faucet at a lukewarm temperature, you know how frustrating this can be. Luckily there is an easy fix for this problem, and it’s called a recirculation pump.

All you have to do is attach one end of the wire (provided in most kits) to the incoming cold water and the other end to an outlet. This allows hot water from your tankless heater to flow back through the pipes and heat up colder water before it reaches your faucets or showers.

Bosch Electric Mini-Tank Water Heater Tronic 3000 T 4-Gallon (ES4) - Eliminate Time for Hot Water - Shelf, Wall or Floor Mounted

5. Energy Star Ratings Replaced

Although tankless water heaters were once Energy Star rated devices, they are no longer included in product comparison tools such as this. You’ll still want to check with your local utility company for rebates, tax credits, and other incentives that can help save you money in the long run.

6. Drain Pipe Issues

If you’re installing a tankless heater yourself, the chances are that you’ll have to install a separate drain pan. This is true because most tanks include this accessory in their standard construction materials.

Without it, condensation forms on the bottom of your tankless water heater when it is not being used which can cause damage over time due to corrosion or rust. 


7. Maintenance Costs 

Although they don’t require an annual service call like traditional storage tank heaters, some upkeep costs are associated with having one installed in your home.

Some models feature both internal filters and anti-scaling materials that need to be replaced regularly to ensure optimal performance. Depending on which brand you choose, you may also have to replace the heating elements themselves after a certain time frame.

8. Not Economical In Cold Climates

Although some tankless water heaters include a drain pan, this accessory is only necessary if your home’s utility bills are included with your rent or monthly mortgage payment, so it can be expensive to maintain.

If you live in an area where the average daily temperature during the winter months is below 40 degrees Fahrenheit, you’ll probably want to stick with conventional gas or electric-powered storage tanks. This type of heater is much more cost-effective in colder climates because it doesn’t rely on ambient air temperatures like its tankless counterparts do.

Stiebel Eltron 239223 Tankless Water Heater – Tempra 29 Plus – Electric, On Demand Hot Water, Eco, White, 23

Tankless Water Heaters vs. Storage Tank Water Heaters

While the upfront costs of a tankless water heater may be slightly higher than what you would pay for your average gas or electric storage tank, you’ll end up saving money in the long run. If you’re looking to cut down on your monthly energy bills, this type of device can help lower your carbon footprint without sacrificing too much hot water!

Tankless Water Heaters vs. Gas Water Heaters

If you haven’t done an energy audit on your home, now may be the perfect time to do so. By choosing a tankless water heater, you’ll save money in the long run because they don’t waste heat at all hours of the day – even when no one is around or when it’s below freezing outside!

The fuel source for this type of unit is constantly being recharged by burning natural gas, which means that you get hot water faster than you would if it was stored in an insulated tank somewhere in your basement.


How Do Gas Tankless Water Heater Work?

Tankless water heaters are still considered high-end appliances even though they’ve become far more commonplace in the last decade. There are an estimated 50 million homes using one or more of these types of units worldwide and counting, so it’s important to understand how a gas tankless heater works before you make a purchase.

Installation & Maintenance

Although there aren’t many moving parts associated with this type of equipment, installation is still a job best left up to a professional. You’ll want to take your time when installing a gas hot water heater to prevent any leaks from occurring, which can lead to serious damage if it isn’t taken care of immediately.

If you’re having trouble with installation or maintenance, don’t be afraid to get in touch with the manufacturer for more information.

Hot water is an essential part of our everyday lives because it helps us wash away dirt and grime, but did you know that it can also be used to heat your home during the winter months? Because tankless water heaters don’t store any hot or cold water on site, they are much more efficient than conventional tanks, which means that you’ll save money in the long run. 

Final Words

Although tankless water heaters are certainly a solid investment if you live in an area that experiences mild winters, they may not be the best option for those who live in extremely cold climates. If this sounds like you, then you’re probably better off sticking with a standard storage tank system.

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