All water heaters not created equal

After your heating system, heating of water is the second greatest energy user in American homes, accounting for 15.5 percent of residential energy consumption, the federal government says. In recent years tankless or “on-demand” water heaters have gained popularity.

If you are in the market for a water heater, here are some facts to consider:

Tankless types: There are two types of tankless water heaters. One provides hot water to a single area of the house, such as a bathroom. This is called a "point of use" water heater. A "whole house" tankless water heater meets all of the hot water needs for an entire household.

Tankless advantages: According to manufacturers, tankless water heaters require less space, supply instant hot water, supply an unlimited, continuous, flow of hot water and reduce energy costs.

Let’s take a closer look at these claims.

Less space: There is no question that tankless water heaters require less space than conventional storage heaters. This can be a real advantage for homes where storage space is limited. But money, not space, is typically the main factor in the purchase of a major appliance.

Instant hot water: This claim is true for point-of-service tankless water heaters. Depending upon the size of your house, this claim may be less true for whole house heaters. As with conventional storage water heaters you will have to run the cold water out of the pipes before the hot water reaches the fixture.

Unlimited, continuous flow: A tankless heater heats water on demand and is not limited to the amount of water held in a tank. However, there are some limitations. According to the U.S. Department of Energy, tankless water heaters provide hot water at a rate of 2 to 5 gallons per minute. Gas fired heaters will supply more water than electric powered heaters. This can be limiting for larger households where more than one shower and/or hot water using appliance is operating at the same time. In this case the volume of water flow through the heater may be greater than the heater can keep up with. The result is cooler hot water. In addition, a tankless water heater may not fire when a small amount of hot water is used like when washing your hands. The performance of a tankless water heater can also vary by season.

Reduced energy cost: There is no doubt that holding water at a certain temperature in a conventional water tank uses more energy than a tankless heater that heats water only when it is needed. The question is, does this savings offset the greater upfront cost of a tankless water heater? Not only are tankless water heaters themselves more expensive, but additional costs can be incurred from the need for larger gas lines and vent pipes.

Conclusions: Armed with the above information, which should you choose? If you have a large family and live in a large house, a tankless water heater may not be your best option. If you are a one- or two-person household and use less hot water you may want to go with a tankless heater. There is no question that the tankless heater will save energy and by installing one you will be aiding the environment.