How Tankless Water Heaters Work

In order to understand how a tankless water heater works, it's important to know how a standard tank heater operates. In a traditional heater system, there's a large tank that holds and heats water. In order to give you hot water when you need it, the tank continually heats the water to maintain a constant temperature. The energy used to keep the water hot even when it's not being used is called standby heat loss. You can get more information about tank heaters in How Water Heaters Work.

Tankless systems avoid standby loss by heating incoming water only as you need it -- they're also referred to as "on demand" water heaters for this reason. The elimination of the standby heat loss is what makes a tankless system more efficient, but we'll get to that in more detail a little later.

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In order to get you that piping-hot shower when you want it, a tankless water heater uses a powerful heat exchanger to raise the temperature. A heat exchanger is a device that transfers heat from one source to another. There are heat exchangers in your air conditioner, refrigerator and car radiator. In this case, it transfers heat generated by electric coils or a gas-fired burner to the water that comes out of your faucet. This exchanger is activated by the incoming flow of water. So when you turn on your hot water tap, the incoming water circulates through the activated exchanger, which heats the cold water to your preset temperature. All you need then is some soap and shampoo and you're ready to wash, rinse and repeat.

Tankless systems come in two varieties -- point-of-use heaters and whole-house heaters. Point-of-use systems are small and only heat water for one or two outlets -- say, your kitchen sink. Because of their size, they can fit under a cabinet or in a closet. They're beneficial because they can be installed closer to your outlet and avoid water loss due to lag time. Lag time is the amount of time it takes for the hot water to reach your faucet. In large houses, the lag time can be significant, sometimes as long as several minutes. This means that while your water heating bill may be going down, your water consumption will be going up, which is something you should consider when debating whether or not to go tankless. Whole-house systems are larger, more expensive and can operate more than one outlet at a time.

With tankless water heaters, you can choose from electric, propane or natural gas models. Point-of-use models are generally electric, while whole-house systems are usually powered by either natural gas or propane. Which model to go with and what heating source you should use depends on many different factors. We'll take a closer look at those factors in the next section so you can make an educated decision when it comes time to purchase your tankless heater.

Deciding what kind of tankless water heater to go with depends on a couple of things:

The Federal Energy Policy Act of 1992 set flow limits at 2.2 gallons per minute (GPM) at 60 pounds per square inch (PSI) for household water fixtures [source: U.S. Dept. of Energy]. Some people also use aerators to further limit the flow of water. Tankless manufacturers size their units based on the temperature rise needed for a given flow rate.

To calculate your flow rate, add up the GPM for the household water fixtures you'll need at one time:

Now figure out your temperature rise by calculating the difference between the temperature of your groundwater and what you'd like the end result to be. For instance, if you have a groundwater temperature of 70 degrees and you like your showers to be a pleasant 110 degrees, that's a rise of 40 degrees. Your ground water temperature is roughly the same as your average yearly air temperature.

Once you have your temperature rise and know your flow rates, then you ­know what size and what kind of water heater will work best for your needs. It's important to remember in this calculation that you'll be measuring the amount of hot water you'll need at one time. Tankless systems never run out of hot water, but if you want to turn on every fixture in your house at the same time, the hot water will be split among them. So estimate the number of fixtures you think you'd need at one time -- chances are it won't be every fixture.

Let's say you live in an older home that has been partially remodeled. You estimate that you'll need to heat water for your kitchen faucet, one bathroom faucet and two shower heads at one time. One of the shower heads is newer and meets the 1992 standard, while the other is older and has a flow rate of roughly 5.0. The rest of your fixtures also meet the 2.2 standard. Add 2.2 + 2.2 + 2.2 and 5.0 for a total flow rate of 11.6. You live in Miami, so your groundwater temperature is roughly 72 degrees and you like your showers at 100 degrees. This means you should look for a tankless system that can heat 11.6 GPM at a rise of 28 degrees.

Gas- and propane-powered heaters typically provide more juice than electric models and are generally used for whole-house systems. Electric models are more common in point-of-use scenarios, although sometimes people prefer to use two electric heaters in parallel instead of one larger gas-powered unit. If you want a shower in your pool house or hot water for an outdoor kitchen, you might be a good candidate for a small electric tankless heater.

In the next section we'll look into some of the benefits and negative aspects of going tankless.

If you're considering making the switch to a tankless water heater, you should carefully weigh the pros and cons first.

Benefits:

Drawbacks:

Other Considerations:

If it's time to get a new water heater and you want to know if switching to a tankless unit will save you money in the long run, compare the yellow "Energy Guide" stickers on your current heater and the tankless model that best suits your needs. This sticker will give you a good idea of what you can expect. Then weigh in all the expense factors that come with going tankless, including venting costs and gas line or electricity upgrades. Once you know the total costs involved, compare this to the cost of a new tank model and then figure out your energy costs for each. The amount of time it will take to make back your money with your monthly savings is called the payback period. You should also consider that a storage tank heater will need to be replaced again in about ten years -- you'll get roughly 15-20 years of use from your tankless model.

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