I’m convinced this technology is ideal for many homes. Trouble is, you need to understand a few issues up front before spending a lot of time considering a tankless heating system for your own place. I know because I’ve wrestled with these issues several times, and they always turned out to be deal breakers.

Tankless water heaters save energy by eliminating standby losses associated with traditional, tank-style heaters. Even with excellent insulation around the tank, energy is inevitably lost to the surrounding air over the course of time, even when you don’t use any hot water. Tankless systems, on the other hand, heat water only as you demand it by turning on the tap. That’s why these units are sometimes called ‘on demand’ water heaters.

At the moment there are two kinds of tankless systems on the market: electric and gas-fired. Both types can work well, but the logistics of installation sometimes poses problems that aren’t always easy to see ahead of time.

The big challenge faced by any kind of tankless water heater is the short time available for delivering thermal energy to the stream of cold water flowing through the unit. To be useful in a typical household situation, a tankless heater must be able to raise the temperature of 20 L of water by a whopping 50C in just one minute. That’s a huge energy transfer, and it’s the Achilles’ heel of electric tankless heaters.

As electricians have told me on several occasions, my 200-amp electrical service isn’t sufficiently large to handle the demands of a tankless electric heater along with all the other electrical loads connected to it. But even if it had been, I’d still be cautious about installing an electric tankless heater because of probable changes in the way electricity will be metered in the future. Right now residential customers only pay for the total quantity of electricity used, with no special premium applied to peak demand. But the huge current required by electric tankless heaters during operation is taxing on the grid, and something that the authorities will likely discourage in the future when smart metering systems are implemented.

Then there’s the issue of how much hot water an electric tankless system can actually provide. For the various models I’ve investigated, water temperature would probably drop to lukewarm whenever more than a couple of hot water taps were turned on at the same time. Who wants that?

The huge, short-term energy demands of a tankless heater make gas a much more practical energy source than electricity. Trouble is, not all of us have convenient access to gas. I don’t, and though I could’ve opted for a propane fired tankless heater, that choice would have required the installation of an outdoor propane tank and supply lines. I almost considered doing this, too, then I remembered how very easy it is to fix a tank style water heater, and how troubleshooting any kind of tankless system requires a specialized technician. That did it for me.

All this said, I’m convinced that tankless water heaters are a great idea in many situations. The technology behind gas-fired systems is mature and efficient. Most units are about half the volume of a Blue Box and they operate quietly enough that they’re practical to install just about anywhere. Too bad my place isn’t one of them.


Steve Maxwell is Canada’s Handiest Man. An award-winning home improvement authority and woodworking expert, he’s truly a treasure of home wisdom and the ultimate home GURU. Be sure to visit Steve Maxwell’s Site.

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