Tankless water heaters - a good choice?

Our water heater quit -- and now we're trying to decide between a tankless (on demand) water heater and a standard model.

Our 1909 house is very small, less than 1,300 square feet -- and a tankless heater would conserve space. But tankless heaters cost more and we'd need to make adjustments to our electric panel. A standard heater would use more energy but they're relatively cheap and no modifications to the house would be needed. My husband thinks we can power down the heater when we're not using the house. Any opinions?

Yes, but first a question: How are you managing without hot water? That can't be easy!

But, assuming you can hold out for a while longer, you're smart to do your homework.

A water heater can account for up to 25% of your total energy bill.And with energy costs rising as rapidly as they are you may be better off considering something called the "life-cycle" cost of each option. That includes the price of the heater as well as how much it costs to run it over its lifetime.

Using this yardstick, a high-efficiency, on-demand water heater fueled by gas is one of the best choices you have. These water heaters have a lower life-cycle cost than either conventional gas or electric water heaters. And they last longer.

Here are the details, using costs calculated by the American Council for an Energy-Efficient Economy.

Conventional tank heaters
A conventional gas water heater costs about $380, uses $179 in fuel a year and should last about 13 years. That's a total (life-cycle cost) of $2,707. A standard electric water heater costs more than twice as much to run and has a life-cycle cost of $5,680. Ouch!

Yes, you can turn down a conventional heater when you're not around. You can even shut it off completely as long as you know temperatures won't dip below freezing. But it takes time and energy to heat all that water back up next time you need it. It's not exactly a convenient solution.

Tankless savings
Tankless heaters use less energy because they're not trying to keep a tank of water hot all the time. A high efficiency gas heater without a pilot light costs only $90 a year to operate, and it should last 20 years. That adds up to a life-cycle cost of $2,370 - more than $300 cheaper than a standard gas heater.

Electric tankless heaters, by the way, aren't nearly as attractive. Their life-cycle cost over 20 years is an estimated $5,982 - about the same as a conventional electric water heater.

Pros and cons
There are two other things to like about gas tankless heaters. As you point out, they don't take up much room. And if you locate the heater close to the shower or sink you won't be waiting forever for hot water to arrive.

On the down side, on-demand heaters are a lot more expensive initially than conventional heaters. In addition, you'll have to run a gas line into the house if you don't already have a gas appliance.

Bottom line? Of the two options you mention, go with a gas tankless model. Its advantages far outweigh its few problems. Just make sure to read the fine print. Make sure your heater will get water hot enough and deliver enough of it to suit your needs.

All of this assumes you plan on holding on to your house for a while. If you're headed for a quick sale, choose a conventional heater.

One other attractive option
But before deciding, consider one other possibility.

If your home is heated with hot water radiators or baseboards, your best choie may be an indirect water heater.

With an indirect water heater, hot water from the boiler runs through a separate, insulated tank where it heats water for domestic use. When connected to an efficient gas or oil boiler, an indirect water heater has the lowest life-cycle cost of all - a total of $1,900 over a 30-year life span.

For more reading, check the web sites for the American Council for an Energy-Efficient Economy (www.aceee.org) and the U.S. Department of Energy (www.eere.energy.gov) Both have valuable information for sizing and choosing your new water heater.

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