Tankless Energy Savings | How Much Can You Save Going Tankless?

There are many reasons for choosing a tankless water heater (a.k.a. an on-demand water heater) and one of the largest is the significant cost savings you will realize on your home energy bills. Continuous hot water on demand and more money in your pocket – that’s a winning combination you can enjoy while taking your next long, hot shower!

Tankless Water HeaterThe Bottom Line on Tankless Water Heater

So how much can you save by using a tankless  water heater? The bottom line is that you will enjoy energy savings of 15% to close to 50% by using a tankless water heater. The wide range from 15% to 50% is based on several factors including the age of the conventional water heater you are replacing, the efficiency of the on-demand water heater you choose, and whether you use a whole-house tankless unit of several zone or point of application units.

Why are Tankless Water Heater Systems More Efficient?

The primary reason that a tankless water heater uses less fuel is that they do not heat water whether it is used or not. If you have a 40 gallon tank-style water heater and it is set to 110 F, it’s going to keep the water at that temperature while you are all sleeping, gone during the day, away for the weekend, etc. It will heat the water and incur what are known as “stand-by losses” when the system is going through a heating/idling/cooling/heating/idling/cooling cycle, for hours or days on end in some cases.

Tankless models heat water when it is needed, so the only potential stand-by losses are those associated with heated water cooling in your home’s pipe system after the hot water tap is turned off, if you use a whole house tankless unit.

Save More with Point of Use or a  Zone Tankless Water Heater

In some homes it makes the most sense to use a whole-house tankless unit, due to the home’s construction, space requirements, or the lower initial cost. But for pure energy savings, using more tankless units closer to the actual points of use is the way to achieve the highest energy savings possible. A tankless water heater for each bathroom, one for the kitchen and one for the laundry/utility room would produce greater efficiencies than a single whole house unit. Using several units would eliminate virtually all stand-by losses and you wouldn’t waste water – and money if it is metered – while it runs down the drain awaiting the arrival of the hot water.

Some Specifics

First of all, gas-fired tankless water heaters are generally less expensive than electric models, so if you choose a whole house unit and have a gas supply, that would be the way to go. If you are going to install several zone/point of use models you’ll have to factor into the equation the cost of running gas line to the various locations versus simply running electrical lines which are likely close by already. For a ranch-style/one-story home the extra cost will not be great for running gas pipe. In a two-story or more it can be cost-prohibitive or simply impossible due to the home’s construction.

Secondly, let’s compare a whole house tankless system with a 40 gallon conventional water heater. Let’s say the tankless model has an energy factor of .98 (98 cents of every dollar is used to heat water rather than being lost/wasted) and the tank-style heater has an energy factor of .88. These energy factors are both on the upper end for their kinds of appliances. Consider using them in a busy home where in a typical day 3-5 showers are taken, 10 hand-washings occur, 1 load of dishes is done by hand and 2 loads of laundry are run through a machine that does not heat its own water. Does that sound like your home? The number of gallons of hot water in this example would be about 120 for the day.

Comparing an electric tankless to an electric conventional water heater the average home would save approximately $315 per year with the tankless unit, $335 against $650. That’s a savings of 44%! If both appliances were gas-fired the tankless would cost $225 to run for the year and the conventional hot water would cost $410, a difference of $185, or 45%!

Again, while the initial costs would be greater, using 3 or more smaller tankless water heaters in place of one conventional water heater would yield energy savings that may be as great as 50% or higher! Remember that at least during the first part of 2011 the Federal Tax Credit program is still in force. This can be a huge savings off your installation of a tankless water heater.

If you’ve already made the switch our readers would love to hear what your actual energy savings have been. Let us know how old/how efficient your conventional water heater was, what you replaced it with, and the results you’ve received. Any information that will help others “do the math” for their own homes would be much appreciated! If you have a question, send that along and perhaps other readers will offer solutions!

A tankless water heater will save money!

quote banner


2 Responses to “Tankless Energy Savings | How Much Can You Save Going Tankless?”
  1. Fred says:

    My wife and I are now “empty nesters” but live in a large home with 3 bathrooms and a 70 gallon (20 year old) gas water heater. I looked at a tankless gas water heater to replace our current tank but everyone is recommending an expensive unit ($3,000 installed and permitted) because we have so many bathrooms. We found a low GPM unit that is only $750 (actual cost without install, permit or tax) but we have been advised this will only serve one bathroom at a time.

    We are thinking about adding a low GPM tankless gas water heater (sufficient for one shower at at time) with manual valves to allow bypassing or parelling with our existing tank heater. This way, we can take one shower at a time with the tankless unit and save money (I’m assuming we will save about $40/month) in this mode. When our kids come home over the summer, we will open the valves and turn on the gas tank heater so multiple showers can be taken simultaneously.

    Does anyone see a problem with this approach? Any issues with resale?

    Any help would be appreciated!

    • DaveT says:

      Fred: Empty Nesters. I have heard of them. My 4 are all grown but keep coming back lol. I hope we get some good input on your question. I was wondering why you don’t consider a single point use tankless heater. You could go electric and avoid the need for venting. it could be used in one bathroom and it would be far less expensive then taking on the whole house at one time. If you find this works well then you could add more single point type units as you feel they are needed.

Join In The Conversation

Hey, we love to hear from our site visitors, hint-hint... That's You!
Join in and share your comments below.