The demand or tankless system does not have a tank that stores hot water. A tankless system heats the water as needed, so there are no storage losses as with a conventional tank system. For this reason, tankless water heaters have a higher efficiency rating than any other residential water heating system.

While the tankless or demand water heaters are relatively new to United States, they have been manufactured and installed for many years in Asian and European countries.

A natural gas tankless water heater has one of the highest efficiency ratings for a residential water heater – from a .82 to .88. Most households will save approximately 1/3 of their annual water heating costs with a natural gas tankless water heater.

One disadvantage of the gas-fired, tankless water heater is the cost to purchase and install - it will cost about 2-1/2 times more than a standard tank water heater. However, a tankless unit will pay for itself in just a few years or less, and the life expectancy is longer – 15 to 20 years.

With a tankless water heater, you should never run out of hot water again. Depending on the model of tankless unit installed, the typical gallons per minute of hot water delivered is 6 to 8.5 – that’s 360 to 510 gallons per hour.

A tankless unit can be installed on an interior (garage/attic or where it can be properly vented) or exterior wall. It does not take up valuable space in your home.

The temperature setting for a tankless unit is simple to set. An electronic keypad typically comes with each unit which allows for touch-button controls. The electronic keypad performs additional functions including service information and error codes.

Tankless water heaters should be installed by a trained appliance installer or plumbing contractor. There are several considerations a trained installer should take into account when installing a tankless water heater:

• Hot water usage at your home to ensure the proper model is chosen.
• Special venting materials are required.
• Make sure there is adequate natural gas pressure to your home. Tankless units require additional gas pressure to operate properly.
• The climate where you live could affect the hot water output and where the tankless unit is installed. If you live in an extremely cold region or high altitude area, follow the manufacturer’s instructions. Additional parts may be required. In addition, the amount of delivered hot water is reduced if the temperature rise is more than 50 degrees.

Electric tankless units are available, but they are not recommended for providing hot water to a whole house. An electric tankless can be a solution for when a small amount of hot water is needed to a single source.

Electric tankless units are expensive to operate and the electrical system required to power this equipment is expensive to install. In addition, electric tankless water heaters can only produce a relatively small amount of hot water. They require a large amount of electrical current to produce a significant amount of hot water.