Tankless Water Heater Pros and Cons

Tankless Water Heater Pros and Cons

As part of my skill set in a previous career, I spent time installing, maintaining, and troubleshooting tank and tankless water heaters in commercial buildings. Depending on the application, there is little to no difference between the equipment used commercially and for residential homes.

As a homeowner, this intrigued me. I thought “wouldn’t it be cool if I could have a tankless water heater- I could save space in my laundry room and save money by not having to heat water 24 hours a day.” At the time, it seemed like a great idea until I had more experience with tankless water heaters and the challenges that come along with them. If you want the cheapest and easiest to maintain solution for your home, a tank water heater is the way to go.

Is it Really More Efficient?

When searching tankless water heater efficiency,  results will show claims of efficiency savings of anywhere from 30 to 70 percent. These numbers are very generic and (often, but not always) do not take into account comparison factors such as: the size of the tank, the gas burner size (or electric heating element size if all-electric), actual gas consumption, etc. These numbers are on a case-by-case basis, and depending on the application, may actually show that a tank water heater is cheaper per year to operate than a tankless water heater.

Cost of Tankless Water Versus Tank Water Heater

Tank water heaters are relatively simple and do not have a lot of parts. There’s a tank, electric controls with heating element (for all electric), gas valve with controls, burner, and relief valve. If the tank water heater is high-efficiency, it adds a control board, a few sensors, and an induction fan. Tankless water heaters have a lot more parts, and therefore cost more to manufacture. As of the time of this writing, the average cost of a 38-40 gallon, 36,000 BTU tank water heater is $500 to $800. The average cost of an equivalent tankless heater is $1800 to $4500. That is a significant difference- it will take many years to recover the difference in initial cost.

Water Heater Installation Costs

Read on to compare the costs associated with tank and tankless water heaters. Oh, and prepare yourself…The ride might get a little bumpy.

Tank Water Heater Installations

When it’s time for a tank water heater to be replaced, the technician can easily come very close to matching the old water heater dimensions and specifications with the new water heater. Unless there was a premature failure of a tank water heater and the exact same brand and model is used to replace it, some minor piping and exhaust flue piping changes may have to occur. This is very minor, and usually adds less than an hour to the installation time. Overall, the cost to install a tank water heater is very low due to the similarity between the old and new units.

A very important consideration is that the old gas water heater may have been all mechanical and not had external external electric run to it.

In purely mechanical water heaters, the pilot and main flame heat up a thermocouple, converting heat energy to a small electrical current that powers the gas valve. That energy conversion allows the water heater to fully operate whether the house has power or not. The only time it would not work would be a situation where the gas company could not supply gas during a power outage. When converting to another tank water heater, this functionality can be preserved. When switching to tankless, it cannot.

Tankless Water Heater Installation

A low install cost is not the case with tankless water heaters. Significant plumbing changes need to be made to install the manufacturer’s recommended valves and piping. If a gas-powered tank water heater is being replaced, the gas piping will need to be upgraded to allow for the extra gas volume required by the tankless heater.

Gas-powered tankless water heaters need electrical power to operate, and if there is not adequate power nearby, will require an electrician to install electrical wiring to the tankless heater. Lastly, new intake and exhaust flue piping will need to be installed to match the tankless water heater’s requirements.

Electrical-only tankless water heaters are a little bit simpler in that they do not require exhaust flue piping or a gas line upgrade, but they will still require significant plumbing changes and an electrical circuit upgrade.

Cost Comparison

According to Home Advisor, the current national average for a tank water heater installation is $900, and a tankless water heater installation is $3000. Keep in mind that if you live near a major city, your cost will most likely be higher for tank and tankless water heater installations.

To see how close those numbers were to the District of Columbia area, I spent two days polling every local residential plumbing company I could find in a phone book and online, and averaged the results. Doing this was easy, and only 3 out of 113 companies asked to come see the house before giving me an estimate.

My average for a tank water heater installation was $1600, and the average for a tankless installation was $4100. That is much higher than the claimed national average, and should give an idea of cost if living near a major city.

You might be saying “Well, I don’t care about initial cost. I was already prepared for that.” Before completing Amazon checkout on that shiny new tankless water heater, read on for some associated concerns and costs of ownership.

Interested in knowing the hidden costs of tankless water heaters? Continue on to the next page to find out.