14 Pros and Cons of Going Tankless

a tankless water heater on a shower wall

Tankless water heaters, sometimes referred to as on-demand water heaters, are becoming an increasingly popular alternative to traditional water heaters. 

Traditional water heaters use a vast amount of energy by heating up a large volume of water at once. These water heating systems also heat the water continuously to ensure hot water is available when the hot water faucet is opened.

In contrast, tankless water heaters only heat smaller quantities of water when needed. They are not constantly heating a water storage reservoir. This means they use less energy overall, resulting in lower energy bills.

In this post, I’ll highlight what you need to consider when deciding whether a tankless water heater is right for you and your home.

Tankless Water Heater Pros and Cons

Woman turning regulate knob, adjusting temperature on boiler

On-demand water heaters have been in use in Europe and Asia for many years, but not until the late 1990s did they become popular in North America.

Today, they are considered a viable option for homeowners and business owners who want to save energy, reduce their carbon footprint, and take advantage of many other benefits offered by this water heating system.

Pros of Tankless Water Heaters

Instant tankless electric water heater installed on grey tile wall with input and output pipe outlet and elcb safety breaker system and silver shower

On-demand water heaters offer several advantages over traditional water heaters:

1. Tankless water heaters are energy efficient.

These water heaters are considerably more energy-efficient than traditional water heaters, saving between 20% and 30% on energy costs. This is mostly a result of the way that tankless water heaters work.

The savings tankless water systems offer in energy costs depends on the amount of hot water you typically use in your home.

Average homes use about 41 gallons of hot water daily, which could see a greater energy efficiency of between 24% to 34% compared to traditional water heaters. Households with heavy hot water usage, above 80 gallons per day, may see a reduced energy efficiency of between 8% and 14%. (Source)

If you use quite a lot of hot water, the lower energy savings may not warrant installing a tankless water heater system, but some of the other benefits may sway your decision in favor of this option.

2. Continuous hot water.

With a tankless water heater, you never have to be concerned about running out of hot water. The heater will continue to provide hot water as long as it is needed, so you can enjoy a never-ending hot shower.  

In contrast, a traditional water heater can run out of hot water if all the water in the tank is used up. The heating element in these systems cannot heat the water up fast enough to provide an endless hot water supply.

3. Longer lifespan

Tankless on-demand water heaters typically have a longer lifespan than tank-based water heaters, with some lasting up to 20 years or more. Traditional water heaters, on the other hand, typically last around 10-15 years.

The tank-based water heating systems tanks can be eroded and corroded by the water and the constant heat in the tank.

The heating element of the electrical components on a tank-based system is activated more frequently than in a tankless system, which can cause the element to burn out or break down.

This means that you’ll save costs in the long run with a tankless water heater by not having to replace your water heater as often, and you will have fewer breakdowns in your water heating system.

4. They save space

Tankless water heaters are much smaller than tank-based options, making them take up less space than electric water heaters.

This reduced space requirement makes tankless water heaters ideal for small spaces. They can be mounted on a wall, taking up much less space than a traditional tank-based water heater.

5. Lower risk of leaks and water damage

Traditional water heaters are known to leak over time or even burst, potentially causing water damage to your home.

Tankless water heaters are less likely to leak, reducing the risk of water damage; in the rare case they do leak, there is no large storage container that can dump large quantities of water, which can cause significant water damage.

6. Reduce your carbon footprint

Tankless water heaters produce fewer carbon emissions because they use less energy. The higher energy efficiency of these water heaters reduces the overall carbon footprint of your home.

This makes them a more eco-friendly option, and with a reduced energy cost, they are easier on your wallet too.

7. There may be tax incentives 

In some cases, you may be eligible for tax incentives or rebates when you install a tankless water heater. Some governments offer a tax rebate on the installation costs of tankless water systems and an annual tax credit after installing the tankless system.

The rebates are not the same everywhere in the US, so you’ll need to check with your local government or utility company to see if there are any available programs.

8. Provide better control over water temperature 

A tankless water heater gives you greater control over the temperature of your hot water. This means that you can adjust the temperature to your liking in different rooms in your house.

You may have a higher temperature setting for the tankless system in the kitchen for washing dishes than for your shower in the bathroom.

9. Tankless water heaters require less maintenance

Tankless water heaters have fewer parts that can fail or develop problems than storage tank water heater systems.

Tankless water heaters do not work continuously but provide water on-demand, which reduces wear on the heating mechanism and reduces the risk of component failure.

10. Reduce the risk of leaking pipes

Tankless water heaters can be positioned anywhere in the home where you need access to hot water. This allows the hot water supply to be closer to where you need it, preventing the need for long pipes and reducing the risk of leaks more common in long pipes.

11. They are not only for the bathroom

Tank-based water heaters must be installed in a centralized location in the home to get hot water where it is needed in various locations.

Tankless systems can provide hot water wherever needed, from outdoor homesteading kitchens to outdoor showers to rinse off after swimming in the pool.

Cons of Tankless Water Heaters


While tankless water heaters offer several advantages, there are also some potential drawbacks:

1. There are higher up-front costs

Buying and installing tankless water systems are typically more expensive than purchasing and installing traditional water heaters.

A factor that may affect the initial up-front cost is the number of heating units you need to install. If you are installing a separate water heating unit for your bathrooms and the kitchen, the initial cost compared to tank storage systems may be prohibitive.

Many homeowners install a combination of tanked and tankless systems, depending on the demand and the areas of higher hot water use in the home.

2. Additional supply services may be required

Installing a tankless water system may require the installation of additional services, such as gas lines or venting systems, depending on the method used to heat the water.

Electrical options may require wiring new electrical outlets for the water heater. These additional requirements can increase the initial cost of installing these systems.

3. Limited hot water flow rate

While tankless water heaters provide an endless supply of hot water, they do have a limited output. This means that if too many appliances or fixtures are using hot water simultaneously, and you have purchased a unit that cannot accommodate the required flow rate, the water may not be as hot or run out more quickly. (See section below called “What Size Tankless Water Heater Will You Need?”)

Gas vs. Electric Tankless Water Heaters


Regarding the choice of tankless water heaters, there are two main types available on the market: gas and electric. 

Both types of tankless water heaters offer several benefits over traditional tank water heaters, such as increased energy efficiency, endless hot water supply, and a smaller carbon footprint.

However, significant differences between gas and electric tankless water heaters can influence which type is the best fit for your home.

Gas Tankless Water Heaters

Gas tankless water heaters are: 

  • Powered by natural gas or propane and use heat exchange to warm the water as it travels through the system.
  • Will continue to work when the electricity grid is down.
  • More energy-efficient than electric tankless water heaters, making them an excellent option for homes that have high hot water demand or are located in colder climates.
  • Have a higher flow rate than electric models, making them a better choice for larger households or homes with multiple bathrooms. A gas-powered water heater has a flow rate of up to 5 gallons (22 liters) of water per minute at a temperature of 70°F (21°C).
  • More expensive than electric models due to the higher purchase price, installation cost, and the need for a gas line.
  • Require more maintenance than electric versions and must be vented properly to avoid dangerous carbon monoxide buildup.

Electric Tankless Water Heaters        

Here are the main characteristics of electric tankless water heaters:

  • They are powered by electricity and use heating elements to warm the water as it passes through the system.
  • They are generally cheaper to purchase than gas versions. They are also cheaper and easier to install since they don’t require a gas line.
  • Don’t produce emissions, making them safer.
  • Don’t require monitoring gas cylinder levels. However, they will not work when the grid goes down.
  • Have a lower flow rate than gas models, which can limit their use in larger households or homes with multiple bathrooms. An electric-powered water heater has a flow rate of up to 2 gallons (9 liters) of water per minute at 70°F (21°C).
  • Less energy-efficient than gas models, which can result in higher energy bills over time.

How to Chose a Water Heater


Here is our comparison list of the advantages and disadvantages of boiler-style systems compared to tankless water heaters. I used the electric water heater in the comparison.

Gas-Powered TanklessElectric-Powered TanklessGas-Powered Storage TankElectric-Powered Storage Tank
How They WorkOn-demand water not stored in tankOn-demand water not stored in tankWater stored in 30-60 gallon tanksWater stored in 30-60 gallon tanks
Price and Installation CostUnits are expensive and installation costs more than storage tankUnits are expensive and installation costs more than storage tankLess expensive; Easy DIY installationLess expensive; Easy DIY installation
PerformanceProvides a constant supply of hot water at 120 degrees Fahrenheit (48 degrees Celsius)Provides a constant supply of hot water at 120 degrees Fahrenheit (48 degrees Celsius)Gives a steady supply of hot water at 120 degrees Fahrenheit (48 degrees Celsius)Gives a steady supply of hot water at 120 degrees Fahrenheit (48 degrees Celsius)
Operating CostsAnnual operating costs average $195Annual operating costs average $535
Annual operating costs average $245Annual operating costs average $580
Energy ConsumptionExcellentFairVery GoodFair
Energy EfficiencyExcellentExcellent GoodGood
MaintenanceOnce a yearOnce a yearUnder warranty for 15 yearsUnder warranty for 15 years
Size of UnitSmall and compactSmall and compactBig and bulkyBig and bulky
LocationAny space if connections are supplied, indoors or outdoorsAny space if connections are supplied, indoors or outdoorsOnly where size allowsOnly where size allows

Both gas and electric tankless water heaters offer several benefits over traditional tank water heaters. However, the decision between gas and electric tankless water heaters ultimately depends on factors such as energy efficiency, upfront cost, and household size.

A gas tankless water heater may be your best option if you live in a colder climate or have a larger household. If your budget requires a more affordable option or you have a smaller household, an electric on-demand water heater may be the way to go.

What Size Tankless Water Heater Will You Need?

The size of a unit is gauged by the flow rate. The more outlets the water heater must supply simultaneously, the greater the flow rate required from the water heater to meet the demand.

Each hot water outlet in your home has a different flow rate demand. The following table will give you an idea of how to size your tankless system for your hot water demands.

Low-flow faucet (guest bathroom basin)0.5 GPM
Bathroom faucet (basin and bath)1 to 2 GPM
Kitchen faucet1.5 GPM
Shower2 to 3 GPM
Dishwasher1.5 to 2 GPM
Washing machine2.0 to 2.5 GPM

Using this information and determining how many outlets will use hot water, you can estimate the best tankless water heating system you need.

For example, if you run two showers and the washing machine at the same time, your tankless water heater must be able to deliver at least 8.5 GPM to prevent temperature and flow degradation.

In some cases, installing smaller point-of-use (POU) tankless systems for heavier-use locations, such as washing machines and dishwashers, may be more cost-effective and energy-efficient.

Is a Tankless Water Heater Good for the Bathroom?


Tankless water heaters are a good choice for the bathroom, but they may not be for everyone. The on-demand water heating is useful if you have many people showering one after the other. The tankless system will not run out of hot water, requiring some people to wait till the water re-heats.

The best tankless water heater for a bathroom is a dedicated unit that does not supply other home locations with hot water.

This ensures that there will be a sufficient flow of hot water at all times in the bathroom, irrespective of the hot water usage elsewhere in the home.

Ecosmart Tankless Water Heaters


Ecosmart is a tankless water heater brand that offers electric and gas-powered models. The company has included enhanced management software in the heating system to intelligently manage flow rate and temperature to maximize the system’s efficiency.

The EcoSmart ECO 27 Tankless Water Heater, a 27 kW water heater, is ideal for supplying on-demand hot water for homes in warmer climates. The unit is sized to supply an entire single-family home with endless hot water.

Rinnai Propane Gas Tankless Hot Water Heater


Rinnai is a renowned tankless water heater manufacturer that offers a wide range of solutions, with units with various heating methods and sizes available.

The Rinnai RL75iP Propane Gas Tankless Hot Water Heater is a 7.5 GPM unit that operates from a propane gas supply and is ideal for a 2 to 3-bathroom home, supplying only the bathrooms with hot water.

Stiebel Eltron Tempra 20 Plus Electric Tankless Water Heater


Stiebel Eltron is a German-made tankless water heater system available in various sizes. The Tempra Plus 20 is a 19.2 kW model with an output water temperature range of between 68°F and 168°F or 20°C to 75.5°C.

The Steibel Eltron 20 Plus requires a flow rate of at least 0.5 GPM to activate the unit and can deliver 4 GPM at a temperature of 72°F or 22.2°C, making it ideal for a single bathroom or a bathroom and a guest bathroom combination.

So, Should I Buy a Tankless Water Heater?

Tankless or on-demand water heaters offer several advantages over traditional water heaters, including energy efficiency, an endless supply of hot water, and a longer lifespan. 

However, there are also some potential negatives to consider, such as the higher upfront cost, the possibility of inconsistent water temperature, and inadequate flow rate in high-demand use.

If you value energy efficiency and a consistent hot water supply, a tankless water heater may be the right choice. But if the upfront cost and ease of installation are more important factors, a traditional water heater may be better.

Note: If you’d like to save big on a bathroom remodel, get our Save Big $$$ Cheat Sheet with designer hacks that can help you save thousands of dollars. Just fill out the form below and we’ll send it straight to your inbox.

Tags: electric, gas, Tankless water heater

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