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Advantages and Disadvantages of a Tankless Water Heater

Fact checked by Stephen Conklin

advantages and disadvantages of a tankless water heater

Learning and appreciating the advantages and disadvantages of a tankless water heater is necessary for making an informed buying decision. After all, a conventional storage-tank water heater can still deliver hot water for the whole family.

Here is a glimpse of a tankless water heater’s pros and cons to help whet your curiosity.

Advantages of Tankless Water Heating Systems Disadvantages of Tankless Water Heating Systems
  • Highly energy efficient
  • Money-saver
  • Space-saver
  • Long-lasting
  • On-demand hot water
  • Eco-friendly
  • High upfront costs
  • Limited hot water in some instances

Now, continue reading to learn the nitty-gritty details of a tankless water heater’s benefits and drawbacks.

Table of Contents

Pros and Cons of a Tankless Water Heater


Let us look at the pros and cons of tankless water heaters to help you decide if this appliance is worth buying.

1. Advantages

The following points describe the advantages of tankless water heaters.

  • Highly energy efficient

The US Department of Energy describes tankless water heaters as more energy efficient than conventional water heating systems.

These appliances can shave 24-34% off their energy bills when using less than 41 gallons of hot water daily. Families who consume up to 86 gallons of hot water daily can save 8-14%.

Tankless units are energy-efficient because they don’t lose standby heat loss as storage-tank appliances do. Instead of constantly keeping the water at an ideal temperature, tankless heaters only warm the water up when someone opens a hot water fixture.

  • Money-saver

Tankless water heaters are money-saving devices, as they have lower operating costs. Let us calculate how much you will save with such a system.

Suppose your household uses less than 41 gallons of hot water daily, your savings are 24-34%. Let us assume you pay $500 annually for water heating. Tankless water heaters can save you $120 to $170 per year.

Heavy hot water users (about 86 gallons daily) can also expect to pay lower energy bills. If they normally pay $800, their annual energy expenditures will fall to $736 and even $688.

  • Space-saver

The average electric tankless water heater only measures 7 inches wide and 10 inches high, although tankless gas water heaters can have a dimension of 30”x20”.

Meanwhile, conventional water heaters can be as tall as 50 to 76 inches and as wide as 18 to 21 inches. These appliances also require minimum space allowances for servicing and ventilation.

Tankless water heaters only require a wall for mounting, while standard heaters need a floor.

  • Long-lasting

Tankless water heaters can last up to two decades with proper maintenance and care. It is also worth noting that their components are more robust and replaceable, allowing homeowners to continue using the heater without replacing the whole unit.

In contrast, a standard water heater might only last a decade on average (about eight to twelve years).

  • On-demand hot water

With tankless heaters, it is possible to shower for hours without getting cold water.

To elaborate, you could enjoy up to seven gallons per minute if you pick the right tankless water heater size. Meanwhile, a tank-type water heater can only give you so much once you exceed its first-hour delivery and recovery ratings.

  • Eco-friendly

Tankless water heaters have less impact on the environment than their traditional counterparts. They only consume energy only when someone uses hot water, and the appliance’s components are replaceable.

2. Disadvantages


All technologies have downsides, including tankless water heaters.

  • High upfront costs

The downside of a tankless water heater is its higher initial cost. Tankless water heaters can cost $1,000 to $3,000, while tank-type units have a price range of $300 to $2,000.

Installation costs are higher, too. Professionals can charge $300 to $2,500 for a tankless water heater installation, while a tank-type setup only costs $200 to $1,100.

  • Limited hot water in some instances (system overloading)

It’s not always the case that tankless heaters can supply an unlimited amount of hot water. Like other technologies, these appliances have “capacities” or limitations. Exceeding the tankless water heater’s rated capacities can limit its hot water delivery.

For example, a 7-GPM tankless water heater cannot deliver enough hot water for a family that uses more than seven gallons per minute (simultaneous use of the shower, laundry, hot water faucet, dishwasher, and other hot water fixtures).



Installing tankless hot water heaters can cost families $1,200 to $3,500, including unit price and labor costs. Installation costs vary, with electric tankless water heaters being typically cheaper than gas units ($150 to $1,500 vs. $900 to $1,500).

Although we recommend a professional installation for tankless water heaters, you can install the unit yourself. Here are the steps:

  • Read brand- and model-specific installation instructions.
  • Ensure electrical system readiness for the water heater.
  • Make sure your home has the right water pressure for the heater.
  • Secure necessary permits.
  • Choose the ideal location for the appliance.
  • Cut off the water and electrical supply to the old heater unit.
  • Prepare and mount the tankless water heater.
  • Connect the pipes and install the flow and pressure valves.
  • Check for leaks.
  • Check the electrical connections.
  • Reestablish power to the tankless water heater.
  • Check water temperature.

Care and Maintenance


Caring for and maintaining a tankless water heater is crucial to help you enjoy and maximize the many benefits of tankless water heater appliances.

  • Clean the tankless water heater housing periodically by removing dirt, dust, debris, and other particles on the surface. You do not want these substances to enter the water heater and cause problems.
  • Scrub the water filter regularly to prevent sediments and other particles from accumulating. Shut off the water supply and remove the filter for cleaning with warm soapy solutions.
  • Regularly clean the air filter, especially for some gas-fired water heaters. To do so, use a soft brush dipped in a soapy solution, rinsing it well afterward. This trick will help optimize airflow to the unit.
  • Flush the tankless water heater annually to prevent sediment buildup and limescale formation. Although the process is straightforward to do yourself, a licensed plumber can help you.

Top Brands You Can Refer To


If we were to compare tankless water heaters by asking homeowners their preferred brands, some names would always come out on top. The following tankless water heater brands are our favorites, which we recommend to anyone.

  • Rinnai – This Japanese brand has four categories of high-efficiency tankless water heaters, with varying high-tech features like wireless remote control and monitoring, low carbon emissions, and advanced water recirculation technology.
  • Rheem – Reading customer reviews will give the impression that Rheem is one of the world’s best tankless water heater brands. These appliances are highly efficient, safe to operate, and eco-friendly.
  • O. Smith – This brand is a favorite of old-timers, having been in the business since 1874. Its tankless water heaters are highly-efficient and feature Energy Star qualifications.
  • Stiebel Eltron – This German brand takes tankless water heater quality very seriously. Stiebel Eltron products can surpass any expectations about the modern tankless water heater

Frequently Asked Questions

What are the most common problems with tankless water heaters?

System overloading is the most common issue with tankless units, especially with hot water demand exceeding the appliance’s rated capacity. The water heater shuts down to preserve its integrity when the load exceeds capacity.

Excessively high hot water demand beyond the tankless water heater’s capacity can also result in overheating. Irreparable damage could result, leading to an unexpected retirement of the unit.

“Cold water sandwich” (alternating cold-hot-cold water) can also occur with increased hot water consumption.

Other issues include corrosion and sediment/mineral buildup. These substances accumulate over time, requiring frequent and regular flushing.

Is a tankless water heater better than a regular water heater?

Yes, a tankless water heater is better than its regular (storage tank-type) counterpart.

As pointed out above, these systems are 8-14% more energy-efficient for families that use 86 gallons of hot water daily. Their longer lifespan and replaceable components also mean you can save more money in the long run.


The advantages and disadvantages of a tankless water heater reveal one truth: this water heating system is better than a conventional storage tank-type appliance.

Tankless water heaters are more efficient, saving you more money while being compact and robust. You can also contribute to a greener Earth without worrying about replacing the water heater in the next two decades.

If the initial cost scares you, a tankless water heater’s durability and energy efficiency can pay for the unit and installation cost within a few years.

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