Tankless water heaters are sexy. They take up less floor space, they provide an endless flow of hot water, they're environmentally conscious… and they're really expensive. If you enjoy showing off your home's mechanical equipment to your friends or you're in to being green at any cost, get a tankless water heater. On the other hand, if you're in to saving dough, doughn't buy a tankless water heater.
A tankless water heater will not save you money.
I stopped by my local big orange box the other day to check up on the latest sales pitch for tankless water heaters. The brochure for tankless water heaters said they can save up to 25% in fuel costs. That sounds great, but lets examine what that means. I spend about $12 per month for natural gas during the non-heating season, if I don't include my fixed fuel costs, such as the 'fuel delivery charge.' This figure includes the gas for my water heater, clothes dryer, and oven. Just for the sake of argument, lets also pretend that I don't have a family of four who uses the clothes dryer all the time, and I don't use the oven all the time. We'll pretend that I spend the full $12 / month just to keep a 50 gallon tank of water hot all the time.
If I save 25%, I'll save $3/month, or $36/year, or $720 over a period of 20 years. My standard 50 gallon water heater has a 12 year warranty, and so does the tankless water heater I looked at… but the life expectancy for a tankless water heater is apparently 20 years, so I'll give it the benefit of the doubt and assume it will last that long.
Sizing a tankless water heater
The brochure on tankless water heaters said I should buy the largest tankless water heater they make, based on the number of bathrooms I have in my house – three. The particular model is the ECOH200DVN. This unit boasts a 9.5 gallon per minute flow rate at a 35 degree rise in temperature. With an average ground water temperature of 45 degrees here in Minnesota, that would give me… 80 degree water. Ha! That's useless. To get 120 degree water, my flow rate would be reduced to 5.1 gallons per minute. Maybe I'll need two water heaters. For the sake of argument, lets just say I only need one. This unit retails at my local Home Depot for $1,427.00.
Plumbers charge a lot more money to install tankless water heaters, because they're a lot more work compared to traditional storage tank water heaters. The water supply pipes will need to be re-routed, the venting will need to be completely redone, the unit will need to be mounted on a wall, an electrical outlet may need to be added, and the gas pipe may need to be re-done. Just for fun, let's say you were able to find a plumber to do all of this for $1,000. A traditional water heater might cost up to $500 in labor for replacement, so we'll assume you're only spending an extra $500 in labor for a tankless water heater.
The bottom line
A traditional 50 gallon water heater with a 12 year warranty retails for $559 at my local Home Depot. I would spend an extra $868 to buy a tankless water heater, and at least an extra $500 in installation costs, making this unit cost at least $1,368 more than a traditional water heater. I would spend at least $1,368 for the potential of saving $720 over a period of 20 years. If I ever buy a tankless water heater, I won't be doing it because I'm hoping to save money.
- A White Paper from A.O. Smith - What's the Big Deal About Tankless Water Heaters?
- Consumer Reports - They're efficient but not necessarily economical
- Jay's Blog - The Fabled Tankless Water Heater