The Pros and Cons of Tankless Water Heaters

Tankless water heaters, also known as on-demand water heaters, have become an increasingly popular choice for homeowners looking to upgrade their plumbing systems. Unlike traditional tank water heaters that store and continuously heat water, tankless models only heat water when needed. While they offer several advantages, they also come with some downsides. In this article, we’ll explore the pros and cons of tankless water heaters and provide cost comparisons to help you decide if making the switch is right for you.

Pros of Tankless Water Heaters

1. Tankless Water Heaters Are Energy Efficiency & Cost Savings

One of the biggest benefits of tankless water heaters is their energy efficiency. According to the U.S. Department of Energy, tankless water heaters can be 24%–34% more energy-efficient for homes that use 41 gallons or less of hot water daily. This increased efficiency leads to lower utility bills over time. 

2. Tankless Water Heaters Provide a Continuous Hot Water Supply

Unlike traditional water heaters that can run out of hot water, tankless systems provide an endless supply of hot water. This is especially beneficial for large families or households where multiple people need hot water at the same time.

3. Tankless Water Heaters Have a Space-Saving Design

Traditional water heaters with storage tanks take up significant space, while tankless models are compact and can be mounted on a wall. This makes them an excellent choice for small homes, apartments, and areas where storage space is limited.

4. Tankless Water Heaters Have a Longer Lifespan

Tankless water heaters typically last more than 20 years, compared to 10–15 years for traditional tank models. This longevity can offset the higher initial investment over time.

Cons of Tankless Water Heaters

1. Tankless Water Heaters Have Higher Initial Costs

Tankless water heaters have a higher upfront cost than traditional models. The average cost of a tankless water heater installation ranges from $1,171 to $3,331, while traditional water heaters can cost as little as $500–$1,500.

2. Tankless Water Heaters Are Expensive Installation & Upgrades

Installing a tankless water heater often requires modifications to gas lines, electrical systems, or venting, which can significantly increase the installation cost. If your home is not already equipped for a tankless system, these upgrades can add several hundred or even thousands of dollars to the total cost.

3. Tankless Water Heaters Have a Limited Flow Rate

If multiple appliances or faucets are running hot water simultaneously, a tankless water heater may struggle to keep up with demand. In larger households, this can result in inconsistent water temperatures, requiring either a larger or multiple units for optimal performance.

4. Tankless Water Heaters cause a Delay in Hot Water Delivery

Since tankless water heaters heat water on demand, there can be a slight delay before hot water reaches the faucet. This “cold water sandwich” effect can be noticeable, especially if the unit is installed far from the fixture.

Cost Comparison: Tankless vs. Traditional Water Heaters

Traditional Tank Water Heaters

• Initial Cost: $500–$1,500 (including installation)
• Lifespan: 10–15 years
• Energy Efficiency: Lower due to standby heat loss
• Space Requirements: Requires more space

Tankless Water Heaters

• Initial Cost: $1,171–$3,331 (including installation)
• Lifespan: 20+ years
• Energy Efficiency: 24%–34% more efficient than traditional models
• Space Requirements: Compact, can be wall-mounted