Warranties 
Rebates 
Tax Credits 
Sustainability 
Careers 
Help 
Facebook 
X 
LinkedIn Can You Save Energy and Money With a New Tankless Water Heater? .
July 1, 2005
Absolutely! But first you must select the right type and size of tankless water heater to meet the specific demands of a particular application.
From the time the first water heater was patented by Edwin Ruud in 1898, storage tank-type units have dominated the U.S. market. In recent years, tankless water heating technology has emerged as a viable alternative to storage-type models for U.S. consumers and businesses, primarily on the strength of industry claims that the former consume less energy and therefore cost less to operate. While tankless water heaters can reduce energy consumption, consumers and business owners and managers must carefully consider a number of variables when deciding whether going tankless is right for them.
A Little History
Tankless technology has been the primary method for heating water in Europe and Asia for a number of years, and it is not new to the U.S. market. However, the tankless water heater industry in this country has suffered from high initial product costs, concerns about product liability, misrepresentation of product capabilities, and a lack of sufficient infrastructure to support the technology.
Most of these issues have been addressed in the past few years. The recent creation of test methods for tankless water heaters by the Gas Appliance Manufacturers Association (GAMA) should help ensure that manufacturers’ performance claims are verifiable, and that information is available for consumers and end users to make accurate product comparisons, especially with storage products with which they – and the installers they hire – are most familiar.
Gas Storage vs. Gas Tankless
By design, gas storage water heaters maintain a ready supply of hot water, and they are well-insulated to minimize the amount of heat lost from all that stored hot water. Still, this standby heat loss represents almost 20% of the operating cost of a storage water heater.
By contrast, a tankless water heater has no storage capacity and, therefore, no standby heat loss. In addition, some tankless gas water heaters feature electronic ignition and can modulate the gas input based on the temperature of the water supply and desired output temperature. These energy-saving features help make some tankless gas water heaters 10% to 30% more fuel-efficient than a comparable storage water heater.
The energy-efficiency measure most commonly used for comparing residential water heaters is the Energy Factor. The DOE has set minimum EF efficiency standards for residential water heaters, using a formula that factors in storage capacity. An estimated annual cost of operation can then be determined, using the EF value and the fuel cost.
Table I - Estimated Annual Cost of Operation
(Based on the October 2004 national average of 91.0 cents per therm for natural gas)
(Based on the October 2004 national average of 91.0 cents per therm for natural gas)
|
40-gallon gas storage unit
|
EF
|
0.59
|
0.61
|
0.64
|
|
Estimated annual cost of operation
|
$231
|
$224
|
$213
|
|
|
Tankless gas (2.4-4.3 gpm* Fmax)
|
EF
|
0.69
|
0.81
|
0.85
|
|
Estimated annual cost of operation
|
$198
|
$168
|
$160
|
*Gallons per minute
Table II - Estimated Annual Operational Cost Savings
( tankless gas water heater, as compared with a storage gas water heater)
Table II - Estimated Annual Operational Cost Savings
( tankless gas water heater, as compared with a storage gas water heater)
|
Tankless EF
|
|
Storage EF
|
||
|
.59 EF
|
.61 EF
|
.64 EF
|
||
|
.69 EF
|
$33
|
$26
|
$15
|
|
|
.81 EF
|
$63
|
$56
|
$45
|
|
|
.85 EF
|
$71
|
$64
|
$53
|
|
Tables I and II compare the EFs and operating costs for a 40-gallon gas water heater and a tankless gas water heater with comparable hot-water outputs. The January 2004 NAECA energy efficiency requirements set the minimum EF level for a 40-gallon gas water heater at .59. The highest EF for a 40-gallon atmospheric water heater listed in the latest GAMA directory is .64. Comparing the most efficient 40-gallon storage water heater (EF = .64) to the most efficient tankless water heater (EF = .85) nets an annual savings of $53. (See Table II, far-right column, bottom row.)
The 2003 Frost and Sullivan report on the U.S. Water Heating Equipment Market estimated the average price of a residential gas storage water heater at $223 and a tankless gas water heater at $606. Using these figures, the payback for the initial expense of the tankless water heater would be more than seven years ($606 - $223 divided by $53). (A recent article in the October 2004 edition of The Wholesaler magazine estimated the installed cost of a 50-gallon gas water heater at $850 to $1,300, compared with $2,000 to $3,200 for a tankless water heater.)
In short, energy is still relatively cheap in the United States, which results in relatively lengthy payback periods. What’s more, these calculations do not reflect the additional costs typically required in a replacement application.
For example:
- Most of today’s high-Btu-input, high-efficiency tankless water heaters require venting materials and/or sizes that are very different – and more costly – than the materials used by conventional, atmospheric-type, storage water heaters.
- Some tankless heaters may also need larger gas lines.
- Models with the highest available EFs all require a 110-volt power supply.
These additional material costs – even before labor is factored into the equation – may increase the payback period to 12 years or more. However, for water heaters installed in new-construction projects, the additional labor and some of the materials for the system upgrade would be eliminated, resulting in a shorter payback period.
To sum up: Tankless water heaters will save energy when compared with storage-type water heaters, but the initial acquisition and installation costs must be carefully evaluated to determine accurately any potential dollar savings. Only the consumer or the end user can decide whether it is worth waiting for that payback.
Right-Sizing
Ultimately, customer satisfaction with any water heater depends on proper sizing: making certain there is an adequate supply of hot water to meet not just one or two, but all the various needs of a given application, residential or commercial. Tankless water heater manufacturers recognize the critical importance of sizing, which is why sizing information is readily available on their web sites and in their product literature and sales materials.
For either a storage water heater or a tankless water heater, the size of the water heater should be based on the amount of hot water needed during peak demand – normally during the morning hours. For a storage water heater, peak demand is calculated in gallons per hour (gph), and the amount of storage required to meet this demand is determined accordingly. Tankless water heaters maintain no storage, of course. They are dependent on water flow rate, as well as Btu inputs and incoming water temperatures, so their outputs are listed as gallons per minute (gpm). The appropriate gpm capacity can be determined by adding together the flow rates of the various appliances and fixtures in use during peak demand.
Incoming water temperature is an important, but frequently overlooked, variable in the sizing of a tankless water heater. Tankless units are designed to raise the incoming water temperature to the set point of the thermostat control. In practical terms, the amount of hot water produced – that is, the flow rate in gallons per minute – will vary up or down with incoming water temperatures: the higher the incoming temperature, the more hot water that can be produced. Likewise, lower incoming temperatures yield less hot water at the desired set temperature.For example:
- With a temperature set point of 120°F and 70°F incoming water, a water heater may produce 6.7 gpm of 120°F water.
- The same water heater with the same set point will provide only 4.8 gpm when it must heat 50°F incoming water.
The bottom line? If the combined flow rates of all the hot-water appliances and fixtures in use during the peak-demand period exceeds 4.8 gpm, the home or business owner will likely be calling you to complain about not having enough hot water!
That’s why any water heater – storage or tankless – must be sized to meet peak-demand requirements when the incoming water temperature is coldest. This variable is most critical in parts of the United States where incoming water temperatures fluctuate dramatically between winter and summer. Parts of the country where groundwater temperatures remain relatively constant year-round do not need to contend with this issue. Manufacturers strongly recommend that consumers consult professionals for proper water heater sizing.So Why Go Tankless?:
- We have strived to impart quite a bit of cautionary information in this article. So you might wonder if all the publicity and promotion for tankless water heaters is just empty hype. The answer: Absolutely not! When properly sized, tankless water heaters can provide a wide range of benefits and features to consumers:
- Lower operating costs: Water heating can amount to upwards of 20% of a home’s fuel costs. A tankless water heater operates only when there is actual demand for hot water. No fuel is consumed to maintain a stored supply of hot water throughout the day.
- Compact size, small footprint: Because they are much smaller than storage water heaters, tankless models provide greater flexibility when choosing the water heater location. That can free up valuable floor space for other uses.
- Endless supply of hot water: Properly sized, a tankless water heater will provide as much hot water as needed, as long as it is needed. No waiting for a cold storage tank to recover, following periods of heavy hot-water demand.
- Electronic temperature controls: Some tankless models feature thermostatic controls that allow the end user to set and achieve precise temperatures with no fluctuations.
- Installation flexibility: Different tankless gas water heaters can be installed indoors or outdoors and may be vented horizontally or vertically. This flexibility means the water heaters can be placed close to the point of need, eliminating extended pipe runs
Tankless water heaters may not be a perfect fit for every project. But educated plumbing contractors and their customers can make the most of this exciting technology by taking the time to select and size the right models for their particular applications.
Jim Connors is residential product manager for Rheem Water Heaters in Montgomery, Alabama. He can be reached at 334.260.1577 or jconnors@rheem.com
