closeup on the bottom and cables connected to a gas tankless water heater

When it comes to hot water in your home, it’s not just how much you use that matters but how you use it. 

While the four-person American household uses around 63.1 gallons (239 liters) of hot water daily inside their home (and more during peak hours), there are more efficient ways to heat water, such as using a tankless water heater. 

The rest of this article will explain this concept further and provide seven reasons tankless water heaters are more efficient. It will also offer information on their overall cost-effective and fuel-efficient benefits for the household. 

Why are Tankless Water Heaters More Efficient?

Tankless water heaters are more efficient than standard tank heaters because they use less energy and only heat water when needed, reducing overall costs. In addition, they don’t store heated water, are durable, and can be powered by renewable energy, making them highly convenient. 

Tankless Water Heaters Use Less Energy To Run

Since the 1990s, tankless water systems have been touted as an excellent way to reduce energy usage. And you’ll be right to believe the hype. 

Since standard tank heaters have a fixed capacity, once a shower, sink, or bath is opened, the appliance continuously feeds the hot water until the storage tank is empty. Therefore, it is easy to use more water than you need just by leaving the tap running for a few minutes.

A conventional hot water heater in the corner of a garage.

This instance is where a tankless system excels. As its name suggests, it doesn’t store any warm water; instead, it heats fresh cold water from the main supply as soon as there is demand for it—ideal for anyone who likes long showers!

Tankless water heaters are recommended by the Environmental Protection Agency (EPA) because they can help conserve energy and save money. Of course, the number of people living within the household will offset the savings, but to mitigate this, there is no reason you can’t have more than one tankless heater. 

Energy Saver, the U.S. Department of Energy’s (DOE) consumer resource for saving energy, recommends installing two or more tankless water heaters. For example, this will be useful if you have appliances in your house that utilize a lot of hot water, such as a clothes washer or dishwasher. 

Just take a look at these energy-busting stats: 

  • A tankless water heater saves 24-34% more energy than a conventional storage-tank water heater for households using 40 gallons (151.42 liters) or less of hot water each day.
  • There is also good news for homes that use more than 80 gallons (302.83 liters) of hot water daily, as they can be 8-14% more energy-efficient than conventional tank heaters.

Tankless Water Heaters Come With Tax Credits and Rebates

So, now we know that tankless water heaters are energy efficient, wouldn’t it be nice to know that you’ll be rewarded for “going green?” Nowadays, most countries are encouraged to use these efficient appliances to reduce energy expenditures. 

With incentives such as credits and rebates for installing alternative energy equipment, U.S. citizens can make their homes more energy-efficient and get rewarded for doing so. 

Therefore, the Residential Energy Efficient Property Rebate, which was last updated by the IRS on April 27, 2021, offers rebates based on the cost of the property bills. 

This rebate is available for tankless water heaters powered by any of the following sources, including: 

  • Solar energy
  • Geothermal heat pumps 
  • Small wind turbines 
  • Fuel cell qualifies 

So far, the offer is valid until December 31, 2023. However, your refund will depend on how long you have had the appliance installed and will be subtracted from the overall cost of a tankless water heater.

Better Durability Than Storage Heaters

Durability is key to the functionality of an appliance. Therefore, a product that serves one of our seven basic human survival needs must be efficient and reliable. 

It’s more eco-friendly to use durable materials because they conserve resources, reduce waste, and reduce the time and energy needed for repair and replacement. 

Generally, tank-style water heaters last eight to twelve years but can last up to 15 years with proper maintenance.

On the other hand, tankless water heaters can last nearly twice as long as storage water heaters. And, because their parts are easily replaceable, they can often last longer than a conventional appliance. 

A technician services a tankless water heater

Sometimes, when an older traditional water heater is reaching its end of life or malfunctions due to excess use, the pipes can corrode and produce harmful toxin build-up, affecting water purity and enhancing appliance degeneration. 

Unlike traditional heaters, tankless heaters don’t build up mineral deposits or corrode because of their on-demand functionality. Furthermore, you will not have to spend extra on yearly repairs or replacements.

So if you’re looking for a water heater that’ll serve you for several years without the risks of toxins or contamination due to wear and tear, you should consider settling for a tankless water heater. 

Tankless Heaters Help Overcome Standby Loss

Tank water heating systems lose heat when they’re not in use, a phenomenon known as standby heat loss. A tank of unused heated water in your home constantly wastes energy as it cools down and has to be reheated before you can use it again.

Unlike traditional water heaters, tankless water heaters only produce hot water when needed. This feature not only allows you to save on energy costs but also helps prolong the device’s useful life. 

The process tankless water heaters use to heat your water:

  • First, the appliance that needs hot water is turned on
  • Cold water enters the tankless system
  • The system triggers the burners to ignite
  • A heat exchanger heats the cold water, and voilà, hot water!

Water heaters automatically shut off when there is no demand for hot water. The appliance uses sensors to detect the request in your home to provide just the right amount of hot water.

As a result of their standby mode and instant hot water on demand, tankless heaters overcome standby loss, effectively reducing energy costs and increasing efficiency. 

Multiple Energy Sources Can Be Used

Because tankless heaters are still a relatively new technology, consumers have multiple options for energy sources, including renewable energy. 

A tankless water heater installed on a wall

Electricity and natural gas can both be used to power tankless heaters. However, it is essential to note that an electric heater has advantages over a gas heater, such as avoiding expensive service fees or problems related to damaged gas lines. 

Water heaters without tanks come in two types—gas and electric

  • A gas-fired heater typically heats water faster and more efficiently than an electric heater. Therefore, they are ideal for homes of more than two people. Nevertheless, they require venting and are more expensive to install and pipe. 
  • Although electric tankless heaters are easier to install, they cannot heat large amounts of water—they usually suffice for one or two people. But, you can always double up on your heaters if you’re not sold on the idea of gas. 

In addition to solar energy systems, tankless water heaters can be connected to other renewable energy sources, like wind power or geothermal heat pumps. Installing this unit will have high initial costs, but you will use clean energy and reduce your costs over time. 

The World Economic Forum reports that renewable energy is the world’s cheapest energy source. 

Tankless Water Heaters Reduce Energy Costs 

As mentioned, tankless heaters use high-powered gas burners or electric coils instead of constantly reheating water to provide hot water when needed. But, they are still more energy-efficient and save on bills, even though they require more power.

  • The EPA reports a 10-50% less energy consumption than standard models. 
  • In addition, Consumer Reports discovered energy costs are reduced by 22% compared to traditional water tank heaters. 

Tankless Heaters Can Fit Into Small Spaces

A compact home with a tiny basement is a prime candidate for a tankless water heater. This smaller alternative to an old-fashioned storage hot water tank could save you tons of space. 

Tankless water heaters are perfect for optimizing home and office space efficiency. Due to their small sizes, they are ideal for smaller homes, minimalist interiors, or those just wanting to save on floor space. 

Due to their inconspicuous size, they can also be mounted on a wall anywhere in the house.

In general, they fall into the following size categories: 

  • The dimensions of gas-fired units are 30-inches (76.2 cm) high by 20-inches (50.8 cm) wide.
  • The dimensions of electric units range from 10-inches (25.4 cm) high to 7-inches (17.78 cm) wide.

Electric units require very little space to mount, while gas-fired units require a little more room to vent combustion fumes. An electric unit is your only option if you do not have the space or the appropriate venting system. 


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