How Does a Tankless Water Heater Work

Best Selling Water Heater

When most people think of a water heater, they imagine a big storage tank in their basement. However, this doesn’t have to be the case because tankless units come complete without a water vessel. It sounds impractical, but it works more efficiently than the conventional water heater.

These units come in different models, such as electric and gas tankless water heaters. You can use different energy sources, including propane and natural gas; thus, it is convenient. Another benefit you get with this unit is an on-demand supply of hot water.

If you are curious to know how this energy-efficient heater works, let’s delve in.

How Does a Tankless Water Heater Work?

A tankless water heater warms water only when you need it. It also maintains the temperature of the water until you are done using it. Here is the process that the cold water goes through for you to receive hot water

  1. The flame ignites, heating the two heat exchangers
  2. Water passes through the secondary heat exchanger and gets preheated
  3. The preheated water goes through the primary heat exchanger. At this point, it gets heated to your desired temperature.
  4. The hot water then travels to where you need it. Whether in the shower or washing machine.
  5. The unit’s flame then adjusts to maintain the hot water temperature until you are done using it.
  6. When you stop using the hot water, the flame turns off, and the tap ceases to supply warm water.

Direct heating allows tankless water heaters to supply gallons of hot water without a storage tank. However, lacking a vessel limits their flow rate between 2-5 gallons or 7.6 to 15.2 liters per minute.

While gas tankless heaters have high flow rates than electric models, sometimes they cannot supply enough hot water to multiple applications in large houses simultaneously.

For instance, taking a shower and using your washing machine can stretch these units to their limits. To solve this difficulty, you should install two or more tankless heaters parallel for simultaneous hot water demand.

For those appliances that use a lot of hot water like dishwasher and washing machine, install separate tankless water heaters.

The Pros and Cons of a Tankless Water Heater

To know whether a tankless unit is suitable for your house, it is vital to learn its pros and cons. The reason being, they help you plan in terms of heater installation time, energy cost, hot water use, and maintenance.

Advantages of On-Demand Hot Water

1. It Saves on Energy and Other Costs

Tankless water heaters are energy efficient and save you cash in the long term. A tank-style unit uses energy around the clock to maintain a specific water temperature for you to access it when you want. The storage capacity of this vessel is usually 40 to 50 gallons; thus it loses much heat.

As their name suggests, tankless water heaters warm water on-demand, and they don’t keep a supply of water. Hence, they do not have standby heat loss and the need to reheat the water constantly.

When you turn on your shower or hot water tap, the cold water (from the inlets) passes through the tankless unit where electric coils or gas burners heat it within seconds.

2. Zero Risk of Tank Explosion

A conventional water heater comes with a tank that can accumulate pressure. The manufacturer includes a temperature and pressure relief valve to release pressure so that it does not explode. Nevertheless, the risk is not fully eliminated.

The water that comes into the tank usually has minerals and sediments, which can clog the temperature and pressure relief valve. If you are not aware, the tank can explode and cause serious damages. Thanks to tankless water heaters, which have absolutely zero risks of causing an explosion.

3. It Has a Long Life Expectancy

While you may want to enjoy an unlimited hot water supply in your house, you do not want to visit the shop now and then to replace your water heating system. Tankless units offer you peace of mind because their life expectancy is over 20 years.

A tank-style hot water heater usually lasts between 8 to 12 years. Hence, you have to pay an extra cost every decade. If you’ve built your family a permanent house, you can invest in tankless water heaters for pro-longed service.

4. Tankless Water Heaters Have Lower Risk of Exposure to Toxic Metals

Since tank-style units wear out due to hard water, their vessels’ inner linings rust and corrode. These minerals dissolve in the water, making their way into the exit fixtures such as sinks and showers. Consequently, your family is exposed to harmful toxins.

Tankless water heaters do not keep the water supply in a tank. Thus, there is no risk of rust and corrosion. Instead, they provide you with more pure water, which is safe for your skin.

The fact that tankless models are also easy and accurate in temperature settings prevents you from getting burnt.

5. A Tankless Hot Water Heater Has Lower Risks of Leaks

Due to corrosion, conventional water heaters can easily leak. When they leak, water may make its way through to your house, causing flooding or damage to walls or floors. Ultimately, you will pay a high cost to replace or reinstall these parts of your home.

Since tankless water heaters do not have a tank, there is no danger of leaks or flooding. Thus, you will avoid such damages and high costs. Nevertheless, tankless units can run leak issues, but they are rare, and if they occur, the damage is not severe.

6. Tankless Water Heaters Occupy Less Space

If your house has limited space, a tankless heater is suitable for you. Typically, you can mount this type of heater on the wall or floor since it occupies less space, unlike the conventional units.

For instance, a tank-style heater with 40 to 50 gallons of water is usually 54 to 60 inches long. It has a diameter measuring 20 inches and is cylindrical. In contrast, an average tankless heater is rectangular and measures 27 inches tall, 18 inches wide, and 10 inches deep.

On the one hand, conventional water heaters utilize your floor space, usually the basement. On the other hand, tankless models are mounted on the wall like circuit breakers, and they can fit in closets.

6. Endless Supply of Hot Water

The thought of getting stuck in the shower with cold water in chilly weather is agitating. A conventional heater can get you here since it only supplies you with the water in the tank. If the capacity is not enough for the whole family to shower, the last person may not enjoy a happy shower time.

Tankless heaters come in handy since they do not rely on a storage tank to provide a constant supply of hot water. While their flow rate limits them, they heat water continuously for you when you demand.

Disadvantages of On-Demand Hot Water

1. High Upfront Cost

The main disadvantage of tankless water heaters is the high upfront cost associated with the unit and installation. While a tank-style with a capacity of 40 to 50 gallons and installation costs $889, buying a tankless model and installing it may cost you $3000.

Why are tankless water heaters pricey?

Tankless heater installation entails special wiring to manage the increased load. If not, you may have to fix a vent pipe. These demands may require you to hire a professional and since it is intensive it will demand more funds.

Hard water can interfere with the tankless heater’s functioning causing a breakdown. Thus, some manufacturers demand that you install water softening systems for your warranty to be valid. This additional expense increases the overall cost.

2. The Cold Water Sandwich

Here is a sequence; you open the hot water tap, warm water flows out, then cold water, and finally hot water again. If you have gone through this before, you just got a share of a cold water sandwich. This occurrence is frequent in houses with tankless water heaters.

When handwashing your dishes, you tend to turn off the hot water quickly and on again. Usually, the hot water retained in the pipe comes out at the set temperature. The delay between water flowing from the channel and the unit’s kickstarting causes this challenge.

3. Inconsistent Water Temperature for Multiple Applications

In a situation where you have multiple showers running simultaneously, a tankless water heater can fail to maintain the same water temperature. When using one shower in turns, you will not experience such difficulties.

What changes with multiple applications? Depending on the water heater’s size, its flow rate may not keep up with this water demand.

The flow refers to the water that the tankless water heater can heat at a specified time. Usually, experts measure it in Gallons per minute or GPM. The lower the flow rate, the lesser water can be heated concurrently.

4. Challenging To Provide Lukewarm Water

If you enjoy cool showers, a tankless water heater may disappoint you. While this is not apparent to many people, these units have difficulty achieving a lukewarm water temperature.

Tankless water heaters require a minimum quantity of water flow. Thus, there exists a gap between cold water and the coolest hot water for you to create a lukewarm mixture.

5. No Hot Water During Power Outage

Whether you are using electricity or a gas-powered tankless water heater, you will have to put up with cold water when there is no electric power. On those occasions when the storm knocks out electricity in your house, you better have an alternative.

While gas-powered water heaters utilize propane or natural gas, they depend on electric control panels to run the system. Tank-style units outshine tankless units in this area because they keep your water hot for several days even without electricity.

6. Tankless Water Heaters Take Long To Deliver Hot Water

Compared to tank-style water heaters, tankless units take longer to deliver hot water. On-demand heaters receive cold water, heat it, and then it travels to the exit features. You will have to allow cold water to flush out for some seconds or a minute before receiving hot water.

Contrary, tank-style water heaters keep a supply of hot water. Hence, when you open the tap or shower, you receive warm water immediately. You do not have to wait for the heating.

Condensing Vs. Non-Condensing Tankless Water Heaters


During combustion (the heating of the heat exchangers), the unit burns the fuel’s hydrogen element producing hot gases. One of these gases is steam which, when cooled to water known as condensation. This water is acidic having a (PH 3-5) meaning it is corrosive and can damage steel metals and other materials.

The condensing tankless water heater extracts extra heat from exhaust gases cooling them to 100 degrees F. This process helps collect the condensation water inside the heater. The heat exchanger is the core part of this unit; thus, it should be high-quality. Manufacturers make it with special stainless steel alloys to prevent corrosion.

After the tankless hot water heater collects the acidic water, you need to neutralize it before draining it outside. You can make it safe through dilution or special filtration.


  • They are energy efficient.
  • Condensing tankless water heaters are suitable for colder climates that have lower groundwater temperatures
  • They have flexible venting materials


  • They drain condensation water at the bottom of the heater
  • They are pricey


A non-condensing tankless unit pushes the hot gases outside. These gases are generally at 300 degrees F and must be vented through non-corrosive materials which can withstand high temperatures. Manufactures utilize special stainless steel (category 3) material to make these drains.

During the combustion process, part of the energy produced is used to heat water, while the other is used in eliminating the gases. The hotter the exhaust gases, the lesser the energy supply for heating water, hence the lower the efficiency.


  • Non-condensing tankless units are simple to maintain
  • You don’t need to drain the water if it is exhausted horizontally
  • It is suitable for warmer climates where groundwater has a high temperature
  • It has a lower initial cost


  • The drain (stainless steel materials) is pricey
  • Non-condensing tankless water heaters have lower efficiency compared to condensing units

Gas-Fired Vs. Electric Tankless Water Heaters

The three main fuel sources for on-demand units are electricity, propane, and natural gas. Electric tankless water heaters have a different design from gas models. Most people do not have access to both electricity and gas.

Nevertheless, if you are fortunate enough to select between the two, here are several differences you may want to learn before purchasing your unit:

Gas-Fired Tankless Water Heater

This unit is designed to burn either natural gas or propane. A premium gas tankless water heater will cost you approximately $1,000. However, the more wheels and rings you prefer, the higher the price.

If you decide to buy a non-condensing gas tankless water heater, you will purchase it at a lower price. If you choose a condensing unit, it will be more expensive.

A gas tankless water heater is more expensive to install compared to an electric unit. It is rare to find the venting ducts and gas lines in a house been compatible with a gas tankless heater. Hence, you have to hire professionals, which increases the installation costs.

The operation cost of gas tankless water heaters is low since its price is relatively affordable. The energy efficiency of these units is also high (80 to 85%). Nevertheless, fuel fluctuations usually interfere with this expense.

A gas tankless water heater can deliver over 8 GPM. Thus, this model is suitable if your water usage is high. This unit also requires high maintenance, which may be costly over time.


  • Tankless gas water heaters have high GPMs
  • They are versatile, and you can use natural gas or propane
  • These units are energy efficient reducing your bills
  • Gas tankless water heaters last to 20 years


  • Fuel fluctuations may increase your energy costs
  • Tankless gas heater installation is expensive

Electric Tankless Water Heaters

If you plan to purchase an electric tankless water heater, you can get one for $500 or $600. Its installation cost is less since it is easy to set up. The electric water heating systems are also three times smaller than tankless gas water heaters making them less expensive.

These units also have an energy efficiency ranging between 98 to 99%. Even when the electricity costs increase, energy savings offset the high prices. However, their water flow is limited to 8 gallons per minute, making them unfit for high water usage.

The maintenance of electric tankless water heaters is minimal. Experts recommend you clean the inlet screen filter and flush the system once a year. A premium electric tankless water heater can last over 20 years. You don’t have to worry about replacing it anytime soon.

An electric tankless water heater comes with a warranty for the parts and labor. Its system is also easy to analyze, diagnose, and repair. These units are more environmentally friendly, so if you are passionate about your surroundings, they are more suitable.


  • An electric tankless water heater has a power efficiency of 98 to 99%
  • Electricity price fluctuations are rare
  • Installation of this model is easy and affordable
  • Electric tankless water heaters last over 20 years


  • The flow rate of an electric tankless water heater is limited to 8 gallons per minute
  • In case of a power outage, you cannot access hot water

Factors To Consider When Buying a Tankless Water Heater

Most prospective tankless water heater buyers keep calling different manufacturers, trying to find the best unit. However, you may not fully rely on these recommendations since they are also in business.

To get a tankless water heater that meets your needs, here are few factors you should consider:

1. Size

An appropriate water heater capacity will serve your house sufficiently for you to operate more efficiently. To size tankless water heaters, you should consider the highest temperature they can achieve at specific flow rates.

Depending on the application, whether it’s the whole house or a bathroom, confirm that the heater’s temperature and flow rate capabilities can keep up. How do you accomplish this?

Start by listing all the devices you will be using in your home. Then, add their flow rates in GPM. The total figure you get is the requirement you should check on the tankless water heater.

So, if you have a shower with 0.75 GPM and a shower with 2.5 GPM, you will need a water heater that has a minimum water flow rate of 3.25 GPM. Nevertheless, you can reduce your appliance’s fixtures through lo-flow water fixture installation.

For temperature rise, take the desired output unit and subtract the incoming temperature. Assuming the incoming water is at 50 degrees F, and you prefer a temperature of 120 degrees F, you will need a 70 degrees F increase.

Most tankless water heaters can keep up with different inlet temperatures. Usually, they can provide a 70 degrees F temperature rise at a flow rate of 5GPM for gas-fired units. Electric on-demand heaters will offer 70 degrees F rise at 2 Gallons of water per minute.

2. Fuel Type

When choosing a tankless water heater, it is vital to consider the fuel you will be using and whether it is available. This factor is significant because it can affect the unit’s size, operational costs, and energy efficiency.

Apart from electricity, natural gas, and propane, below are other fuel types you can use for your water heating system.

i. Geothermal Energy

As long as you have a geothermal heat pump system in the US, you can access this fuel. Typically, people use it for space heating and cooling.

ii. Solar Energy

This fuel is friendly to the environment and is usually applied in tankless solar water heaters.

iii. Fuel Oil

Fuel oil is available in some parts of the US for tank water heaters and space heating systems.

3. Energy Factor

The EF shows how energy efficient a tankless water heater is. The amount of water you heat per unit of fuel gives you the EF. It entails:

I. Recovery Efficiency

Recovery efficiency refers to how fast the tankless water heater takes to transfer heat to the water.

II. Cycling Losses

As the water circulates to reach the exit fixture, it expends some heat known as cycling losses.

The higher the EF of a tankless water heater, the more efficient it is. However, this does not mean that you will always have lower operational costs. The reason being, when you compare other fuel sources, you may realize you are spending much annually.

4. Costs

The excitement of acquiring a heating water system may blind you from the fact that there are many additional costs involved apart from purchasing the unit. When calculating your expenses, you have to examine the energy factor and the type of fuel the tankless water heater uses.

Start by listing the unit’s price, add the installation and maintenance costs. To the amount you get, add the annual energy expense. You will get the total amount of money you will be paying.

Thus, comparing this total expense with other tankless water heater models and energy types will help you make the ultimate decision.


Tankless water heaters are becoming more popular as days go by. They work accurately and are energy efficient compared to water tank units. These properties make them unique and suitable for small and large house use.

A tankless water heater will also offer you fuel options, condensing and non-condensing models, making it convenient. However, they may also prove to be pricey, especially the gas-fired units.

You can always grab a tankless water heater that meets your needs!

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