Pros and cons of tankless water heaters: Endless hot water or endless headaches?

Picture this: you're the third person in line for a morning shower, and you know exactly what's coming. That dreaded blast of ice-cold water that makes you question every life choice that led to this moment. Enter the tankless water heater – the promise of endless hot water that's got homeowners everywhere reconsidering their relationship with that bulky tank lurking in their basement.

But is going tankless really the game-changer it's cracked up to be? Like most home upgrades, the answer isn't black and white.

What is a tankless water heater?

A tankless water heater ditches the traditional approach of keeping 40-80 gallons of water hot around the clock. Instead, it heats water instantly when you turn on the tap – earning it nicknames like "on-demand" or "instantaneous" water heater.

Think of it as the difference between keeping a pot of coffee warm all day versus brewing a fresh cup every time you want one. The tankless approach only uses energy when you actually need hot water, which sounds pretty smart until you consider the complexities involved.

These systems come in two main types: whole-house units that serve your entire home, and point-of-use models designed for specific fixtures or appliances. You'll also choose between gas-powered and electric models, each with distinct advantages and limitations.

Types of tankless systems

How tankless water heaters work

While the heating happens in seconds, the underlying process involves several sophisticated steps. When you turn on a hot water tap, a flow sensor inside the unit detects water movement and signals the heating system to activate.

Electric units use powerful heating elements drawing 3,000 to 36,000 watts (most residential models use 12,000-24,000 watts), while gas units use burners triggered by the flow sensor. Both systems use sophisticated temperature sensors to maintain consistent output. If you're running multiple fixtures, the system automatically adjusts to prevent scalding or temperature fluctuations.

The heating process breakdown

Advantages of tankless water heaters

Let's start with the good news – and there's plenty of it. Tankless systems deliver some genuinely impressive benefits that explain their growing popularity among homeowners.

Energy efficiency and cost savings

Traditional tank water heaters constantly fight heat loss, maintaining temperature even when nobody's home. It's like leaving your car idling in the driveway 24/7. Tankless systems only consume energy during actual use, achieving efficiency ratings of 80-98% compared to 60-80% for conventional tanks.

This efficiency translates to real money. The Department of Energy estimates that homes using 41 gallons or less of hot water daily can see 24-34% energy savings with tankless systems. Even heavy users can achieve 8-14% savings.

Space-saving design

Traditional water heaters demand serious real estate – typically requiring a dedicated closet or room. A tankless unit mounts on the wall like a large circuit breaker box, freeing up valuable storage space. For urban homeowners or those with cramped basements, this space liberation alone justifies the switch.

Unlimited hot water supply

Here's the headline feature: you'll never run out of hot water again. No more strategic shower scheduling or waiting 30 minutes for the tank to reheat. As long as you stay within the unit's flow rate capacity, hot water flows indefinitely.

This benefit shines during holidays or events when multiple people need showers, or when you're running hot water appliances back-to-back.

Longer lifespan

While traditional tank heaters typically last 8-12 years, tankless systems commonly operate for 15-20 years with proper maintenance. Some units push beyond 20 years, making them a solid long-term investment despite higher upfront costs.

Disadvantages of tankless water heaters

Now for the reality check. Tankless systems aren't perfect solutions, and their limitations can be deal-breakers depending on your situation.

Higher upfront costs

The upfront investment is significantly higher than traditional units. While a decent tank water heater costs $500-1,500 installed, tankless systems typically run $1,500-4,500 including basic installation, though costs can exceed $6,000 when electrical panel upgrades, new gas lines, or complex venting modifications are required. 

You might need electrical panel upgrades, new gas lines, or extensive venting work – expenses that aren't immediately obvious when shopping for units.

Limited flow rate capacity

This limitation catches many homeowners off-guard. Most electric tankless heaters max out at 2-5 gallons per minute, while gas units typically provide 5-10 GPM. Compare this to your current usage:

Typical hot water flow rates:

Run a shower and dishwasher simultaneously, and you might exceed your system's capacity, resulting in reduced water pressure or temperature fluctuations. You can also learn more about how much electricity different appliances consume by reading about washing machines, microwaves, TVs, and computers.

Installation complexity

Unlike swapping out a traditional tank, tankless installation often requires significant modifications. Electric units require dedicated 220V circuits with substantial amperage capacity – typically 120-160 amps for whole-house units, though point-of-use models may need only 20-60 amps and larger systems can require up to 200 amps. Gas units require proper venting and potentially upgraded gas lines.

Many installations require permits and professional work, adding time and cost to your project. DIY installation typically voids warranties and may violate local codes.

Maintenance requirements

Tankless systems need regular descaling, especially in hard water areas. Mineral buildup can reduce efficiency and damage components. Professional maintenance typically costs $100-200 annually, though some homeowners handle basic maintenance themselves.

Skip maintenance, and you'll face expensive repairs or premature replacement. Traditional tanks are more forgiving of neglect.

Performance in cold climates

Cold incoming water requires more energy to reach target temperatures. In northern climates where groundwater temperatures drop to 40°F or below, tankless systems work harder and may struggle to achieve rated flow rates.

Some units automatically reduce flow when incoming water is extremely cold, potentially leaving you with disappointing performance during the winter months.

Tankless vs. traditional water heaters

The choice between tankless and traditional systems depends heavily on your specific circumstances. Here's how they stack up across key factors:

Is a tankless water heater right for your home?

The decision ultimately comes down to your household's specific needs, usage patterns, and budget constraints.

Tankless makes sense if you:

Stick with traditional if you:

Household size considerations

The bottom line? Tankless water heaters deliver on their core promise of endless hot water and energy savings, but they're not magic bullets. Success depends on matching the system to your specific needs and accepting the higher upfront investment for long-term benefits.

For many homeowners, the combination of space savings, efficiency gains, and unlimited hot water makes tankless systems worthwhile investments. Just make sure you understand the limitations and costs before making the switch – because there's nothing worse than buyer's remorse when you're standing under a lukewarm shower.

Sergey Fedorov

Co-founder & CTO

Sergey has been running A1 SolarStore since 2017 with the main idea in mind – making going solar easier for everyone. Based on a thorough market research and his personal experience, he shares his ideas on both solar industry and management related topics

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Illustrator: Dasha Vasina