Instant water heaters are touted as the best option if you want to save money on your utility bills and have less of a negative environmental impact. But is this true? Is an instant water heater worth it? Or are you better off sticking with the traditional hot water tank? Then again, there are also “point-of-use” water heaters to consider, and with these, you can consider a hybrid solution to heat your water.
Is an instant hot water heater worth it? The more hot water you use, and the longer you stay in the home in which you install it, the greater the benefits of an instant hot water heater. With such a variety of heaters, patterns of water use, and utility and installation costs, it’s impossible to give a straight answer that would apply to everyone.
Let’s take a look at all of the possible costs and benefits and how they might apply to your situation. Then you can decide, in your circumstances, Is an instant hot water heater worth it?
What Exactly Is An Instant Hot Water Heater?
Instant hot water heaters, also known as tankless water heaters, are designed to heat the water in your home, only when you need it. To see why some people think they are a better alternative, let’s start by looking at how traditional systems work.
Traditional Hot Water Systems
With a conventional hot water tank, the system will heat your water and hold it in your hot water tank at the temperature you set on the thermostat. Whenever you turn on your hot tap, you allow the colder water that is sitting in the pipes to run away, and then the hot water kicks in.
You will have as much hot water as your water tank holds. When the tank is empty of the heated water, it will refill and begin heating the fresh water. You will have to wait for the entire tank to get to temperature before you can have more hot water. If you turn on the tap before it reaches your required temperature, you will get cold or warm water.
Instant Hot Water Systems
You install an instant hot water heater in roughly the same place as your traditional tank heater. However, with an instant hot water system, you do not need a tank in which to store your hot water. Instead, with the tankless system, a pipe carries the water directly into the unit, where it is warmed by either a gas burner or an electric element.
When you turn your hot water tap on, you will have a moment of cold water followed by almost limitless hot water. In theory, your hot water should never run dry. There is no tank to empty, and the instant hot water system will continue to heat the cold water coming into your home for as long as you like.
How Much Do Instant Hot Water Heaters Cost?
If you are trying to decide if an instant hot water heater is worth it, your first thought is likely to be, “How much do they cost?” When considering how much a tankless heater costs, you have several different things to consider and not just the purchase price.
The exact purchase price of a tankless hot water heater depends on many things:
- Whether the heater is powered by gas or electric
- The amount of water you can heat and how fast you can heat it. This is generally measured in GPM – Gallons Per Minute.
- How much energy it uses. It is measured in BTU. BTU is the amount of energy an appliance needs to use in order to raise the temperature of one pound of water by one degree. The higher the BTU, the more energy a heater uses to heat the same amount of water.
- Where you are located in the country.
As an extremely rough guide, I checked out the prices for tankless water heaters on the website of a major US retailer. I chose a random store location to access the costs, and this is what I found.
Gas instant hot water heaters range from $600 to over $2,000
Electric instant hot water heater heaters range from $200 to over $1800
Meanwhile, if you are buying a new, traditional hot water heater, it will cost between $400 – $1600.
Again, just to reiterate, the actual cost depends on what you buy and where you buy it.
The nest cost you have to consider when you are wondering if an instant hot water heater is worth it is installation. This is possibly the highest cost involved with any type of hot water heater, but with tankless heaters, it gets complicated.
For basic installation you can expect to pay:
- Traditional heaters: $500 – $1600
- Gas instant hot water heaters: $800 + See below
- Electric instant hot water heaters: $700 + See below
The amount for the tankless installation is where it can get sticky. You see, some electric tankless hot water heaters require more power than the average home can supply. In this case, on top of the cost of the heater and basic installation, you will need to rewire your entire home and possibly even pay for the utility company to upgrade the infrastructure which delivers electricity to your home.
You can encounter a similar issue with gas systems. The additional requirements for large volumes of gas at once to heat the water can mean you have to have extra gas lines installed.
On top of these upgrades for energy needs, there is also a possibility that you will have to have your water lines upgraded.
Peripheral coasts include permitting and remodeling the area where the tank is installed.
How Much Do Instant Hot Water Heaters Save?
At one point, it was relatively simple to give a general answer when someone asked how much they might save by installing an instant hot water heater. However, these days, not so much.
The problem is simple. You have already seen how variable the cost of purchasing and installing a tankless hot water heater. A similar set of issues affect the on-going running costs. You have to consider:
- The size, make, and model of the unit.
- Whether you buy an electric or gas model.
- How energy efficient a unit is.
- The starting temperature of the groundwater or water in the pipes to your home.
- The temperature to which you heat your hot water.
- How much water you use.
- The size and layout of your home.
- The cost of energy where you live.
Having said that, according to Energy Saver, the US Department of Energy’s consumer resource site, a tankless heater powered by gas will save an average of $108 per year in energy costs. Meanwhile, an electric-powered heater will save approximately $44 per year.
There are a lot of other pros and cons to consider if you are asking yourself Is an instant hot water heater worth it?
Benefits Of An Instant Hot Water Heater
If there are no clear cut cost savings to tell us whether an instant hot water heater is worth it, what else can we consider?
The Tanks Are Longer Lasting
Most tankless hot water heaters are said to last at least 20 years while their traditional counterparts last, on average, 10 to 15 years.
Manufacturers Provide Longer Warranties
This longevity is reflected in the warranty a manufacturer is willing to provide when you buy their heater. Standard hot water tank systems usually have a five or six-year warranty at most, while instant hot water heaters regularly come with a 15-year warranty as standard.
They Take Up Less Space
Instant hot water heaters take up significantly less room than older systems. This may not be a consideration if you have a large utility or boiler room, but if space is at a premium, every last inch might count.
There Is Less Chance Of Flooding
A dying hot water tank can leak for some time before you notice. Worse still is the fact that a hot water tank can fail and flood your home with gallons of water. With a tankless system, this is not a concern.
They Are More Energy Efficient
Traditional hot water heaters are around 93% energy efficient, while tankless heaters can hit 99% efficiency.
Gas is always less energy efficient than electricity when it comes to heating. Therefore you will find that a hot water heating system with a tank will be around 63% efficient. A tankless gas system, however, will achieve approximately 86% efficiency.
Rebates Are Available To Offset The Costs
The exact tax rebates available at the federal level can change, but as of 2019, you can claim a $300 tax rebate if you install a gas-powered tankless system. Refer to Energystar.gov and consumerreports.org to check for tax savings items.
There are also other rebates and subsidy programs available across the country.
They Have A Lower Negative Environmental Impact
By using less non-renewable energy, you will have a lower negative impact on the environment in general. If you install an electric tankless system, you can have even less of an effect if you can install solar panels with which to power it.
However, there are more environmental benefits in addition to the energy savings with a tankless hot water heater.
- With a smaller tank, there are fewer resources and less energy used to manufacture each unit in comparison to tank heating systems.
- If a water heating system with a tank breaks down, it frequently requires the replacement of the tank and/or the heater. On the other hand, tankless systems may be repaired with replacement parts.
Downsides Of An Instant Hot Water Heater
There are, of course, some potential downsides to installing a tankless hot water system. We have already touched on the higher installation costs and possible infrastructure upgrades, but there are further potential drawbacks to consider.
There May Be A Lower Flow Rate
Depending on the make and model you choose, you may find that the tankless system cannot keep up with demand. This can result in either one or two outlets having hot water while others have cold or all of your taps and other outlets having lukewarm water.
Hard Water Can Cause Problems
In hard water areas, you may need to purchase a water softener. You will then need to install it where it can treat the water before it goes into the tankless heater. If not, you may find damaging scale build-up within the heater.
Instant Heaters May Not Always Turn On
Some users have found that if the tap is turned on slightly, such as when shaving or brushing teeth, the tankless water heater does not kick in. This results in the need to turn the tap on further and use more water than needed.
If you are wondering if an instant hot water heater is worth it, there are a wide range of things to consider. The initial purchase price is only a small piece of the puzzle. By carefully evaluating your needs and your motivations for replacing your heater, you will be able to arrive at an informed choice that’s right for you.
Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.