Tankless (“On Demand”) Water Heaters

There has been an increased interest in “on demand” (tankless) water heaters due to the energy crisis.

Manufacturers marketing efforts make claims of huge savings in the range of 30-50%.

Independent studies show actual and reasonable savings expectations to range from 10-15%.

Installation costs for a tankless water heater can be as much as 3 times the cost of a standard water heater. These costs include larger wire, larger breakers, and larger service panel.

Operating cost of a standard water heater is around $30/ month, $360/ year. If you save 10-15% of that using a tankless water heater, the result will be a savings of $3.00-4.50/ month, or $36-54/ year.

It is reasonable to expect the installation cost of a tankless water heater could be a minimum of $1,000. Therefore, using that cost and an expected savings of $36-54 per year, the payback period would be several years.

Some of the negatives of a tankless water heater are:

• Lower water temperatures
• Inadequate water flow for multi-fixture use
• Blinking lights and voltage drops due to instantaneous electrical draw
• Expensive repair, inadequate service contractors, and inadequate replacement parts access
• Additional utility cost for upgrade of transformer and service connection

Some of the negatives for the utility provider:

• Power quality issues from the spikes in voltage and electrical requirements
• Neighboring customers experiencing voltage drops and dimming/blinking lights
• Harmonics produced on system by TWH
• Several TWH installations on system would change the dynamics of demand issues

A customer can obtain the same results with a tank type water heater by taking the following steps:

• Adding a water heater blanket
• Setting the temperature lower
• Adding a timer
• Adding low-flow shower heads

These options would be more practical, save money and maintain comfortable service, while spending much less money. Due to these issues, Mountain Electric does not endorse electric, tankless water heaters.