Popular in Europe and Japan for many years, “on-demand, tankless” water heaters are beginning to attract more attention in North America. Tankless heaters are relatively compact wall-mounted units, fueled either by gas or electricity, that are designed to produce hot water only when needed. When a hot water faucet is turned on at a household fixture, cold water begins to flow through coils in the unit and is instantaneously heated to a preset temperature, then distributed to the plumbing fixture. 

When first introduced years ago, few builders or homeowners became interested because of their relatively high price and reliability problems. But the continuing escalation of fuel costs and the redesign of many units to eliminate some of the earlier problems has led to renewed interest, primarily in new construction, but for replacement of old or leaking conventional tank-type units as well. The key benefits touted in the marketing of these units are their energy efficiency, limited space requirements, and ability to supply hot water whenever needed.

While these units will supply hot water on demand, they are not designed for high water volume. Typically, tankless heaters provide adequate hot water at a normal water flow rate of 2 to 4 gallons per minute. They can provide adequate hot water as long as the draw through the system doesn't exceed design ratings. However, if there is a demand for hot water from many different fixtures at one time, a tankless heater may not be able to keep up. Hot water will continue to be produced however; the high volume will result in a lower supply temperature.

Most of these units also have a minimum operating flow rate and pressure. At very low flow rates, for example, less than 0.5 gallons a minute, the unit may stop producing hot water. The primary reason for this limitation is that it is difficult to maintain a safe water supply temperature at low water flow rates.

Undoubtedly, the reduced space need is a plus for almost all installations – not only because the unit takes up less physical space but because the smaller size provides options on placement in many different areas of a house that could not accommodate a large storage tank.

To meet an expected high demand, multiple tankless heaters can be installed at one central location, or several units can be distributed throughout the house. A tankless unit can also be used as an indirect heater by installing an insulated storage tank. The feasibility of this option, however, must be weighted against the cost of installing a conventional water heater.

When contemplating installing one of these units, homeowners must look at all the costs and benefits versus storage tank type units. Review specific manufacturer information and realize that, at least initially, switching to a tankless heater will likely mean some adjustments in hot water usage patterns.