A conventional water heater—also called a storage water heater—heats water stored in a tank. This type of hot water system can provide stored water on demand but is limited by its capacity. If you run out of hot water, it will take a while before a hot shower is possible. A tankless water heater—also called an instant water heater—actually warms the water on demand. So, not only does it provide the heated water instantly, it is never at risk of running out. Tankless systems are a relatively new innovation. Most homes do not have them. Even most new homes still have conventional water heaters installed, and so homeowners must decide if investing in the transition is worthwhile.
Is Your Home Suitable for a Tankless Water Heater?
You should first determine if your home is suitable for a tankless water heater. Generally, any home can be made suitable, but underlying issues will add additional costs, which you will have to factor. The first potential issue is electrical capacity. The requirement can be anywhere from 200 to 300 amps—with the higher end being necessary for colder areas. Most modern homes will typically meet this spec. Older homes often will not. Your power company will most likely perform this evaluation for you at no charge. But if the capacity is too low, you will have to hire an electrician to perform the upgrade. Another potential issue is water flow. The required flow depends on the gallons per minute required by the unit or units you choose. Inadequate water flow will likely require an upgrade as well.
Higher Initial Costs
A tankless water heater will generally have a higher upfront cost than a conventional water heater. But be mindful that this additional upfront expense is mostly limited to the equipment. If you deal with a company that installs both tankless and storage water heaters, the cost for labor should be about the same. How much more will it cost? This depends on the kind of water heater and features you want and regional pricing differences. The rule of thumb is that a tankless water heater will cost twice as much as a water heater with a tank. So, if a conventional unit would cost you $500 overall, the tankless unit would cost about $1,000.
It is also important to note that there may be ways to mitigate the initial cost. Some of these opportunities are specific to tankless water heaters, such as tax credits and energy rebates. This will vary from year to year, but at the time of this writing, there were energy rebates and tax credits available for tankless systems but not conventional systems. How much you can save will depend on the federal credits available but also the rebates that are available in Arizona in addition to your county and city or town.
Tankless Lasts Longer and Is More Efficient
Creature comforts aside, why does a tankless water heater make sense financially if it costs more upfront? There are two very good reasons for this: energy efficiency and product lifespan. Storage-based water heaters must operate around the clock to maintain the storage of hot water. A tankless water heater only operates when you need it. For households that use 40 gallons or less of water a day, the estimate is between 24 and 34% energy savings. With greater water usage, that percentage goes up.
Tank-style water heaters last between 10 and 15 years, and it is often recommended to consider replacing them after the 10-year mark to optimize efficiency. A tankless-style water heater should last at least 20 years and can last upward of 30 with proper maintenance. The warranty you receive is also likely to reflect that greater life expectancy. If you save $80 annually, the average tankless system pays for the additional upfront costs in about eight years. That means from year nine to 20 and beyond, the total cost of ownership is certainly lower.
Electric, Gas, Oil and Propane
Just like conventional water heaters, you can purchase tankless water heaters that run on electric, gas, oil and propane. Why is this important? Well, if you transition from an electric storage-based water heater to an electric tankless water heater, there are no conversion costs, which can be considerable. It is generally advisable to stick to what you have. If you have the option, however, propane is generally regarded as the most cost-efficient kind of tankless water heater.
Tankless Takes Up Less Space
Tankless water heaters take up considerably less space because the tank is the most space-consuming aspect of a conventional water heater. This can be a factor because the current space can be repurposed, and even in cases where space is reused, you have more space available for other appliances, like a water filtration system, for example.
Something else to consider is water filtration, which can either be a pro or a con depending on your perspective. Typically, a water filter is advised in order to eliminate minerals, sediment and so on before it passes through the tankless system. Without filtration, your maintenance and repair costs for the heating element are likely to increase. However, if you install a water filter prior to the pressure regulator as opposed to prior to the heater, you can provide filtered water to the entire home.
The Multiple Heater Option
It is generally not practical to have multiple conventional water units. While this may not apply to the average consumer, in larger homes, it is often practical to have smaller units that serve a particular set of rooms rather than one unit. A common setup is to have a downstairs unit that serves the kitchen, bathroom and garage and an upstairs unit that serves all of the bedroom bathrooms.
Home Resale Value
Upfront expenses versus the total cost of ownership are not the only factor that determines whether this investment is worthwhile. There is the added value to your home in terms of comfort and convenience, and only you can put a number on that. There is also the added resale value of your home should you sell it. In fact, tankless water heaters have garnered some attention of late when listed by a number of high-profile real estate organizations among tech upgrades that add value to a home. Both Zillow and Home Advisor estimate that a tankless water heater is an effective investment for people who plan to sell their homes during the lifespan of the product.
Your Tankless Water Heater Experts
Rite Way Heating, Cooling & Plumbing is a locally owned and operated business that has been serving homeowners in Tucson and throughout the surrounding areas for more than 60 years. Our company specializes in both tankless and conventional water heaters. We install, inspect, maintain, and repair them. Our other plumbing services include water treatment, drain cleaning, repiping, leak detection, and leak prevention. We also install, inspect, maintain and repair air conditioners and heating equipment, ductwork, and indoor air quality equipment.
Call today or contact us online to learn more about our tankless water heater and other services!