Do your research before purchasing a tankless water heater
Business Development Manager
Most homeowners use storage tank water heaters, which keep water hot 24/7. Tankless water heaters, also known as "on-demand" water heaters, heat water as you use it.
A tankless water heater (or “on-demand” water heater), whether powered by electricity or gas, has gained popularity due to its space-saving design and claim for increased energy efficiency.
Tankless water heaters do not store hot water, they heat the water as you use it. The size of tankless water heaters varies from small point-of-use heaters to whole-house units, and prices for the units range from $500 to $1,500. The manufacturers of these units make claims about big savings from energy efficiency and reduced standby loss. Unfortunately, they neglect to tell you the downside of an electric on-demand water heater.
Pros and Cons:
- Pros: No standby heat loss, space-saving design.
- Cons: Minimal energy savings compared to well-insulated tank heaters, high energy demand (12 kW to 30 kW), potential need for electrical system upgrades, and higher operating costs for electric models.
Efficiency and Costs:
- Tankless heaters can draw as much as 30 kW, compared to 4.5 kW for traditional tank heaters.
- High demand can lead to increased costs for electric cooperatives and their members.
- May require significant electrical upgrades, such as a designated 100-amp circuit breaker, in addition to installation costs and monthly operating costs.
Suitability:
- Best for small quantities of hot water, such as in cabins.
- May not be cost-effective for typical homes due to high operating costs and potential for running out of hot water during peak usage.
Choosing between a tank and tankless water heater requires careful consideration, including up-front costs, installation requirements, operating costs and your family’s specific hot water needs.
For personalized advice, contact our energy experts who can help you determine the best option for your home.
| Electric water heater cost comparison |
20-kW tankless water heater on regular rate |
4.5-kW storage water heater on regular rate | 4.5-kW storage water on off-peak rate |
| Demand (kW) charge | $30.00 | $6.75 | $0.00 |
| Energy (kWh) charge | $41.00 | $44.00 | $25.25 |
| Estimated monthly operating cost | $71.00 | $50.75 | $25.25 |
| Off-peak savings | No | No | Yes |
| Eligible for rebates | No | No | Yes |
*Note: Electric tankless water heaters could incur a higher monthly access charge.