Tankless water heaters are promoted as an energy efficient appliance and a cost benefit. But will you be saving energy and money?

tankless water heater

According to SDG&E, the average home in San Diego spends about $300/year to heat water. A tankless water heater can reduce usage up to 23% or about $75 per year.


  • One of the advantages of having a tankless water heater is never running out of hot water.  Unlike a conventional water heater, you can keep the hot water coming as long as you like.
  • Another advantage is the size. They are very small and can be put in places that don’t fit a conventional hot water heater.
  • They also last about 20 years and are easy to maintain.


  • A tankless water heater can cost up to $2,500 installed and sometimes even more. Installation can include adding extra ventilation to avoid carbon monoxide poisoning or installing larger gas lines and fittings because tankless water heaters need more gas to heat the water quickly. These extra installation items also raise the labor costs which can add up to another $1,000 to the costs.
  • It could take up to 20 years to recoup the costs of buying and installing a tankless water heater.
  • People tend to think they heat instantly but they actually don’t. It may take a little longer for the hot water to arrive at the faucet since it takes moment for the heater to sense the demand, check the temperature of the incoming water and then turn on.
  • Some people complain that the water temperature isn’t consistent with tankless water heaters compared to conventional water heaters. So you have either continuous hot water with inconsistent temperatures or consistently hot water but run out of it quickly. With the advancement of technology, the inconsistency of temperature may be fixed in the near future.
  • Another huge disadvantage is not having hot water during a power outage. With a conventional hot water heater, there is a backup water source but not with a tankless water heater.

So will you be saving energy and money if you install a tankless water heater?

Not really.  You can save some energy because you won’t be using gas or electric when the heater is just sitting there.  However, it’s a minimal savings.

You won’t be saving money unless you plan on keeping your tankless water heater for more than 20 years.  However, that doesn’t mean you shouldn’t upgrade to one.  You just won’t be saving much if you do.