Electric Tankless Water Heaters – Will They Save You Money?

Electric Tankless Water Heaters – Will They Save You Money?

I was thinking about what topic to post on this weekend and I got a call from my sister. She asked; where can I get a tankless water heater. This was fortuitous, because I had just read an article on gas tankless water heaters and the comparative costs of installing one versus a standard gas water heater. In that article the comparison was not very favorable.So, I asked my sister; why do you want to know? Well it seems she is renovating her utility room and wanted to reclaim the space in the corner occupied by her standard water heater. So I did some quick research.

My sister does not have gas service , so I investigated the available electric tankless heaters. Now a couple of things you need to think about very carefully as it regards tankless water heaters, especially electric ones, is your families lifestyle. If you have 4 teenagers and 2 working adults, it is possible you will pay more to heat the water with a tank less heater than if you have a standard water heater.

This is especially true if you live in colder climates or your water comes from a deep well. In these cases your incoming water will be colder than if you live in say Florida or Texas, so you will need to raise the water temperature more than if you did live in Florida (avg water temp. from faucet is about 70 degrees in Winter, in colder climates, water is as low as 40 degrees from the tap). Given that teenagers take longer showers, the savings just might not be there.

General physics will tell you that it takes 1000 watts to raise 4.1 gallons of water 100 degrees. Based on this, if you are importing water at 40 degrees, then it will take 10,000 watts to raise 40 gallons (typical size of standard water heater) of water to a standard storage temperature of 140 degrees. Now once it is raised, then it will start to cool, although slowly with the improved insulation in newer water heaters.

At a KWh price of 10 cents, the cost to heat that water was $ 1.00. Now compare that to an electric tankless unit producing a temperature raise of 65 degrees at 2 gallons a minute (adequate in Florida with an input temperature of 65 degrees, not adequate in New York or Maine). This particular unit is rated at 14KW. That means that while it is heating, it is going to burn 14,000 watts of electricity per hour. That same 40 gallons will take 26 minutes to heat and cost about 60 cents to heat. Seems like a big savings right.

Well not exactly. You see, when your standard tank is full it reduces the energy needed to heat the incoming water as the incoming water will absorb some of the heat from the already hot water somewhat reducing the input to raise the temperature of the water. In a tankless there is no stored hot water so the electricity required to heat the water is expended on a direct ratio. In testing the range of saving comparing tankless to standard water heaters has fallen in the range of 10-40 percent (the higher ranges being on gas fired devices).

So the next consideration is installed cost. In the regard you will spend about $ 1,200.00 labor and device to install an electric tankless heater, providing you have enough capacity in your electric panel. Assuming so, we compare this cost to an approximate installed cost of $ 600.00 for a standard electric water heater. Additionally, expected savings are thus according to government research:

For homes that use 41 gallons or less of hot water daily, demand water heaters can be between 24% and 34% more energy efficient than conventional storage tank water heaters. They can be between 8% and 14% more energy efficient for homes that use a lot of hot water;around 86 gallons per day. You can achieve even greater energy savings of 27% and 50% if you install a demand water heater at each hot water outlet.


So lets analyze this. If you have 4 teenagers in the house, you probably use more like 120 gallons of hot water per day, so your savings will disappear unless you can afford to install 3 uits (cost about $ 3,600.00) to cover both bathrooms and the kitchen and clothes washing. Even then your savings will be between 27% and 50% of your cost of heating water.

Government figures now say the average elctric bill allocates about 13 percent to heat water, so if your monthly bill is about $ 100.00 your savings might be 3-6.00 per month. Additionally, taking a shower and washing the dishes or clothes at the same time will probably stretch the capabilities of the electric tankless heater that I am using in the example, so you will need a bigger one or another one and a bigger electric service unit so your installed cost will increase dramatically. So the saving just are not there.

If on the other hand, there are just 2 of you and your lifestyle is easily adjusted to accommodate the demand between showers, dish washing and clothes washing, then you might achieve some savings by installing the tankless heater. At this point, given the numbers, I could not see any justification in my family. There is one other factor to consider, tankless heaters have a life expectancy of 14-18 years a standard water heater will last 6-12 years depending on the hardness of the water and the maintenance performed on it.So I had to tell my sister the facts that the tankless will cost more to install, will save them a very minimal amount on operating costs, but that it would save her the 7 square foot of space or so that the current water heater takes up in the utility room. In the end she will have to decide if it is worth it.