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Experiences With A Tankless Hot Water Heater

originally posted: June 22, 2005
last updated: August 11, 2007

All about tankless hot water heaters, and our experience installing and using one in our home.

Tank or Tankless

The hot water heaters most commonly used in the United States are basically large tanks of water kept continually hot by a heater, which may run on natural gas, propane or electricity. The heater runs intermittently all day to keep the water in the tank constantly at about 120 degrees Fahrenheit, ready for your use.

Our house had a gas-fired hot water heater that died of old age in 2004. When I started reading up on hot water heaters on the web, I ran across tankless hot water heaters, sometimes called "flash hot water heaters". Tankless hot water heaters, obviously, have no tank of water. When you turn on a hot water tap, they sense the flow of water, turn on instantly, and heat the water to 120 degrees as it flows through the heater. You can get natural gas, propane, or electrical models, but I'll mostly be discussing gas models.

The most obvious advantage of this approach is that the tank never runs out of hot water. You can shower as long as you like, or immediately after someone else has showered, and there will always be hot water. However, there is a limit on how much hot water the heater can produce per minute. If two showers are running at once, and the dishwasher is running too, it's likely that the heater won't be able to heat enough water for them all.

The less obvious advantage of tankless hot water heaters is energy efficiency. Since they heat water only when water is needed, they end up burning much less fuel than standard hot water heaters.

Though tankless hot water heaters definitely use less energy, their up-front cost is much higher than a regular hot water heater, so it's not entirely clear if a tankless hot water heater will end up saving you money, but it probably will. Natural gas prices have historically been low, so saving gas didn't necessarily save you a lot of money. However, gas prices have been rising substantially lately, and there is reason to believe that they will continue to do so. Furthermore, conventional hot water heaters typically die because of all the mineral deposits from the hot water in the tank. Tankless hot water heaters don't usually have much hot water in them, so they get far fewer mineral deposits, and so last around ten years longer.

But saving energy has non-economic advantages too. Every bit you save helps reduce America's dependency on foreign energy, and reduces carbon dioxide emissions that contribute to global warming. Also part of the reason that these heaters are more expensive is that fewer are made and sold in this country. Each one you buy helps grow the industry, leading to lower prices, more people buying them, and more energy savings.

I live in Michigan. The actual energy savings are probably higher for people in warmer climates. The "wasted" heat produced by a standard hot water heater mostly leaks into the house. If you are heating the house anyway, that's maybe not so big a problem. If you are air-conditioning the house, it's much worse. You expend energy to make the heat, and then expend more energy to get rid of it. For people in warmer climates, it may well make sense to install the heater outdoors.

Tankless hot water heaters are not new. When I visited my grandparents' old house in Germany as a child, I remember seeing a tankless hot water heater in their bathroom. Such heaters have been very common for a very long time in Germany and Japan. Not surprisingly, most of those available in the US are made in either Germany or Japan. The quality of the ones I've seen has generally been quite impressive, entirely on par with the quality of engineering that we are used to seeing in German and Japanese cars. Which is probably a good thing, because I expect that finding someone to service one in the US could be difficult.

Point-of-Use or Whole-House

German homes tend to use multiple smaller point-of-use hot water heaters. One in the bathroom, one in the kitchen, and so forth. These are usually small and can be installed in a cabinet under a sink. The Japanese tend to use a single larger capacity hot water heater for the whole house. Because of this, you'll find that most of the larger capacity heaters are made in Japan, while the smaller capacity ones are made in Germany.

In our case, we chose a single, whole-house hot water heater, rather than multiple point-of-use heaters. I think if I were building a new house, I'd prefer the point-of-use option. Not only would having instant hot water when you turn on the tap be nice, but it would save energy. If you want to fill a pot with hot water, you only have to heat enough water to fill the pot, not enough to fill both the pot and the long pipe from the hot water heater to the kitchen.

However, installing point-of-use heaters would have been difficult in our existing house. Finding spaces for the heaters under cabinets or in closets would be easy enough, but for each heater you'd also need to bring in a gas line, and provide an exhaust vent. Electrical heaters would be easier, but not as energy efficient. So we choose to just install a single hot water heater in place of the old heater.

Our Heater

We purchased the Takagi TK2 hot water heater, shown at right. No local store stocked it, so we ordered one on the web from Ira Wood & Sons for $929 (plus $48 for the backflow prevention kit and $47.14 shipping).

This unit can deliver 6.9 gallons of hot water per minute, theoretically enough so one person can can shower while the dishwasher is running. It has a computer that senses the rate of flow and the water temperature. When the rate of flow rises above some low minimum, it ignites the gas burner. The computer continuously adjusts the flow of gas to keep the temperature of the hot water at 120 degrees. The unit has an electric fan that blows exhaust gases out the vent pipe, which is also computer controlled.

Though the rated capacity is 4.0 gallons per minute, your mileage may vary. A lot depends on the temperature that the water is at when it comes into the house. The 4 GPM rating assumes a temperature rise of 77 degrees Fahrenheit. I measured the inflow temperature in my house at around 40 degrees. That means the heater needs to raise the water temperature by about 80 degrees. That means I'm likely to get a little lower flow rate, about 3.9 GPM. This is another advantage for people in more moderate climates than Michigan. Your inflow temperatures are likely to be higher year round, so you'll get more hot water.

For an energy efficient tankless heater, not having a pilot light is important. In a standard hot water heater, the pilot light is harmless - it burns all the time, but the energy used helps keep the water in the tank warm so it is put to good use. With a tankless hot water heater, the gas used by a pilot light is just wasted.

One clear disadvantage for a heater like this is that unlike a standard gas hot water heater, it needs electricity to work. The exhaust fan, the ignition system, and the computer are all electrical. That means no hot water during a power outage. It is apparently possible to hook up a battery backup system, but I haven't done so.

A possible problem for tankless hot water heaters in colder climates is freezing. If the unit is not used for a while during the winter, it would be possible for cold air to seep up the exhaust vent and freeze the small amount of water in the heater's pipes. This is much less likely to happen in a standard hot water heater, because of the large volume of water, and because that water is always hot. Our Takagi has an electrical heater and temperature sensor to defend it against this, but these would obviously not work during a power outage. So in addition, there is a backflow preventer on the exhaust vent. This is just a spring-loaded flap that closes off when the exhaust fan is not running.

Clearly this is a much more complex machine than a standard hot water heater. If you take the front panel off it, the inside looks like something you'd find under a access panel on a space craft - it's just packed solid with pipes and wires and gadgetry.


I was fortunate to have my brother volunteer to do most of the work on installing this unit in my house. Having built his own house, he has plenty of experience with all sorts of plumbing and wiring and all the tools necessary. For most people, however, I would recommend professional installation. I called around in my area a bit, and found nobody who had experience installing these, but several who were quite willing to undertake it. Based on my experience working with my brother, I'd say that any contractor can do this who has experience installing standard hot water heaters and perhaps furnaces, if they are also willing to spend some time reading the manual. If I hadn't had my brother's help, I'd probably just have hired the same company that routinely inspects our gas furnace.

This unit did come with a very good manual, also available in PDF form. I did at one point phone Takagi for clarification on some points. The phone support was OK, but not outstanding.

The Takagi hot water heater could either be stood on the ground or mounted on the wall. We choose to attach ours to the wall directly behind where the old hot water heater stood. This put the exhaust vent and water pipe connections pretty close to where they had been for the old heater, requiring a minimum of new plumbing. In warm climates, installing it outdoors would be an option.

Most of the hook-ups for the tankless hot water heater are similar to those needed by a standard hot water heater. You can see all of them in the picture. The water inflow and outflow connections are at the side instead of the top, but are otherwise normal. A pressure relief valve must be installed on the outflow pipe. We made our lives easy by using a bit of flex pipe on these connections.

Unlike a normal hot water heater, an electrical hookup is needed. There isn't a plug. You need to wire it into a junction box.

The gas hook-up is the part that is going to be the biggest challenge for an installer. Although the tankless heater uses less gas overall than a standard hot water heater, at times when it is running full blast it has to burn far hotter than a standard heater ever does, and so it needs to be fed gas at a much higher rate. To enable this, the Takagi needs to be hooked up to a 1-inch gas pipe, instead of the standard 3/4-inch pipe. (Note - this is the inside diameter of the pipe. A 3/4-inch pipe has approximately a 1-inch outside diameter and a 1-inch pipe has approximately a 1.25-inch outside diameter.) Furthermore, the length of the pipe is an issue too. If the pipe run from the gas meter to the heater is too long, or has too many bends in it, then you might need to replace the whole thing with a bigger pipe to get enough gas flow to the hot water heater. Before upgrading to a tankless hot water heater, you'll definitely want to investigate your gas pipes. I expect it can have a big impact on your installation costs.

It so happened that there was a 1-inch gas line running right behind where our old hot water heater had stood, with just a short 3/4-inch spur to the heater. So we only had to upgrade a small section of the pipe. In fact, we ran into some problems here with our installation. The main outside gas valve turned out to be nearly impossible to shut off, making it impossible to replace some of the pipe sections we wanted to upgrade to one inch pipe. We improvised around it. So it's possible our heater is getting a bit less gas than it wants. I still need to get back to this to fix it up right.

The vent pipe is the same size as the one from a standard hot water heater. This is actually a bit surprising, because with gas being burnt at a much higher rate than in a standard hot water heater, you'd expect to need a bigger exhaust pipe, but that's why the Takagi has an exhaust fan, that it turns up to a higher speed when more gas is being burnt. So the vent pipe installation is pretty much normal, except for the insertion of the backflow protection valve, which is just short section of vent pipe with a flap in it. You might also want to be extra careful about avoiding leaky joints in the exhaust pipe, since you are sometimes pushing exhaust through it at a higher pressure than a standard hot water heater exhaust.

The installation manual says that for cold climates, the temperature sensor inside the unit should be put on an extension wire and mounted outdoors instead. We did this, but I never really figured out why that is needed. I would think that it would cause the internal heaters to run whenever it is cold outside, rather than only when the unit itself is cold. I don't really understand why this is necessary. Maybe by the time an internal temperature sensor sensed cold, there would already be risk of freezing.


For the most part, we notice no difference in the supply or availability of hot water. It just works. If you happen to be near the heater when someone turns a tap on, you can hear it firing up, and shutting off again when the tap is turned off.

We did have a problem with our shower though. Sometimes, in mid shower, the hot water would just shut off, which is, shall we say, rather unpleasant. The reason for this was fairly simple. The heater doesn't fire up until the flow of hot water exceeds 0.75 gallons per minute, and it shuts off if the flow drops below 0.6 gallons per minute. I presume this is just because the gas flames can't be turned low enough to keep from overheating the water if it flows slower than that. Now a low-flow shower is supposed to deliver 2.0 gallons per minute, so things should be fine, unless you are already taking a pretty cool shower. After experimenting with a gallon milk jug and a stop watch, I determined that our shower delivered somewhere between 0.8 and 0.85 gallons per minute. With that much total flow, you need to be taking a fairly hot shower if you don't want the heater to shut off.

Careful inspection of the showerhead revealed that it had an inconspicuous flow regulator control that we hadn't noticed in the three years since we'd bought the house. Opening this up seems to have solved the problem. Still, we were reasonably content with the shower when it's flow rate was lower, and it's a pity that we needed to increase it just to keep from getting frozen. Generally, anything you want to do that requires limited flow of not-very-hot water could be a problem.

To get a feeling for the impact on our gas consumption, I reviewed the gas bills for our house. We have a gas furnace, gas hot water heater, and gas stove. Our winter gas usage varies widely depending on the weather, but during the summer, when the furnace is off and gas is used only for hot water and cooking, our gas usage is pretty constant each year:

usage per day
Before tankless heater
June-July 2002 50cf
July-August 2002 50cf
August-September 2002 50cf
June-July 2003 48cf
July-August 2003 47cf
August-September 2003 39cf
After tankless heater
June-July 2004 27cf
July-August 2004 23cf
August-September 2004 27cf

So summer gas usage dropped from an average of about 47 cubic feet per day to about 26 cubic feet per day, a savings of 21 cubic feet per day. At current gas prices (including taxes and what not) that's in the neighborhood of 20 cents a day, maybe $70 a year. That would add up to the extra $700 or so we paid up-front in about 10 years. The expected lifetime of a tankless heater is about 20 years (compared to to 10 to 15 for a standard hot water heater).

Obviously, this data needs to be taken with a grain of salt. With a growing family, our hot water usage probably isn't really constant from summer to summer. Also, a newer model tanked hot water heater might also have been more efficient than our old one, though I don't think the old one was particularly bad.

So I wouldn't say the money savings here are spectacular, but if you factor in the benefits to the environment and our nation's energy independence, it's not a bad deal at all. And if gas prices rise, it could be a very good deal.

Update: In 2005 our three summer gas bills showed average daily usages of 38 cf, 26 cf, and 352 cf. The first one is a bit higher than in 2004, the second one approximately matches, and the last one is completely insane. Eventually we determined that our gas meter was defective and was giving occasional wonky readings like this. It's been replaced, but I think our water use patterns have changed enough now that further comparisons for later years aren't really useful.

It appears that under the Energy Tax Incentives Act of 2005 it will be possible to get a tax break for upgrading to an energy efficient hot water heater in 2006 and 2007. As I understand it, if you install a hot water heater with an energy factor of 0.8 or better in your principle residence, then 10% of the purchase and installation cost (up to a maximum of $150) can be taken as a tax credit. Do-it-yourself installations are allowed, but you have to be able to prove the date of installation and can't add the cost of your time. Most tankless hot water heaters have an energy factor better than 0.8. Taking this together with the near certainty of significantly higher gas prices in the future makes a tankless hot water heater a pretty clear winner.

An update from Valerie, Jan's partner, February 21, 2022:

I was curious to compare the savings that Jan logged in this article to today's gas costs.

Jan estimates that our tankless water heater is saving about 21 cubic feet of gas per day.

So I logged in to our electric company's website and looked up our current bill. It says we used 219 CCF of gas in 28 days last month. One CCF is 100 cubic feet. Our gas bill for that month, including gas and taxes, was $184.59. So, dividing $184.59 by 219, that's a cost of $1.19 per CCF, which is 1.19 cents per cubic foot. I'll round that to 1.2 cents per cubic foot.

If the water heater is saving us 1.2 cents per cubic foot for 21 cubic feet of gas in a day, that's a savings of $0.252 per day, which is $92 per year.

In the article, Jan estimates that the water heater was saving about $70 per year back in 2004.

If I figure that the average cost savings per year for gas for our water heater is the average of $92 (the current savings per year) and $70 (the yearly savings when we got the water heater), that's an average gas savings of $81 per year. Over 18 years, that's a savings of $1,458.

The water heater originally cost about $1,000. So, over time, after it paid for itself, it's saved us $458, and counting. Of course, I'm comparing its gas usage to the gas usage of a tanked water heater that died in 2004, and today's tanked water heaters are probably much more efficient than that. But still, I'm impressed!

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Originally created with Backtalk version 1.4.5 / Wasabi version 1.0.3 - Copyright 1996-2005, Jan Wolter and Steve Weiss