How Does A Tankless Water Heater Work

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Tankless heaters can produce an endless supply of hot water which means that you won't have to worry about running out during a shower or bath. But, if your tankless water heater making noise when water is off, then you may need to start thinking of replacing it.

In this article, we'll show you how it works and its advantages and disadvantages when compared to other water heaters.

Let's get right into it.

What exactly is a Tankless Water Heater?

Tankless water heaters don’t store the water that is heated before you use it. Instead, they heat the water as it passes through the heater. This means that regardless of whether you have 300 gallons stored or 3 gallons stored, your hot water line will always be at 120 degrees Fahrenheit (49ºC). It also means no waiting because there's no tank – and fresh hot water for everyone.

Tankless heaters are designed to provide instant hot water at any time of day, making them ideal solutions for busy families who want to take showers at night or do laundry right after work without worrying about running out of hot water.

Advantages & Disadvantages of Tankless Water Heaters

Here are the advantages and disadvantages of tankless water heaters.

Advantages of Tankless Water Heaters :

Heating water on demand is low cost; water only heats when needed. This means that a tankless water heater can save you up to 70% on your electric bill, and 25% on gas.

The entire system operates with low maintenance. Even when the cold weather hits and causes pipes to freeze, a tankless will still work thanks to its self-modulating heating elements.

You will never run out of hot water again as the tankless heater produces hot water instantly, unlike systems that store it in tanks so you have to wait for the stored hot water to heat up before using it. This means no more waiting for a long period of heating a lot of cold water just to take a single shower or do one load of laundry.

Tankless systems also use less energy because they are not constantly running and don't require storage space for the excess heated water that is not being used or will be used in an hour or two. The system is very easy to install since there are few parts to connect. It only requires two fittings for the hot and cold water lines outside and one hose to connect the inlet with the outlet.

Disadvantages of Tankless Water Heaters:

The initial cost of purchasing it is high, but over time you will save money by using less energy because of the reduced number of times your tankless heater needs to be turned on. This means that in ten years, even if you don't plan on upgrading or replacing your system, you can recover its investment. However, there are also several state rebate programs available that will help offset the cost.

If you have a low enough demand for hot water (a family of 2-3) then a tankless system would not be advisable as they require more flow than conventional storage tanks when it comes to temperature.

How a Tankless Water Heater works

A tankless water heater is an electrical heating appliance that supplies hot water to the faucet in your home. The unit heats cold tap water as you use it, eliminating the need for a large storage tank to hold enough hot water before it's needed.

Each unit is different, but most are made up of a gas or electric furnace on the outside of your home, with an insulated pipe that leads directly into the house. Instead of using one continuous flame like a regular tank heater, these systems use individual flames called “stages”. Each stage ignites when needed by sensors that monitor water flow in relation to heating demand. 


Your system may have anywhere from two-four stages. Although each stage individually produces less heat than non-tankless models, the many small units ensure that the entire line doesn't run out cold while waiting for one unit to recover from its high heating demand.

Cost of a tankless water heater work

As mentioned previously, a tankless water heater is more expensive than similar storage models, but the benefits are well worth the investment. The reason for this cost is that it uses more energy to heat cold tap water compared to warm or hot water in a tank which makes up for some of your savings over time. 

As long as the tankless water heater lasts, you will pay less by having a tankless water heater because it heats the water as you use it, instead of storing warm or hot water up to a certain temperature. One advantage of this is that you don't have to drain it like the conventional water heater

Tankless water heaters and rebates

There are many rebate programs in place for people who wish to purchase a tankless system, so before your purchase get out the yellow pages or log on to your computer and contact your city's local utility companies to see if any programs are available. In most cases, both natural gas and electricity providers offer rebates for residents who install tankless systems. 

Most utilities will give you anywhere from $100-200 back on-demand type models, while they may offer anywhere from $50-$150 for solar-powered units depending on the size of your home.

Differences Between Electric & Gas Tankless Water Heaters

In a lot of cases, people are not sure if they should invest in an electric or gas tankless system. To help you decide on the best type for your home, this section will discuss the benefits and drawbacks of each.

Gas Tankless Water Heaters

Gas tanks are very similar to their electrical counterparts in that they heat the same way. The major difference is that instead of electricity, gas units use natural gas from your home's main supply line. This allows the almost instant delivery of energy when it is needed as opposed to the slow response time required by electric devices.

When considering purchasing, an important thing to note with these types of systems is that while most offer higher efficiency levels than electric models, they are harder to install – you will probably need a professional plumber or handyman to set them up.

gas tankless water heater
Image Credit: Kitchen Infinity Photo

Electric Tankless Water Heaters

Electric tankless water heaters have the benefit of being easier to install and move around if you should ever need or want to relocate the unit. This is because most use two rubber hoses that connect directly into your cold and hot water supply instead of a gas line large enough for a unit this size. Another major advantage to these units is that they will reduce your home's emissions by around 90% plus makes it possible for you to be energy certified.


Final thoughts on tankless water heaters and how they work 

Overall, there is no denying that tankless water heaters can be a huge benefit to any household `or business. They may save you hundreds of dollars each month on your natural gas bill in some cases, and these energy savings will add up over time. 

If you're looking for ways to reduce your costs while also helping the planet and those around you, then installing a tankless system is one way that should be considered.

Dino Paccino

Dino Paccino

Dino is a lifelong writer and home improvement specialist. He enjoys bringing cutting-edge information on home renovation and remodeling to Kitchen Infinity.

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