How Tankless Water Heaters Work

It's the holiday season and your peaceful suburban domicile
is overflowing with houseguests. You need a nice, hot shower
to soothe your nerves, but you're in line behind your in-laws
and cousins. In times like these, you'll be glad you
installed that new tankless water heater in your garage.

The idea behind a tankless system is that it heats the water
as you need it instead of continually heating water stored in
a tank. Tankless heaters have been the norm in much of Europe
and Japan for quite some time, but they haven't gained
popularity until recently in the United States -- largely due
to the green movement. If you're a good candidate for
a tankless system, you can save a substantial amount of money
every year on your monthly bills while at the ­same time
conserving natural gas. Tankless heaters also last about five
to 10 years longer than a tank heater, take up much less
space and provide you with an unlimited amount of hot water.
On the downside, a tankless system can cost up to three times
as much as a tank heater and often requires costly upgrades
to your natural gas line and an expensive venting system.

So is it cost-effective to switch from your traditional tank
heating system? Or should you just wait until your current
water heater bites the dust to make the switch? This depends
on many different factors. ­In this article, we'll break down
these factors to help you weigh your decision on whether or
not to go tankless. We'll also explain in simple terms how it
works so you know what you're getting into.

Tankless Systems

In order to understand how a tankless water heater works,
it's important to know how a standard tank heater operates.
In a traditional heater system, there's a large tank that
holds and heats water. In order to give you hot water when
you need it, the tank continually heats the water to maintain
a constant temperature. The energy used to keep the water hot
even when it's not being used is called standby heat loss.

Tankless systems avoid standby loss by heating incoming water
only as you need it -- they're also referred to as "on
demand" water heaters for this reason. The elimination of the
standby heat loss is what makes a tankless system more
efficient, but we'll get to that in more detail a little
later.

In order to get you that piping-hot shower when you want it,
a tankless water heater uses a powerful heat exchanger to
raise the temperature. A heat exchanger is a device that
transfers heat from one source to another. There are heat
exchangers in your air conditioner, refrigerator and car
radiator. In this case, it transfers heat generated by
electric coils or a gas-fired burner to the water that comes
out of your faucet. This exchanger is activated by the
incoming flow of water. So when you turn on your hot water
tap, the incoming water circulates through the activated
exchanger, which heats the cold water to your preset
temperature. All you need then is some soap and shampoo and
you're ready to wash, rinse and repeat.

Tankless systems come in two varieties -- point-of-use
heaters and whole-house heaters. Point-of-use systems are
small and only heat water for one or two outlets -- say, your
kitchen sink. Because of their size, they can fit under
a cabinet or in a closet. They're beneficial because they can
be installed closer to your outlet and avoid water loss due
to lag time. Lag time is the amount of time it takes for the
hot water to reach your faucet. In large houses, the lag time
can be significant, sometimes as long as several minutes.
This means that while your water heating bill may be going
down, your water consumption will be going up, which is
something you should consider when debating whether or not to
go tankless. Whole-house systems are larger, more expensive
and can operate more than one outlet at a time.

With tankless water heaters, you can choose from electric,
propane or natural gas models. Point-of-use models are
generally electric, while whole-house systems are usually
powered by either natural gas or propane. Which model to go
with and what heating source you should use depends on many
different factors. We'll take a closer look at those factors
in the next section so you can make an educated decision when
it comes time to purchase your tankless heater.