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Tankless Water Heaters vs Hot Water Tanks

March 14, 2019

The scientific community is in agreement, global warming is definitely occurring with a huge helping hand by mankind. We all want to do our part – recycling our waste, smaller vehicles with greater fuel economy, saying ‘no’ to plastic grocery bags at the local market, etc. More and more Canadians are become energy conscious when it comes to energy usage in the home, and a significant portion of energy goes into heating our domestic water.

Tankless, instantaneous, on-demand hot water heat has never been more popular. And why shouldn’t it be? The energy factor is in the 95-99% range for condensing units, tankless heaters only heat the water when you turn a tap on, they’re almost silent running, and CO2 emissions are reduced by 900-1000 pounds per year per average household installation! Time to replace your water heater? You’re of course going to want to replace it with a tankless system right? Well – with a $1000 FortisBC rebate, it might actually be a good idea. There have been some major improvements in tankless technology (and reliability) in the last 5 years so I've been making some changes to this article (originally written in 2011) putting tankless in a better light.

Before jumping in with both feet, you should still know what you’re getting into. Tankless will likely work great for your household dynamic, but it is a different experience than your old storage hot water tank. This time around, I'm going to start with some tankless water heater pros and cons and storage water heater pros and cons:

Tankless (Navien 0.95 EF)    
Wall hung tankless gains you new space   Requires annual maintenance (a must!)
Instant recovery - Unlimited hot water   Higher up front cost (at least double)
Ultra high efficiency - Uses less gas   Lots of small parts to go wrong
Better for the environment   No hot water during a power failure
15 year warranty   New vent lines must be installed to the outside
$1000 FortisBC Rebate   Requires 110V power outlet to operate
    Couple of seconds longer wait for hot water
    Quiet, but there is some blower sound
Storage Hot Water Tank (Rheem 0.67EF)    
1/2 the price of a tankless after rebate   Slower recovery - can run out of hot water
No annual maintenance required   6-8yr warranty period from manufacturer
Relatively high efficiency   Requires more space (24"x24"x60" approx)
No new vent lines required   Requires 110V power outlet to operate
Stored hot water is available during power failure    
Completely silent (power damper units)    
$200 FortisBC Rebate    

You'll notice that I state in one of the tankless cons is that there are lots of small parts that can fail over time. While this is still true today, we've been installing tankless units since 2011 and surprisingly have had close to no issues. If the tankless unit is properly installed and has annual maintenance, I am much more confident in saying the unit is likely to last out past its warranty period.

Along that same thought, another con is that annual maintenance is absolutely required in tankless units. Don't underestimate the importance of annual maintenance. In my experience, if no maintenance is given to a tankless unit, you can expect damage to the heat exchanger within 5-6 years. This is because the instant temperature rise from 58F to 120F using 199,000 BTUs will coat the heat exchangers very small tubing with calcium (found naturally in tap water), to the point where some of the tubing begins to get plugged up. When enough of the heat exchanger is plugged with calcium, it will begin to leak. It is very important that tankless units are de-calcified once a year with a decalcifying solution to prevent the heat exchanger from leaking. We always install a maintenance kit to allow for easy annual de-calcification.


It’s a Tankless Job

The main thing to realize is that in most cases, tankless system are just that – tankless. No water storage tank at all. With a tankless system, when you turn on a hot water tap, here’s what happens: Opening the faucet allows water to flow inside pipe and out the faucet. A flow sensor within the tankless system detects this flow and allows 0.4 gallons of water through while it is measuring the incoming water temperature to calculate how many BTUs it needs to put out to maintain its operating set-point (usually set to 120F or 50C). Once flow is detected, the system’s computer tells the tankless unit to come to life, firing up the burners and starting up the exhaust fan (these are various levels of “silent”, but none as silent as not having a fan at all). The cold water goes through these burners in a series of very small water channels (the heat exchanger) quickly heating the water to a predetermined temperature (also continually monitored by its computer). Once appropriately heated, the hot water is sent on its way to the open faucet. When the faucet is closed, the flow sensor notifies the computer that flow has stopped, which in turn shuts down the burner and goes back to sleep awaiting the moment flow begins anew.

This flow that we’re speaking of is also important when considering a tankless unit’s practical use. Various tankless models are designed with various levels of maximum flow. This flow is measured in GPM (gallons per minute) for a set tempurature rise. Many tankless units considered to be multi-bathroom use capable, can produce 9 GPM of heated water with a 35 degree fahrenheit temperature rise. This means that if the cold water entering the house is 58 degrees fahrenheit, the unit is capable of “instantly” heating it to 93 degrees at 9 GPM of flow. This same unit would also be rated at approximately 7 GPM with a 45 degree fahrenheit temperature rise, so it can keep up with a solid 103 degrees (about the temperature of a hot tub) at 7 gallons per minute of flow.

Typical flow for: GPM
(gallons per minute)
Bathtub 4
Wash machine 3
Dishwasher 3
Shower head 2.5
Kitchen faucet 2.2
Bathroom faucet 1.5

I’m probably losing you here, but it's important to understand this before selecting tankless unit! Keep in mind that a typical dishwasher needs to maintain a hot water input of approximately 120 fahrenheit to work properly. A hot shower is about 105F. We install Navien NPE240A tankless units because they actually have a built-in buffer tank (2 gallons) and have a flow rate of 5.6 gallons per minute with a 67F temperature rise (which can easily maintain a raise in temperture of your ground water to about 125F - more than enough.)

If you’re like me, you probably like to have a nice hot shower (about 105 degrees) so the tankless unit will want to raise the water temperature 62 degrees getting it up to 120F. To accomplish this temperature rise, we can guesstimate the flow rate would be around 2.5 gallons per minute if you've left the water saver disk inside your shower head. A Navien NPE240A will have no problem doing this since it will send water at 120F and you'll add cold water at your shower valve (to bring the temperature back down to 105F) which will reduce the flow rate required by the Navien to about 2.2gpm.

Since you likely currently have a typical old-fashioned hot water tank, let’s look how that works. When you turn on a hot water tap, water flows from your hot water tank (that is already filled with hot water) to the faucet. (As a side note, to me, storage hot water tanks are truly “instantaneous”. There's no fan, no waiting for burners to come on to heat,  and no flow reduction based on temperature demand. Its full flow all the way at 130F degrees.) A standard hot water tank can easily handle simultaneous usage (until its hot water is depleted that is). My wife and I have a standard 40 gallon natural gas John Wood hot water tank, and two teenage daughters. There is never any thought to turn off the wash machine or dishwasher when someone is in the shower, and we have never run out of hot water. Flow limitations for a standard hot water tank system is dependent upon the waterline sizing, not the water heating capability. Of course, with a storage hot water tank, when your out of hot water, you are OUT! Tankless units may have flow restrictions, but no capacity restrictions - they just keep going and going. Go ahead and have a two hour shower with a tankless unit - you'll have endless hot water.

Energy Requirements

Tankless heaters have no time to gradually heat the water, it needs to heat the water fast, efficiently and now! This is why a typical gas tankless heater runs at 199,000 BTU. It only fires on demand, but when there is demand it fires BIG! If you have an hour long shower, its firing for an hour long. A typical storage hot water tank relies on its storage (usually 40 to 50 gallons) and an extended recovery time (30 to 40 minute range). In my previous house I installed a quick recovery 50 gallon hot water tank, that recovered quickly enough that even when we had lots of guests staying over, it easily kept our water hot. It was a 48,000 BTU tank.

BTU (British Thermal Unit)

One British Thermal Unit is the amount of energy it takes to heat 1 pound of water 1 degree Fahrenheit. With appliances, the BTU value refers to BTUs per hour.

Lighting an ordinary match and letting it burn its length radiates about 1 BTU of energy.

Imagine lighting 199,000 matches and you can see the energy released by a tankless water heater in an hour!

Energy Efficiency

Most tankless units are energy efficient within the unit themselves. I mentioned before that typical condensing tankless units run at a 0.95 - 0.99 energy factor. What may surprise you is some natural gas storage hot water tanks also have great energy efficiency ratings. Modern hot water heaters are much more efficient than they used to be. It used to be (maybe 10 years ago) that there was a fair amount of heat loss out the top of a typical storage water heater. The newer high efficiency atmospheric storage water heaters have a damper on the top that closes the top of the water heater off so there is no heat loss there. If you put your hand on the side of a modern hot water tank that’s full of 140 degree hot water, the tank shell isn’t even warm, it will feel cool to the touch. This equates to higher efficiency storage hot water tanks.

Insulate your hot water lines!

The greatest culprit in heating loss comes not from the heating system used to heat the water, but rather from hot water lines in the house that aren’t insulated. If you have a tankless water heater sending hot water down 50 feet of un-insulated water line, it loses energy the whole way along the line until the pipe is heated up to the same temperature as the water inside it. This is why the water seems to gradually get warmer until finally its hot. The same is true for typical storage hot water tanks. The tank can be as efficient as can be, but if the water lines aren’t insulated, it must waste energy heating those lines up before you finally get the full benefit of the hot water. If you have un-insulated hot water lines in your house that are also part of a recirculation system, the recirc line will actually heat your house, albeit very inefficiently.

Cold Water Sandwich

People investigating tankless systems or who’ve spoken with someone who owns this sort of system will invariably come across the term “cold water sandwich”. What does this mean? With a tankless system, let say your spouse just had a shower so the water lines between the shower and the tankless heater are all hot. Now its your turn for a shower, so you jump in and turn the water on. Immediately, there is hot water coming because the lines are all full of hot water, and you’re in there happily singing at the top of your lungs. But remember, tankless systems aren’t truly “instantaneous” – and I love this part - so while the flow sensor is waiting for a ½ gallon of cold water to go through before it decides to come to life and start heating, you’ve got a ½ gallon of cold water barreling down the line toward you while your singing in the shower. “IEee!” Cold water sandwich! Kind of like putting a bucket of cold water above a partly open door.

So what to do about this? We always install a tankless unit in conjunction with a buffer tank (the Navien NPE240A has a buffer tank built-in). The buffer tank ensures that any cold water coming in is absorbed by the buffer tank – not by your backside.

To be fair, many tankless water heaters now try to reduce the cold water sandwich effect using various methods. On of these methods is to measure the length of time between the last hot water usage and the current hot water request. If the time is short enough (a minute or two), the tankless unit will fire up within one or two seconds reducing the amount of cold water coming at you. Whatever method is used, the cold water sandwich issue is something that should be addressed at the install.

Final thoughts

A tankless system has a great 15 year warranty, unlimited hot water, takes up less space and hangs up nicely on the wall. When installed correctly, it’s easy to perform the required annual maintenance. However, high efficiency storage water heaters are half the price (when you take the rebates into acccount), and still have hot water available to you during a power failure. Tankless is becoming much more common these days, and if you feel a tankless system is right for your situation, click here to get a price quote for installing a tankless hot water heater in your home.