Does Tankless Water Heater Save Money?

Suppose you were preparing for a busy day. It was the worst start as you had to take a cold shower as running out of hot water. Someone used hot water.  And you had no time to wait to fill up the hot water tank. From that day you have been seeking a solution to hot water. An energy-saving tankless water heater would be that solution. You may be eager to know ‘does tankless water heaters save money?’

A briefcase-sized tankless heater will supply you with constant hot water without any delay. You are concerned about the efficiency and saving benefit of the solution.

Let’s dig out to have the answer to the crucial question.

What is a Tankless Water Heater?

Tankless water is also known as an on-demand water heater. As per the name you can understand that this water heating system provides hot water instantly as per user demand.

For heating-water fast, this technology uses a power-driven burner. This appliance normally runs by electricity, natural gas, or propane. It flows water through a heat exchanger pipe directly to your shower or faucet so incoming water temperature would be hot.

As this improved fuel economy model doesn’t store any hot water, that’s the task does tankless water heaters save money.

Tankless Hot Water Heaters vs Tank Storage Water Heaters

Tankless Hot Water Heaters vs Tank Storage Water Heaters austin's best plumbing

The water heater would be an expensive investment for homeowners. The home in which you might be living for decades. For the installation of tankless water heaters, you have to upgrade the electrical system or alter various things for gas lines.

Let’s watch the Pros and Cons of Tankless VS Tanks Water Heater

All these things mean a costly journey for every homeowner. But in the long run, these investments are economical. Because tankless water heaters save money by using less energy.

At the time of the renovation of your home or replacing your old heater, you have to consider cost, efficiency, and life expectancy is important. For choosing the best one you should take advice from a contractor or plumber.

Here we compare the storage water heater to the tankless water heater to make the best decision. We examine the common features of tankless and storage water as you can select the perfect water heater.

How Much Money Does Tankless Water Heater Save?

It is clear that being equal in other categories, tankless water heaters are more efficient than others. As we compare gas operated tankless heater to gas-operated storage heater, electricity operated tankless heater to electricity operated storage heater. Besides, we take into account the same amount of water used in every case.

Tankless Hot Water Heaters vs Tank Storage Water Heaters austin's best plumbing

The U.S. Department of Energy said, “For homes that use 41 gallons or less of hot water daily, demand water heaters can be 24%-34% more energy-efficient than conventional storage-tank water heaters,” “They can be 8%-14% more energy efficient for homes that use a lot of hot water — around 86 gallons per day.”

This huge efficiency helps to save $108 per year for a gas run tankless water heater and $44 for a tankless water heater run by electricity according to the U.S Department of energy. This savings story may excite you, but it does not mean that tankless water heaters save money overall.

This information sounds great. Right?

But you should rush to install a tankless water heater. You have to bear in mind that this model has a significant investment at the beginning stage. On average a tankless water heater has three times more costly than a conventional storage water heater. 

To install an electricity-powered tankless water heater it requires a minimum of $1000 including installation with a plumber. If you dont require a whole house tankless water heater, then your cost would be decreased a bit.  

On the other hand, you have to spend unto £3000 to install a gas power tankless water heater by a skilled plumber. To set up a tankless water heater, some up-gradation would require. For instance, homeowners have to upgrade their electrical system to run an electric heater.

Tankless water heater brings lots of benefits for you. Though, you should think wisely before switching to a tankless water heater. First, you have to know about the availability of energy like gas or electricity to operate the water heater. Find out the best energy resource for the long term.

You have to consider these because you purchase the heater for many years, not for a few months. So, you should carefully choose the best option for you. 

Tankless water heater is cost-effective. That’s why this appliance cut the utility bill. A study run by the Consumer Report also states the same thing. They said this type of water heater is 22 percent more energy efficient than the storage-tank model run by gas.

What the Statistics Say About Tankless Water Heater

According to the US Department of Energy said, on average every American household spends $2,060 for electricity uses. and 13% of the electricity bill is for water heating, which is about $268. This amount of money is spent on washing machines, dishwashers, water heating, and mop buckets.

But the above cost does not include an additional water bill average $70.39 per month ($845 per year). Say for example, in Atlanta a household has to spend an average of $91.92 ($1104 per year) for water.

So, it’s more or less the same story for every American family. That’s the reason every homeowner like you seeks a way to save money that’s tankless water heaters do. Tankless water heater achieves the praises from the people of this field for its energy efficiency. By its fuel-efficient feature, tankless water heater cuts cost and save money.

As you already knew that this model only uses energy only at the time you press the faucet or shower tab. It does not store a single drop of hot water. By doing so it cut the budget for energy from the first month. That’s why you can see a reduced utility bill for this.

Big Investment

Fuel saving tankless water heater is expensive to procure. At the initial state it is not budget-conscious. This thing discourages many people from switching tankless water heaters. But money-conscious all of you have to remember that, that investment is for one time.

And this expenditure for tankless water heaters save money as a long term benefits. Besides the machine itself, you have to take some preparation also. A gas runs tankless water heater may require venting of your household. 

On the other hand for an electric run tankless water heater, you have to upgrade your home’s electrical panel.You should have a conversation with a professional plumber about the up-gradation or change you need and the expense for the heater.

Good at Fuel Economy

Tankless water heater heat water as per hot water demand. But, it doesn’t store any hot water at all like conventional water heaters. As a result, this appliance requires comparably less energy which helps tankless water heaters to save money. And this reflects on energy bills.

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As we want to know the answer to the question ‘do tankless water heaters really save money?’ To get the answer first we have to figure out the amount of energy consumption of the appliance. Electricity or gas consumption depends on the demand for hot water. The more hot water you need, the more electricity or gas bills have charged.

The good thing is that no one does not run a tankless water heater 24/7 in a year. We can assume that it’s for a few fours in a day. As per the energy department of the USA, tankless water heater systems are 24-34% more effective than conventional storage water heater systems. These statistics for those families who consume 41 gallons of water per day.

It’s true that with increasing the consumption of water this effectiveness decreases gradually. For instance, if you consume more than 86 gallons of water per day, then efficiency levels stay between 8-14%.

You already have realized that this water heating model is a bit expensive. As we discussed earlier, most of the time it’s required new electricity wearing. We have known about tankless water heater’s money savings features. It’s true, but we will not get any benefits at the beginning.

How Long Does a Tankless Water Heater Last

Besides the energy efficiency of a tankless water heater, many homeowners see other benefits. For instance, the model saves space and environment friendly. The manufacturer says that many people purchase this appliance by considering it as a green environment.

The preliminary cost of tankless water heater is higher than a conventional storage water heater. So, it is very logical question before spending that how long does a tankless water heater last ?

Question arises another question. In this state of mind you must have other question that is how long do water heaters last? The answer of this question is on an average traditional storage tank-model heater last around 10-15 years.  

Now come to the first question. Tankless water heaters life span is longer than other heaters. Besides a long life span, less operating expenses and energy costs offset tankless heater’s high cost. Most of the tankless water heater’s life span extends more than 20 years.

Moreover, tankless models have some replaceable parts which increase the lifetime of this appliance. And we already knew that, traditional water heaters have 10-15 years of life.

Tax Rebate for Tankless Water Heater

Tankless water heaters save money in various forms. For example, it can help you rebate a $300 federal tax.

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This tax is for non-business energy property. If you purchase a qualified tankless water heater, then you will get a 300 dollar tax credit. This credit is only for existing homes and principal homes. Newly constructed homes and rental houses are not eligible for this benefit.

All energy Star certified tankless water heaters are available for the tax benefit. According to energy star 12% of the energy consumed by a water heater.

Is a Tankless Water Heater the Secret to Savings?

The tankless water heater has become a popular water heater over a conventional storage water heater during the last decade. This demand, on-demand, or instantaneous water heating system has several benefits. It provides hot water almost instantly when you require it. When no one uses this, it does not store 30 to 80 gallons of hot water.

Many homeowners believe that, if they switch to this appliance then tankless water heaters will save money for them. In the long run, it saves money but for most of the users, accounting is not clear.

How Much Electricity Does a Tankless Water Heater Use?

If you are a responsible user, then you should have tankless water heaters necessary electricity-related information. There is a correlation between electricity consumption and saving money.

So, to know how much a tankless water heaters save money, you have to calculate electricity consumption. How much energy or electricity consumes the tankless water heater depends on some factors like the size of your family, personal use of hot water, and the heater unit you use.

For getting the right information about energy consumption, you have to know about the watts of your unit. For that, you have to examine the label of your unit.

You can locate the label beside the water heater. It must be clearly visible to understand.

By reading the label you will be able to know about the wattage and operating voltage of the unit. Your unit should work at 240V. A whole house tankless water heater has four units of 7,000 watts. So in total its requirement 28,000 watts of electricity. 

How Many Watts Does a Gas Tankless Water Heater Use?

You can use gas as the primary source of your tankless water heater unit. It gives the idea that gas run water heaters consume less electricity than water heaters run by electricity.

As a matter of fact, when the gas run water heater stays lazy or not heating water, that time electricity requires only to keep on and run the sensors. Besides electricity also requires operating circuits though we here only talk about watts.

When tankless water heaters start running, the electricity load increases as electricity is required for firing ignite. For gas running tankless water, heaters venting is fundamental. Electricity may be required for venting for some units.

Don’t assume that gas run tankless water heater’s electricity consumption rate would be high. For heating water, gas run heaters will require few amps at 120V.

The notable thing is that it would not require upgrading your home electricity system like an electricity run model. The most challenging part of a gas run tankless water heater is venting. Some people think that that is more complicated than an electricity run model.

Tankless Water Heater Savings Calculator

You can estimate energy efficiency and the of energy for a electric or gas water heaters. This interactive calculator provided by the Federal Energy Management Program or ENERGY STAR.


Electric tankless water heaters require an upgraded home electrical circuit. On the other hand gas run, tankless water heaters need various alterations in your home. But, in the long run, both tankless water heaters save money since they save energy.

If you want to know more about tankless water heater, just make a call to Austin’s best plumbing company Plumberson.

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