Bradford White’s EverHot tankless units.

The age of the tankless water heater is upon us. Sales of tankless units are growing like never before, and what is a common residential product in Europe and Asia is on its way to achieving the same status here in the Western states. But that doesn’t mean tank-type water heaters have seen their waterloo (no pun intended). Plumbers and homeowners need to know when tankless units are appropriate, what they can do for the homeowner, and--perhaps most importantly--the tankless units’ limitations.

“Our business has really exploded in the last couple of years,” said Aaron Siegal, director of marketing and sales for EEMAX, Inc., a supplier of tankless water heaters based in Oxford, Conn. “The market for tankless water heaters is certainly on the upswing, especially on the residential side. Commercially it’s been around for several years, we’ve successfully marketed our product to the light industrial and commercial market. The awareness on the residential side has really exploded in the last couple of years [and] I think that’s only going to increase. Some of the main [tank-type] water heater manufacturers have now introduced tankless water heaters as well. That draws awareness to this product category. We did a segment on Bob Vila’s “Home Again” program recently where they featured our product. It’s definitely going to be a growing part of the water heater market for a number of years, especially on the residential side.”

Paloma Industries, Inc., of Oxnard, Calif., estimates the market share for tankless water heaters at currently less than 10 percent, but definitely on the rise. “The consumer awareness is growing,” said general manager Hadi Takeuchi. “Because of the rising gas cost, energy conservation and the environmental impact, we believe that the tankless market share will be substantially higher within three years.”

In many European and Asian countries, tankless water heaters far exceed tank-type units in market share, according to Frank Steibel, president of Stiebel Eltron, a tankless heater supplier in Holyoke, Mass., who said what’s happening in the European and Asian markets is a good indication of what lies in store for the U.S. market. “The tankless electric whole-house heaters today still have a fairly small [U.S.] market share compared with conventional electric tank type units,” Stiebel said. “However, that is changing rapidly as professional plumbers and homeowners learn more about the many advantages of the newer tankless units: improved large capacity, technical reliability, compact size and easy installation. More and more professionals are turning to tankless electric heaters.”

The rise in tankless popularity is due to factors that go beyond the products themselves, according to Ted Kwak, vice president of Takagi USA in Irvine, Calif. The trend toward recreating bathrooms as luxurious personal retreats or miniature spas has added to the tankless fever, he said.

“Tankless water heaters take up less space, provide a virtually endless supply of hot water, have little need of repair and last a lot longer than conventional water heaters,” Kwak said. “As the spa and bathroom continue to merge with the growing popularity of features like 14-inch rain showerheads and large Jacuzzi tubs, you’re seeing a demand for more hot water. Homeowners expect better-performing appliances that keep up with this demand, yet at the same time are more efficient and reduce energy costs. Because of the capabilities tankless technology has, they are able to provide that. More and more people are turning to them when it comes time to replace their current heater.”

When Should You Go Tankless?

Installing a Takagi tankless water heater.

When home owners find themselves waiting for hot water, or when they wish to improve the operational efficiency of their home's hot water systems, tankless systems make great sense, according to Stiebel. “Tankless means never running out of hot water,” he said. “Our tankless units operate at energy efficiency levels of very close to 100 percent. Generally speaking, applications in a warm climate work better than those in a cool climate. This is because the ambient water temperatures are higher in a warm climate.”

With a "standard" 200-amp electrical service, a tankless electric whole-house heater can supply enough hot water for a home, apartment or condominium with up to three bathrooms in a warm climate or up to two bathrooms in a cold climate. “Most homes today have a 200-amp service, which usually enables you to install a 20-28 KW tankless electric whole house heater,” Stiebel said. “For very large homes with more than three bathrooms and/or a jacuzzi, you should consider the use of multiple units and an electrical service that is larger than 200 amps. The amount of hot water that can be produced is determined by the main electrical service.”

Electric tankless water heaters typically offer a little less capacity than the gas-powered versions, according to Siegal. “The electric tankless water heater, which we characterize as our whole-house product, is roughly 28 kilowatts with a capacity of right around five gallons per minute,” he said. “You can get residential gas tankless water heaters that have capacities to right around 180, even up to 320,000 BTU. That can increase the capacity up to 10 gallons per minute. So with the electric products you’re limited to roughly five gallons per minute capacity.”

While there are many features of tankless water heaters that make them very attractive, there are also some sacrifices that have to be made when choosing them over a traditional tank-type water heater.

“The advantages are several,” Siegal said. “Because the unit creates hot water when activated by flow, you have an unlimited source of hot water, which is attractive to a lot of consumers. Also the unit is very compact and only consumes energy when you have water going through it. There is a point in time where the capacity may exceed the product’s performance, so that’s what you have to look at. To put it into perspective, a shower is roughly 2.5 gallons, and a tub might be three gallons per minute. [A tankless water heater] certainly has the capacity to do more than one application at a time, but it is limited by the capacity you’re using.”

Siegal does not advise using a tankless unit as a stand-alone system for a jetted tub (that may require seven or eight GPM) or a multi-spray shower system (that may require 10 GPM). Using multiple tankless water heaters can often be the solution to such a situation. “You may want to consider using more than one of these type of products if your capacity needs exceed their design capabilities,” he said. “As consumers become more aware of this type of technology, it becomes important to have some dialogue with the manufacturer or with an educated salesperson [who can] tell them both the benefits and limitations of this product.”

Overall, there are three very important distinct advantages of tankless water heaters, according to Siegal: unlimited water supply, energy savings, and space-saving size. “You’re not challenged by having to put a large tank or storage vessel in your garage or basement,” he said.

Tankless water heaters can offer versatility and added value for plumbing customers. “They are ideal for special situations, such as cabin homes or second vacation homes, as well as large families or singles that travel frequently,” Kwak said. “Homeowners look to hire professionals who are knowledgeable and offer creative options. For plumbers, offering a tankless water heater as a solution to a frustrated homeowner increases their profits and puts them in the forefront of technology. Over the past year, plumbers who install tankless units have seen a dramatic increase in referrals, some up to 30 percent. Utility costs are rising while new compliance regulations are driving up the cost of conventional tank water heaters. So homeowners are looking for alternatives.”

Takeuchi pointed out the environmental benefits of using tankless water heaters. “We need to look at the environmental cost of emitting greater amounts of CO2 and NOx,” he said. “Tankless gas water heaters are more efficient, cleaner burning, safer, and will consume less energy compared to storage tank-type water heater. Our new PH-28 models with input of 199,900 BTUH can deliver more gallons per hour of hot water than any residential tank-type water heater.”

Indeed, tankless water heaters may be an important aspect of the increasingly popular trend toward sustainable “green building” practices. “EEMAX has participated on several ‘green’ buildings,” Siegal said. “Recently we did the police headquarters in Dallas, where the building was completely engineered to green specs [including] our product as an on-demand water heater. It’s a prototype for government facilities that want to use green building specifications, and we’re very pleased to be a part of it. Ultimately what will happen is that they’ll try to standardize the products that were used in this project, and future projects, to comply with the green building standards.”

Even Rheem and Bradford White, two major players in the tank-type water heater business, are now offering their own tankless models. “GAMA began tracking tankless water heater sales as of January 2004, and the market is on track to be 100,000 units for the year,” said Tiffani Thompson, specialty products sales manager for Rheem. “Although this is only about 1 percent of the water heating industry, it is the fastest growing category with 15-20 percent annual growth. “California has strong sales, and the Southeast seems to have a growing interest, possibly because warmer climates can take advantage of the outdoor unit which requires no venting and frees up square footage in the home. As consumer awareness continues to increase, this category may go from a niche market to mainstream within the next five years.”

Decisions, Decisions…

There are several manufacturers and models to choose from when looking to spec and install a tankless water heater system. Tankless experts said there are several things to look for to help make the right product decision.

“You want to look for a company that’s reputable and reliable, with a good reputation, that has been around for awhile,” Siegal said. “Look for someone that has reliable distribution. Also, the distributor must have knowledge of the product. Look for unique features in the product itself. For example, the EEMAX unit is easy to service without having to pull the system off the wall, and the unit also has some technology that provides temperature control, such as microprocessing thermostats, so the customer can pre-select a temperature that he’s comfortable with and the heater will consistently deliver that.”

Stiebel echoed the sentiment. “As far as tankless electric whole house units are concerned, [plumbers] should look at the reputation of the company…and the quality of the product,” he said. “By selecting reliable, proven names in the business, you can enjoy a ‘no callback’ experience. You also have to make sure you purchase a unit with a sufficient KW capacity for the job so there is enough hot water available to keep your customers happy. When using an electric whole house unit, the size of the electrical panel has to be at least 200 amps in almost all cases.”

Kwak said the most important feature in a tankless water heater, even above energy cost savings, is overall quality.. “Because the initial investment cost of a tankless heater is more than that of a conventional heater, a reliable unit that will live up to expectations is more important than reducing cost,” he said. “Companies that have built a reputation on manufacturing quality heaters, then back that up with helpful tech support, result in a smooth installation and a satisfied customer.”

Remember that heaters are not a one-size-fits-all proposition. Look for a tankless heater that is appropriate to the needs of the end-user. “Takagi produces several different models, because the hot water needs of an active family of four are drastically different than the requirements of a retired couple,” Kwak said. “Fitting the unit to the customer’s specific needs will reduce follow-up visits.”