Determining whether a tankless hot water heater will save you money is a complicated calculation. In today’s blog article, we are going to talk about how to determine if a tankless hot water heater may save you money.

Costs: Obvious and Hidden

There are two costs to examine when looking at the economics of tankless versus tank hot water heaters. There is the upfront cost, and the cost over time.

In most cases, the upfront cost of the tankless system is higher. The cost is higher not just because of the equipment, but because the installation is more complicated and will take longer. Another issue is the size of the house and whether your current electrical system can handle a whole-house tankless system. If you have to increase/improve your home electrical system to handle the tankless equipment, then that will be an added cost.

Energy Source

Another factor is the energy source. If you are already piped for natural gas, then the you may want to use it. However, an electric tankless water heater will pay out faster than a gas one. You would have to factor in the cost of energy which typically rises over time.

Service Life

A tankless hot water heater will likely have a longer service life than a hot water tank. So, that is another consideration. It is definitely more energy efficient, as well, if that is important to you.

Is Tankless for Me?

You also should consider whether you meet the criteria for a tankless system. With a hot water tank, you have a certain amount of hot water. Once you use it up, you have to wait for it to reheat. With a tankless system, you have a certain threshold of how much hot water you can have at one time. If you use too much at one time—like running the washing machine, dishwasher, and taking a shower–then you will likely not have enough hot water for anything because the hot water will be divided between whatever is demanding it. So, be aware of the limitations of tankless systems.


The tankless hot water heater will likely save you some money in the long term. If that is what you want knowing that the upfront cost is more and the payout will be years away, then the tankless systems are terrific.

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