Tankless water heater's are increasingly popular, and Bellevue Homes is researching whether to install them in our new homes at Oak Park. Our working conclusion, still under review, is that these units should primarily be used in cases where space is at an absolute premium, because the energy savings alone are not sufficient to make them a smart investment.
Here is our thinking...
- Upgrading from a traditional storage-based water heaters to a high quality tankless water heater costs range from $1500 to $2500, installed. Why is this price differential so large? Tankless water heaters rely on large quantities of natural gas being burned in a very short of amount of time. This requires large, high quality burners (as much as 4x as large as those in a traditional storage unit), oversized natural gas delivery pipes, special exhaust vents, and a micro-processor to manage ignition. Storage units, on the other hand, use standard-sized gas lines, don't require electrical connection, and are made in much greater quantities with simpler technology.
- Relative to a high quality storage unit, we would expect a tankless unit to save between 35 and 70 therms of natural gas per year, or about $40-$80. These figures suggest a typical payback period on the order of 40 years, a figure that is much longer than the likely life of the tankless heater. Of course, more precise results depend on the exact nature of a particular homeowner's usage patterns, but this payback period suggests that Bellevue Homes will often look to use our "energy efficiency" budget elsewhere.
What are some of the other considerations that might be considered? A tankless unit can be mounted on an exterior wall and may take up essentially zero usable floor space. A storage type unit, on the other hand, typically requires a small closet and associated access space. This strikes us as the most compelling reason to work with a tankless system--though $1500 is a lot to pay for a closet!
Other considerations don't seem to point convincingly in favor of either the tankless or storage based system. Some suggest that tankless systems will last longer, but these systems are more complicated, repair parts are more expensive, and repairs are not likely to be suitable for do-it-yourselfers. Tankless units allow an "endless" supply of hot water (since there is no tank that might run out), but "endless" does not mean "unlimited"--typical tankless units can deliver between 2 and 3 gallons of hot water per minute (a high volume hot shower may be on the order of 2 gpm). Tankless systems experience a 3 to 10 second delay in delivering hot water--the electronic controls need to process the fact that hot water is called for and then fire up the burners--and some systems have difficulty in delivering smaller amounts of hot water.
Based on the above, you'll understand why Bellevue Homes will likely install more high-efficiency/highly insulated storage tank hot water heaters than tankless, but don't be surprised if a tankless system shows up in one of our homes. Sometimes a home's floorplan is "just right" without the hot water tank closet, and the tankless system's space saving design will come in handy.
