Equipment purchase and installation runs $1,200–$3,500 for tankless heaters versus $800–$1,500 for traditional tanks. Tankless models use 24%–34% less energy when households use up to 41 daily gallons, according to ENERGY STAR. Conventional tank heaters last 8–12 years with operating costs of $440–$580 per year.
Tankless units are more expensive. An electric tankless unit will cost about $500 to $700, roughly the same as a traditional tank model, while the cost of a gas tankless heater runs about $1,000 to $1,200. Beyond the initial cost, the national average for the installation of a tankless unit is slightly over $1,700.
Before you commit to buying a tankless water heater, the primary drawbacks to know include: Higher upfront costs. Tankless water heaters are, on average, quite a bit more expensive to buy and install than tank water heaters. Access to fuel.
A tankless unit allows you to save on your energy bill (up to 34%) by using less energy. Tankless water heaters can last longer than storage water heaters—sometimes as much as five to ten years longer.
Tankless Water Heater Installation Labor Costs
Labor is a significant cost factor when installing a tankless water heater. It can add $500 to $3,000 to the cost of the project. Point-of-use models require less work to install, so you'll pay on the lower end for labor.
The federal tax credit for tankless water heaters can lead to significant savings for homeowners. Eligible tankless gas water heaters must have an ENERGY STAR certification and a UEF of greater than 0.95. Homeowners can claim up to $3,200 in tax credits for eligible home improvements in a single year.
Absolutely! In fact, tankless water heaters are becoming the standard for new home construction because of the energy efficiency.
Some people hesitate to decide on a tankless water heater because they can be a slightly higher cost; however, you get significantly more life out of one. A standard water heater tank lasts about 8-12 years. A tankless water heater can last as long as 25 years!
Installing a tankless water heater typically takes four to five hours, depending on the type of system and a household's needs.
Electric Tankless Water Heaters
They're less expensive than gas-powered ones but aren't efficient if you run multiple hot water devices. They may struggle to keep up with multiple appliances at the same time.
While a tankless water heater will deliver an unlimited stream of hot water, they struggle to deliver a lot of hot water at one time. So while you might be able to take 100 showers in a row if you have the dishwasher, washing machine, and shower going at the same time you might have problems.
A tankless water heater can last anywhere from 15 to 20 years with proper maintenance and operation. In comparison, a standard tank water heater normally has a working life of 10 years or less. How Do Tankless Water Heaters Work?
Installing a tankless water heater can require gas line upgrades, electrical modifications, and specialized venting—all of which can increase costs. Professional labor also runs from $500–$1,500 due to complex installation requirements.
It's important to note that standard homeowners insurance policies typically only cover damage to the structure of your home and personal property. They do not include replacement cost coverage for the heater itself.
Tankless water heater replacement is a complex process that involves the skills of a highly trained technician. Unless you are experienced and comfortable enough to solder pipe, make gas connections and follow local codes, hire a licensed professional.
A tankless water heater cannot provide hot water faster than its ability to heat the water. While a tank unit can provide hot water for multiple uses at once, a tankless unit might not be able to support simultaneous usage, such as washing dishes, taking a shower and running a washing machine all at once.
A 50-gallon water heater should be replaced with a tankless system with a 10 GPM flow rate just to be safe. Selecting the right flow rate ensures you won't experience cold showers or excessive energy costs. Proper sizing optimizes performance, providing hot water on demand without unnecessary waste.
To find the correct capacity, add up all of the fixtures that you expect to use at the same time. For example, if you know that two people will be showering while another person runs a sink, you would need a 5.75 gpm unit, based on two 2.5 gallon-per-minute showers and one 0.75 gallon-per-minute faucet.
Do I need to replace all my home's plumbing if I install a tankless water heater? Rarely is a complete overhaul necessary. However, you may need to upgrade certain sections of your plumbing, particularly those leading into and out of the tankless unit, to ensure proper water flow and volume.
Even for homes with high water usage, up to 85 gallons per day, tankless water heaters can offer up to 14% energy efficiency savings. However, while they offer energy savings, the higher upfront costs and installation expenses can result in a long payback period, ranging from 12 to 27 years.
As we discussed above, the biggest downside of owning a Tankless Water Heater is its higher cost. The initial installation costs and the price of the unit are more expensive than a traditional Storage Tank Water Heater. Another downside of a Tankless Water Heater is that it has limited hot water.
Tax Credits for Water Heaters
Rebates are available for high efficiency gas fired tankless, gas-fired storage and for heat pump water heaters. Gas-fired tankless with UEF ≥ . 95 are eligible for up to $600 in rebates.
You can claim 30% of the project cost, up to a $2,000 maximum credit. Heat pump water heaters that have earned the ENERGY STAR are eligible for this credit. You can find a list of ENERGY STAR certified models here.
Advantages and Disadvantages of Tankless Water Heaters
The initial cost of a tankless water heater is greater than that of a conventional storage water heater, but tankless water heaters will typically last longer and have lower operating and energy costs, which could offset their higher purchase price.