When I began renovating my historic home, I quickly realized that the hot water heater--much like the squirrels that lived in the attic--had outstayed its welcome. Since I didn't want to replace it with another clunky tank that could potentially leak through the ceiling, I chose a tankless version. I was amazed that this tiny, 1' x 2' box mounted to the wall could meet my home's entire hot water needs. I was also pleasantly surprised to learn that it cost mere dollars per month to run, and given that heating water typically accounts for 40% of the average energy bill, that's significant savings.
Tankless water heaters haven't entirely caught on in America, but they've been widely used in Europe and Asia for years. They understood what we're only just realizing: it's wasteful to keep an entire tank of hot water on hand when you can heat water as you need it. Who doesn't love instant, endless hot water on demand?
Choosing a Tankless Water Heater
If you're in the market for a tankless water heater, determine which type best suits your needs. First, you should take into account the fuel type (gas or electric), and then the capacity required. Tankless water heaters come in two general sizes: point-of-use and whole house. The technology is the same; it's really just an issue of "flow rate," or gallons of water per minute (GPM). A point-of-use heater will provide water for your kitchen sink, for example, while a whole house heater can handle a couple of bathrooms plus a kitchen, assuming every fixture isn't running at the same time.
Evaluate your lifestyle and situation. Exactly how many fixtures will run at once? A single person surely won't tax a heater, but a family who gets ready at the same time in the morning will need a lot more hot water. All faucets and shower heads must have a flow rate below 2.2 GPM, according to the Federal Energy Policy Act of 1992, but older fixtures may have a higher rate. Determine the necessary flow rate for your water heater by adding the flow rates of all the fixtures that could potentially operate at once.
Also consider the temperature of the water entering the heater, which will vary depending on your climate, as well as the desired output temperature. This difference is called the "temperature rise," and each unit is rated accordingly.
Tankless Water Heater Installation
The vast majority of you will hire a contractor or plumber to install your tankless water heater, which is a very good idea. Let the professionals handle the complicated tasks of properly ventilating the heater and determining if your existing gas line can support it. Your plumber will also advise you on the size of tankless heater you need, so don't agonize too much about adding up those GPMs. As with any renovation project, check with your local building department as you will likely need to pull a permit.
Pros and Cons
Tankless water heaters are expensive. Expect to pay several hundred dollars, or even thousand(s) to purchase the unit and cover the installation. However, tankless heaters last as much as twice as long as their water-wasting counterparts, so in the end, the costs may even out. A possible Federal tax credit helps to sweeten the deal.
Another potential deal breaker: some tankless heater owners complain that it takes too long for the hot water to reach the faucet. If your bathroom or kitchen is located on the opposite end of the house from your heater, imagine the length of pipe the hot water must travel to reach you. If you stand there running the faucet for several minutes, waiting for the hot water to arrive, it kind of defeats the purpose of choosing an energy- and water- conserving heater. This can be avoided by properly sizing the heater, and if it's impossible to locate a whole house unit within reasonable distance from all wet rooms, then consider zoning with multiple heaters or simply installing a point-of-use heater at that hard to reach location.

