Pick the right size and fuel type. The method for sizing tankless water heaters is different from that for storage water heating equipment. Choose an appropriate model based on peak demand, incoming water temperature, and desired outgoing water temperature. Most water heater purchases are centralized units, but in some cases a point-of-use unit is desirable to cut down on the waiting time for hot water when a sink is a long way from the main water heater. For point-of-use installations, an electric unit is likely the best choice because it doesn’t require venting. Centralized units that are advertised as “whole-house” can be used in commercial applications with small loads despite being marketed to residential customers. (See Figure 2 for example flow rates and temperature rises of gas and electric tankless units.) When choosing a water heater, select one that best accommodates your flow rate and temperature rise needs.
Figure 2: Tankless water heater flow rate comparisons
Gas tankless water heaters can provide hot water at higher flow rates than electric tankless heaters. When choosing a tankless model, be sure that flow rates will meet your peak demand at the temperature rise you need.
To figure out your peak demand, list the number of devices you expect to draw hot water at one time, and add up their flow rates. This is the desired flow rate for the demand of water. For example, let’s say you want a tankless water heater to operate a shower and two sinks at the same time. Assuming your peak demand is 2.5 gpm for the shower and 0.75 gpm for each sink, your total peak demand would be 4 gpm. Knowing your flow rate can also be helpful in some large-load applications, where you may be able to install multiple units to accommodate demand.
Optimize for low-flow fixtures. Specifications for tankless water heaters include requirements for minimum flow rates to activate them—usually around 0.5 to 0.75 gallons per minute (gpm), as well as minimum and maximum water pressure (usually 15 to 150 pounds per square inch). Be aware of low-flow fixtures in your facility when selecting a tankless unit to ensure that your water heater will operate effectively at the relevant flow rates.
Calculate cost-effectiveness. Gas tankless water heaters can be cost-effective, especially when used in high-water-use applications and new construction where incremental installation costs are lower than retrofit applications.
Analysis of a hypothetical situation reveals that payback periods for tankless heaters are significantly longer in lower-water-use applications than in high-water-use applications. In the example shown in Table 2, tankless water heaters have paybacks ranging from approximately 8 to 25 years in low-water-use applications compared to approximately 2 to 6 years in high-water-use applications.
Table 2: Cost-effective applications for gas tankless water heaters
For a conventional 50-gallon residential-size gas tank unit, the installed cost is approximately $600. The incremental costs for an installed gas tankless unit differ depending on whether the unit is installed in a new building, replaces a failed unit in an existing building, or replaces operable equipment in a retrofit. The installation costs for replacements are typically much more expensive than for new construction, because frequently the gas line will need to be replaced due to the higher input capacity, the venting system will need to be replaced, and there will be electrical requirements as well that require hiring an electrician. In a retrofit application, where a tankless water heater is installed in place of an operational existing water heater, the economic calculation must account for the full cost of the new unit.
Tankless heaters become more attractive when replacement costs are considered, because tank water heaters must be replaced between 6 and 10 years and tankless heaters last about 20 years, according to manufacturers.
For a broad overview of expected annual costs for different water-heating technologies based on your water use, and to compare otherwise similar gas and electric water heaters, see our Water Heater Fuel Costs calculator. If you already have a general idea about what technology and fuel sources you’re interested in, our Water Heater Economic Comparison calculator provides a side-by-side economic analysis that compares up-front and annual costs, life cycle costs, and simple payback period. By necessity, these calculators make assumptions to simplify the calculations, so use them for initial screening only. For more accurate performance predictions, conduct a more detailed analysis that includes such factors as actual usage patterns, hot water loads, and part-load performance of equipment.
Plan ahead. Even if your building’s water heaters are not in need of replacement, it’s wise to decide what your preferred replacement product will be ahead of time. Planning ahead is particularly important if you’re considering a tankless water heater retrofit because the installation process can be more complex than a standard replacement. Being prepared to make a decision quickly when the time comes will streamline the replacement process.