People always ask us, “How Does a Tankless Water Heater Work?

Tankless water heaters, also known as instantaneous or demand-type water heaters, are becoming more popular in new homes. Unlike traditional water heaters that store large volumes of hot water in storage tanks to be used at any time, tankless water heaters can produce hot water only when it is required. This makes them a great substitute for traditional water heaters if you’re looking to save on heating costs and conserve energy.

What’s more, they occupy far less space than traditional water heaters making them an excellent option if you’re tight on space. But, before you ditch your traditional water heater for a modern tankless one, it’s vital to understand how tankless water heaters work. This post explores how they work, their pros and cons, and factors to consider when picking a model so that you can make an informed decision should you choose to go tankless.

How a Tankless Water Heater Works

Tankless water heaters, as the name suggests, don’t rely on storage tanks. Instead, they heat water directly using a relatively simple process. When a hot water tap is turned on in the home, cold water travels through a heat exchanger in the tankless water heater. As it flows through the heater, either a natural gas burner or an electric heating coil heats the water.

With a tankless water heater, you won’t need to wait for a storage tank to become full with adequate hot water. But there’s a caveat. Tankless water heaters limit the flow rate.

Generally, tankless water heaters deliver hot water at a steady rate of about 2 to 5 gallons per minute. However, gas-powered tankless water heaters have higher flow rates than electric ones. So, if you use plenty of hot water, you may want to pick a gas-powered heater rather than an electric one.

While tankless gas water heaters produce high flow rates, issues can arise if hot water is simultaneously required throughout the home. For instance, if you’re taking a shower and another person is using the dishwasher, you may notice the water pressure drop, or it may become lukewarm because of the strain on the tankless water heater. To tackle this problem, you can install multiple water heaters.

Alternatively, you can install separate water heaters for different appliances. For example, you can install a tankless water heater for the shower and another for the dishwasher. However, considering the cost implication, installing multiple heaters may not be a practical solution to the problem.

Pros and Cons of Tankless Water Heaters

Tankless water heaters are a modern alternative to conventional water heaters. However, though they can be cost-effective and energy-efficient, they may not be suitable for your home. Before you decide to substitute your old water heater for a tankless one, here are some of its pros and cons.

Pro: They’re Energy Efficient

For homes that use about 86 gallons of water daily, tankless water heaters can be up to 14% more energy-efficient than traditional water heaters. Meanwhile, homes that use 41 gallons or less of hot water every day can be up to 34% more energy-efficient. This makes them an excellent choice if you’re looking to reduce your energy costs and conserve energy.

Pro: They Save Space

Conventional storage-tank water heaters have grown larger to comply with federal regulations that require thicker insulation to minimize standby heat loss. As a result, they’re unsuitable for small spaces. On the other hand, tankless water heaters are pretty small, and they can even hang on the wall, making them ideal for homes tight on space.

Pro: They’re Durable

Most tankless water heaters can last for over two decades, and regular part replacement can extend their lifespan even further. In comparison, traditional water heaters typically last 15 years at most.

Pro: They’re Safer

In the event of a leak or a disaster like an earthquake, tankless water heaters won’t spill copious amounts of water. Plus, because their air supply and exhaust vents are sealed, they can’t cause carbon monoxide leaks due to back drafting.

Pro: They’re Easy to Winterize

A traditional water heater can take ages to drain. On the other hand, you can drain a tankless water heater pretty fast with a compressor, then unplug it.

Con: They’re Expensive to Install

Tankless water heaters are pretty costly to purchase and install compared to traditional storage water heaters. But considering they’re more energy-efficient and last longer, they are cheaper in the long term.

Con: They’re Sensitive to Changes in Flow

Scale buildup in pipes or clogged showerhead aerators may cause tankless water heaters to shut down automatically.

Con: Limited Flow Rate

If multiple appliances are using the tankless water heater simultaneously, the unit may fail to perform efficiently.

Con: They Can Waste Energy

While tankless water heaters are generally energy-efficient, models with a pilot light can waste energy. Pick models with an intermittent ignition device (IID) rather than a standing pilot light. The device looks like the spark igniter on appliances like natural gas furnaces and kitchen ovens.

Factors to Consider When Choosing a Tankless Water Heater

Before buying an instantaneous water heater, here are some key criteria you should consider.


Picking a tankless water heater that’s the right size for your home is key to ensuring your home receives an adequate supply of hot water at optimum efficiency. When picking a tankless water heater that’s an appropriate size for your home, you’ll need to establish the heater’s flow rate and the temperature rise you’ll require for its use (entire home or a specific place like a bathroom) in your home.


To conserve energy and reduce heating costs, check the energy efficiency of the tankless water heater before you purchase it. If you aren’t sure how to determine the energy efficiency of the tankless unit, consult a professional HVAC technician.

Fuel Type and Availability

Tankless water heaters use either gas or electricity. Electric models tend to be cheaper to purchase and install than gas ones. However, gas models cost less to operate due to the lower cost of natural gas compared to electricity. Gas models are also more suitable for large households that consume a lot of hot water because of their higher flow rate.


Before replacing your traditional water heater with an instantaneous one, examine your annual heating costs to determine whether the purchase is worthwhile.

Installation and Maintenance

Tankless water heaters require proper installation and maintenance to perform at optimal levels.

There are several factors to consider during installation like local building regulations, safety issues and much more. Therefore, while it is possible to perform a DIY installation, it’s best to have a professional technician perform the installation.

On the other hand, if you already own a tankless water heater, it’s vital to schedule regular routine maintenance to prevent any problems and keep it in tip-top shape. If your tankless water heater develops any issues, don’t let them get out of hand to take action. Contact a professional technician immediately before they worsen and result in costly repairs.

Ultimately, tankless water heaters have numerous benefits, and they may be suitable for your home in San Diego. If you’re considering replacing your old storage water heater with a modern tankless water heater, contact us at Tarpy Plumbing, Heating & Air to book an appointment. Our team of professional technicians will be glad to answer any of your queries and explore your options.

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