Garage with tankless hot water heater
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There are few things less pleasant in life than when you expect a hot shower but instead get water so cold it feels like it came from a melting glacier.

A tankless water heater is one way to ensure that you never again experience any unexpected cold showers. But these devices don’t come cheap: the average cost of a tankless water heater, with installation, is approximately $3,000. The total cost depends on the model chosen and whether your home requires retrofitting.

Tankless vs. traditional

It may help to understand the difference between tankless and traditional water heaters. A traditional water heater preheats and stores water in a tank, usually with a capacity of 30 to 50 gallons. The heated water sits in the tank until you need it, and when it is used up, the tank refills and goes through the preheating process again.

A tankless water heater uses either electricity or gas to warm up water on-demand. In other words, as soon as you turn on the dishwasher or step into the shower, the water needed is heated at the source and is immediately ready for use.

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Electric or gas?

How much does a tankless water heater cost? The answer depends on whether you choose an electric or a gas model. There are several factors to consider in choosing one or the other:

  • Upfront cost. You can buy an electric model for $500-$700, while a gas unit will set you back $1,000-$1,200.
  • Installation cost: Installing the device and retrofitting utility hookups costs around $1,000 to $2,000, depending on local costs and the amount of work required. Gas models need a safe ventilation system installed while electric units do not, making gas models more expensive to install.
  • Utility cost: Depending upon the cost of utilities in your area, gas may be less expensive to operate. Gas units require annual maintenance while electric models do not.
  • Environmental impact: An electric tankless water heater produces no greenhouse gases and will be easier to dispose of at the end of its life cycle.

Benefits of a tankless water heater

A tankless unit uses 30 to 50 percent less energy than a standard water heater, saving the average family more than $100 a year on heating costs. While a standard water heater wastes 30 percent of its energy, a tankless unit loses only 5 percent.

Although you may have to wait a few seconds for the water to heat at the source, you will never run out of hot water with a tankless water heater.

A tankless unit is smaller than a traditional water heater and takes up less space. It can be installed in a garage, basement, attic, utility room, or even outdoors. Finally, the lifespan of a traditional water heater is eight to 10 years, but the lifespan of a tankless unit is closer to 20 years.

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Disadvantages of a tankless water heater

A tankless model is more expensive to buy and install upfront than a traditional water heater. In fact, depending on the unit and how much retrofitting your home requires, it can cost up to twice as much. Due to the expertise required, it can take up to 10 hours to install.

It takes longer for hot water to be heated and delivered. You may experience what is called a “cold water sandwich,” which occurs when the hot water is turned on but has not had time to heat.

Hard water causes malfunctions in tankless units, and manufacturer warranties do not generally cover the damage caused by hard water.

The final word

A tankless water heater can be an excellent option if you are remodeling your home, building a new home, or are at home on a part-time basis and do not want to worry about a leaky hot water heater while you are away.

A tankless water heater is not a do-it-yourself project unless you have professional level installation skills. Although they can be purchased online or at your local home improvement center, installation is best left to pros who may have to retrofit your home in order to make the water heater work properly.

Due to the cost of installation, tankless water heaters are more expensive upfront than traditional models. Once you factor in annual energy savings and the fact that you have to replace a tankless water heater half as often as a traditional unit though, you may find that it is less expensive in the long run.

 

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