Tankless water heaters

Choosing a water heater - tank or tankless?

Gas powered tankless water heaters
Tankless water heaters via wikimedia

Tankless water heaters or instantaneous water heaters are domestic hot water systems that do not include the storage tank that comes with traditional water heaters.

This type of water heating system can be advantageous in some climates, provided they use gas-fired as opposed to electrical heating. These heaters may also be known as 'on demand water heaters', 'inline water heaters', 'continuous flow heaters', 'instantaneous waters' or 'flash heaters'.

The drawback with traditional domestic hot water systems:

Traditional domestic hot water systems use gas or electricity to heat water that is stored in a central water tank, ready for distribution.

The main drawbacks of traditional systems are the standby and transfer energy losses that result from the intermittent use of the water, the fact that water remains stored along tank walls and in pipes, and the design of the tank heat exchanger.

Even well-insulated tanks and well-designed water distribution systems (that minimize the length of pipe runs to the various faucets) do not completely eliminate these drawbacks.

The more efficient storage tank water heaters would include features such as:

  • additional tank insulation for better heat retention and reduced loss of heat through the walls of the tank (or “standby loss”);
  • improved heat exchangers to transfer more heat from the energy source to the water;
  • factory-installed heat traps that allow water to flow into the tank but present unwanted flow of hot water out of the tank.

Some advantages of tankless water heaters:

Since tankless water heaters do not include a tank, they heat water only when a faucet is opened. In their most rudimentary form, tankless water heaters consist of an electrical element or gas burner, around which the water circulates towards its point of use. By reducing the thermal losses to the environment, (which are inherent in conventional storage tank systems), instant water heaters can offer energy savings.

In a February 2010 article on tankless water heaters found on Quebec consumer protection site Protégez-vous.ca, Stéphan Dussault referred to a 2008 issue of Consumer Reports, in which it was noted that tankless water heaters could yield energy savings of around 22% over conventional storage tank systems. Mr. Dussault noted that this would have equated to savings of around $70 in a typical Quebec household, in which annual hot water costs then approximated $310.

It should be noted that electricity in Quebec is cheaper than in other parts of the country, so savings would vary by region and utility prices.

How tankless water heaters work:

An electrical element or a gas burner turns on or off, depending on whether a sensor detects the movement of water that is triggered by the opening or the closing of a faucet.

Electrically powered systems:

Electrically heated instantaneous water heaters have proven efficient in certain parts of Europe, Asia and the United States. However, the same cannot be said for most of Canada.

The technology is not as suitable for Canada’s colder climate, as the power that is necessary for the instantaneous heating of water (which is close to zero degrees Celsius during the colder months) is too great. In cold climates, it would therefore be preferable to rely on gas-fired instantaneous water heaters.

Furthermore, if your initial budget is limited, you might as well forget about this option all together. The smaller units (costing around $500 and more) will be incapable of adequately supplying more than a single faucet with hot water.

To satisfy the needs of a family, a very powerful model (at least 28 kW) will be required, and will cost around $3000, which does not take into account the additional costs that will be incurred through electrical and plumbing work.

More powerful models might even require a complete revision of your electrical power infrastructure. Modern homes are generally set up with 200 amp / 240 volt electrical service capacity. Using an electrical instantaneous water heater would require increasing input current to 300 amps and replacing the electrical cable linking the distribution panel to the water heater, for a not inconsiderable additional cost of around $2000 or more.

Gas-fired systems:

Gas-fired tankless water heaters may prove beneficial in the colder climates of Canada, provided certain conditions of use are respected. The energy efficiency of gas-fired models has been rated at between 78% and 85% for standard models, and at between 91% and 96% for condensing gas storage models.

Some gas-fired models can operate without any electricity. However, these are generally low-end brands that use air from inside the home (instead of outside air) for combustion.

These models are not recommended because they draw in and evacuate heat from the home and because a defect in the seal of the combustion chamber could – in the event of flow reversal or depressurisation – lead to a risk of carbon monoxide poisoning.

Higher-end models of gas-fired instantaneous water heaters feature sealed combustion systems. One pipe supplies the burner with fresh air from outdoors, while another pipe ensures the discharge of waste gas.

Models with a pilot ignition system are not the most efficient because of the slight but steady energy consumption that is necessary to keep the pilot flame alight, even outside of periods of hot water usage.

In Europe, where using gas-fired instantaneous water heaters has been common practice for over 25 years, some users have gotten into the habit of turning off the pilot flame when the water heater is not needed. Nowadays, however, manufacturers offer heaters with an electrical ignition system that eliminates this inconvenience.

To satisfy the needs of a family home, it would be preferable to choose gas-fired tankless water heaters with an electrical ignition system. For secondary residences, or for homes in remote areas, propane-fired models would probably be a better choice.

Costs and energy savings of gas-fired tankless water heaters:

Québec-based natural gas supplier and distributor, Gaz Métro, estimates at around $525 the average additional cost of acquiring a gas-fired instantaneous water heater. Depending on the heater’s capacity, however, this additional cost can vary from $600 to $1800 upon purchase.

From a financial perspective, is a gas-fired model a viable proposition for most users?

Data collected by Gaz Métro in 2009, indicates that the annual consumption of natural gas used to heat water for a family of four in Québec was approximately 600 m3, at a price (at that time) of $340. A study carried out by the Canada Mortgage and Housing Corporation (CMHC) estimated at around 230 m3 the annual water heating savings achieved with a gas-fired instantaneous water heater; at a cost per cubic metre of natural gas at $0.30, this represented annual savings of $69.

If the average additional expenditure of a gas-fired instantaneous water heater were $525 as estimated by Gaz Métro, you would see a return on your investment within eight years. However, this period could actually triple (to close to the lifetime of the system, which is about 20 years), if you factor in the cost of first-time gas supply installation. While this cost varies considerably depending on system set-up and on the service supplier, you should consider a provision of at least $1000.

To compensate for the additional expenditure of first-time gas supply installation, Gaz Métro gives its clients a refund with the purchase of 44 kW or 51 kW ENERGY STAR gas-fired instantaneous water heaters. The applicable incentive is $250 for a standard model, and $550 for a condensing gas storage model.

In summary –

The advantages of tankless water heaters:

  • compact (no need to plan for the space that a tank would occupy);
  • little energy loss;
  • zero energy consumption when no hot water is being used;
  • limited upkeep costs;
  • long service life (in excess of 20 years) as compared to traditional water heater systems (10 to 15 years);
  • reduction of number of water heaters in landfills;
  • no tank bacteria build-up…

The disadvantages:

  • high purchase and installation costs (purchase costs of $1000-$1500 or up to around $3000 for an efficient electrical model for a family home, and installation costs of around $1000);
  • (with electrical models) high demand on network and possible need to replace existing electrical panels and wiring (additional costs of around $2000);
  • limited volume of hot water that is available at one same time from several faucets;
  • possible variations in water temperature, if several faucets are on at the same time;
  • possible several-second delay between the moment at which the faucet is turned on and the moment at which the water turns hot (leading some users to choose to keep the water running);
  • possibility of the water not being very hot when the flow is reduced (e.g., when using only a trickle of water for shaving purposes);
  • possible need to modify certain habits (e.g., the habit of using hot water at one same time from several faucets; the habit of adding cold water to hot water when showering or washing up).

In a heating climate such as Canada, it is worth noting as well, that the energy loss from storage tank water heaters noted in research is in the form of heat being added to your home.

For much of the year, this is not actually a loss, as it lessens the demands on other heat distribution systems. This reality should be considered as you are crunching the numbers regarding return on investment.

Whatever your considerations and budget, be sure to consult with a qualified professional contractor to obtain an assessment of your current and eventual hot water needs and guidance on what type of water heater would be most appropriate for your particular circumstances.


This text was drafted for Ecohome, by Julie Carter, B. Arch. (Hons.), B.C.L., LL.B.

Julie has bachelor degrees in Design Studies and Architecture (Hons.) from the University of Queensland (Australia), where she studied Environmental Technology under Dr. Steven V. Szokolay (architect, energy and environmental consultant and textbook author). She hopes to make use of her eclectic experience (in architecture, law, international sport and translation) to contribute to sustainable living and practices.



Information for this text was compiled from the following sources: