Bosch Instant water Heater

Although tankless water heaters are, on average, more efficient than traditional tank-style water heaters, they’re also more expensive — so expensive, in fact, that many potential customers wonder whether their high cost can ever be justified by likely energy savings.

Before you can decide whether to buy a tankless water heater, you’ll need to know how much energy you’ll save. Can you trust the information provided by tankless water heater manufacturers — for example, the estimate from Rinnai’s online calculator that you’ll save $178 per year?

Before I get around to answering that question in detail, suffice it to say: probably not.

Real-world answers from a monitoring study

To figure out the payback period for the incremental cost of a tankless water heater, it would be useful to know:

• The installed cost of a tankless water heater;
• The number of gallons of hot water used per day by the average American family;
• The in-use efficiency of a typical tank-type water heater and the in-use efficiency of a typical tankless water heater;
• The annual natural gas savings and the annual dollar savings attributable to switching from a tank-type to a tankless water heater.

To find the answers to all of these questions, a group of researchers in Minnesota undertook a monitoring study to measure the performance of tank-type and tankless water heaters in actual homes. The researchers concluded that most tankless water heaters will fall apart from old age before they save enough energy to justify their high cost.

The researchers — Dave Bohac, Ben Schoenbauer, and Martha Hewett of the Center for Energy and Environment in Minneapolis, along with Tom Butcher of Brookhaven National Laboratory and Mary Sue Lobenstein of Lobenstein Consulting — monitored water heaters in ten homes for over a year. Their data have been published in a report, “Actual Savings and Performance of Natural Gas Tankless Water Heaters”.

The ten families enrolled in the study were chosen based on household size. The number of people in these families matched the household size distribution shown in the census data for the Minnesota in 2000: two homes had 1 resident each, three homes had 2 residents, two homes had 3 residents, two homes had 4 residents, and one home had 5 residents.