Tankless water heaters are some of the hottest new technologies going into homes today. Many builders offer tankless heaters as an upgrade option and a greener way to save the energy used to repeatedly heat water stored in a tank.
In tankless heaters, the water is heated in a set of pipes on demand and sent to a sink, faucet, shower or even heating equipment only as you need it. That means you’ll still get some cool water first, unless a hot water recirculation system or timer is also used. (Keep reading, we’ll get to that.)
Water heating represents about 20 percent of a home’s energy costs, and tankless water heaters can save up to 34 percent of those costs. Energy Star estimates that a typical family can save $100 or more per year with an Energy Star-qualified tankless water heater. However, tankless systems can cost as much as three times the price of tank-based systems, flow rates can decrease with simultaneous use if a tankless system isn’t sized properly, and some gas models require larger incoming gas lines.
To help demystify tankless water heaters and what builders and homebuyers should know, we consulted the experts at two of the top tankless heating manufacturers, Rinnai and Navien America. Aaron Baugh is the national builder sales manager at Rinnai, and Brian Fenske is the specialty channel sales manager at Navien America. Here’s what they had to say.
1. When is tankless the right choice for a water heater?
Fenske: Besides the touted energy savings due to high-efficiency combustion processes, the unit’s small size saves space. Many can be installed with sealed combustion (two-pipe venting) so you’re not losing conditioned air up the flue. And most importantly, they offer endless hot water, so no more cold showers on busy mornings or when guests stay over.
Baugh: Tankless water heaters are technologically advanced appliances that that revolutionize comfort and convenience by providing:
- An endless supply of hot water.
- Lower energy bills.
- Space savings.
- Longer lifespan of up to 20 years.
- A reduction in HERS (Home Energy Rating Score) points [the lower the better] .
2. Are there geographic considerations?
Fenske: There are design considerations because the colder the inlet water, the more the units need to heat the water to meet the desired temperature setting. Homes in warmer climates can usually use smaller or fewer units.
Tankless water heaters can be installed nearly anywhere inside the residence or on a home’s exterior.”
Baugh: The unit should be sized based on the geographic location. Other factors play into appropriately sizing tankless water heaters, such as number and types of hot-water outlets, the location of the existing tank heater in relation to an outside wall and vent length requirements, etc. Answers to these factors help builders properly design systems that meet homeowners’ hot water needs efficiently.
Unlike a traditional storage tank, tankless water heaters can be installed nearly anywhere inside the residence or on a home’s exterior.
3. What are the cost differences between tankless and tank-based water heaters?
Baugh: This is not a simple answer but depends on the market, location of the tankless unit, venting location and local building codes. What we do know, based on an article provided by the Propane Education and Research Council, is that the price of traditional storage tanks will continue to rise and the cost difference between the two types of water heaters will become nominal compared to the energy efficiency and luxury provided by a tankless water heater.
Fenske:With the new flame safety requirements of gas tank water heaters, combined with the popularity of using power-vented water heaters, the equipment price gap has closed a lot. In today’s new construction, tankless water heaters have become popular because they allow for sidewall venting, giving the builder more finished space and [eliminating] the design of chases through the home for the traditional vent flues. In 2015, when new energy code requirements are expected to be implemented, the cost of hot water tank-type heaters is expected to rise significantly due to new government efficiency standards.
4. Gas vs. electric tankless: If electric tankless water heaters are more efficient, why is there such a movement toward gas-fired heaters?
Fenske: Electric tankless units do have higher efficiencies, or what’s known as the Energy Factor (EF). This is due mainly to the absence of flue gasses as a product of gas combustion. The handicap of electric water heaters in most cases is the cost of electric per kilowatt (kw) versus the cost of a therm in natural gas, which both directly relate to the operational cost of a BTU to heat up the water.
Another reason gas-fired tankless heaters are more popular than electric tankless heaters is the availability of energy services. Gas units can provide much more hot water with the ease of a simple gas line connection. In order to equal the hot water output of a 199,000-BTU condensing gas-fired tankless water heater, it would take up to 160 amps/220 volts to supply an electric tankless water heater. Many homes do not have the 220 volt/160-amp capacity on their electric panels to do so.
Lastly, the cost of energy is the deciding factor between electric or gas. If a kw of electric costs $0.12 and a therm of natural gas costs $1, the cost to heat up 1 gallon of water is over 400 percent more with electric. A family of four using 60 gallons of hot water a day would cost $485 per year ($0.12 per kw with a .99 EF tankless) versus $110 per year with a condensing gas-fired tankless ($1 a therm NG/.97 EF tankless). Both systems are more efficient than their tank-type counterparts, but in the end it’s the cost of energy, not so much their operating efficiency [that makes a difference] .
In many cases electric tankless is a viable option and is commonly applied for point-of-use applications [in individual locations] , but for today’s average-sized homes, gas is usually the better option when available.
Baugh: Whole-home electric tankless water heaters can require an expensive electrical upgrade. According to the Electric Tankless Water Heating Competitive Assessment, the cost of upgrading a home’s electric service to accommodate a tankless water heater can cost thousands of dollars and must be considered when evaluating the opportunity. On the flipside, gas tankless units require very little electricity and can typically operate with a regular 120-volt outlet.
Also, electric tankless units can demand large amounts of electricity during peak periods. In some areas, homeowners can incur a demand fee in addition to their electric costs when having a high electric demand during peak periods. This also puts a strain on an already overloaded electric grid. In contrast, gas-fueled water heaters don’t burden the grid, and some smaller utilities go so far as to promote alternative fuel-type water heaters through financial incentives to avoid peak demand issues.
5. Gas pilot light or electronic ignition system?
Baugh: Rinnai Tankless Water Heaters have a direct-spark electronic ignition.
Fenske: There’s no question that a gas pilot light that stays lit consumes energy. Depending on the appliance and its application type of gas and its costs, a pilot light can consume between $4 and $ 10 per month to stay lit.
6. Condensing vs. non-condensing costs?
Baugh: The defining difference between the non-condensing and condensing is that the former has only a primary heat-exchanger, while the latter also has a secondary one. [The heat from combustion gases is used to help heat the water.] This dual heat-exchanger format allows them to operate more efficiently. Condensing tankless water heaters therefore earn a higher Energy Factor (EF) rating (up to 0.96) than non-condensing tankless water heaters (up to 0.82).
One thing that should be considered is the total cost of installation.”
Fenske: Condensing tankless water heaters in the .92 to .98 Energy Factor (EF) range cost more than conventional, standard minimum efficiency models in the range of .82 to .84 EF. This pricing difference for condensing tankless equipment can be as much as two to three times more than conventional gas-fired tankless.
One thing that should be considered is the total cost of installation. Many condensing gas-fired tankless units may use inexpensive venting options such as PVC pipe, compared to the lower efficient gas-fired tankless that have a higher flue temperatures and require the use of expensive special Category 3 stainless or polypropylene materials, which add significant costs to the overall installation. In the end, condensing units may cost more, but often with the ease of installation the end cost is very close to or less than less-efficient gas-fired tankless.
7. What do homebuilders need to know about designing for tankless systems and marketing them?
Fenske: The size and or quantity of tankless units should be chosen based on the expected peak demand flow, measured in gallons per minute (gpm) of hot water needed at any one given time.
Baugh: The small size of a Rinnai Tankless Water Heater gives the builder the flexibility to locate the unit closer to hot water fixtures, reducing hot water delivery time and saving up to 16 square feet of valuable floor space. Or the unit can be installed on the home’s exterior, requiring no venting and using a recessed enclosure that can be painted or textured to match the home’s construction, while decreasing installation costs.
8. Can tankless heaters be sold as providing a return on investment (ROI)?
Fenske: Many try to look at it this way, but it’s not as simple as that. High-efficiency appliances don’t give money back but save money and can save over their long life expectancy. People want to be conscious of energy use but more often have grown tired of running out of hot water.
Baugh: When selecting a water heater, it’s not only about the upfront costs, but also meeting the needs of the homeowners. For example, if a builder is targeting consumers with large families and multiple fixture locations, selecting the lowest price traditional storage tank will not necessarily meet homeowners’ expectations and will ultimately affect their overall satisfaction with the builder.
By offering tankless as an option, builders give the homeowner an opportunity to meet the family’s needs. Also, builders can boost the appeal of tankless water heaters by talking up additional tankless benefits, such as space savings.
9. How can builders profit from tankless water heaters?
Fenske: Tankless water heaters can be both an up-sell or a builder-added upgrade to market and sell a home. In many cases the compact size of tankless water heaters allow builders to use the square footage space more wisely, while locating the tankless heater closer to the hot water fixtures. This alone can save on pipe and construction costs, while offering the consumer the advantage of endless hot water with less water to be wasted while waiting for the hot water to arrive.
Baugh: Tankless technology offers builders an edge over competitors. For those interested in selling energy efficiency, tankless water heaters can help reduce a home’s HERS rating, another differentiation point among builders.
10. How can builders better market tankless water heaters as upgrade options?
Fenske: Showrooms and model homes seem to work best. Potential homebuyers not familiar with the technology like to see them in operation to understand the benefits of having one. One thing going for the tankless industry is, once you have had and experienced a proper tankless domestic hot water system, there is no substitute.
Sales associates should be well versed in the product and understand how to properly sell tankless technology.”
Baugh: Including tankless water heaters in design centers and model homes helps spur discussions about the technology and its benefits. Sales associates should be well versed in the product and understand how to properly sell tankless technology to potential homeowners.
Some builders also sell a tankless water heaters in conjunction with hydronic furnaces, or air handlers, to help heat homes.
Bonus Question: What technologies or features set your products apart?
Fenske: Navien America was the first to introduce PVC venting in North America for ease of installation of our condensing tankless products. We also introduced an on-board circulator, allowing for built-in external hot water recirculation systems and internal circulation to solve the industry-wide term known as “cold-water sandwiches.”
Navien now offers two models, one with and one without the circulator and buffer tank option. We call the tankless unit with the circulator our advanced model with ComfortFlow Technology. All our current tankless models are rated the highest above all other water heating products in the industry with an unmatched Energy Factor of .97 and .98.
Baugh: The Down-fired Ceramic Burner, available on the Rinnai Ultra Series Condensing Tankless Water Heaters, allows condensation to drain from the bottom of the heat exchanger. This process protects the primary heat exchanger and burner, and maintains top product performance over time. The unique condensing design maximizes heating value and earns an Energy Factor rating of up to .96.
Rinnai’s newest engineered solution—the Rinnai Timer Controller—offers homeowners the comfort and convenience of instant hot water with optimal energy usage. The combination of Rinnai Circ-Logic technology and this accessory allows homeowners to set recirculation patterns to coincide with household usage patterns. Hot water is available when needed, without the expense of circulating hot water during times of inactivity. The Rinnai Timer Controller, a stylish wall-mountable digital control panel, works with any third-party pump. The enhanced timer controller’s technology tells the pump when to recirculate water to meet homeowners’ instant hot-water demands.