When considering a new water heating system, homeowners often look for an option that balances performance, reliability, and cost-efficiency. In recent years, tankless water heaters have gained popularity as an energy-efficient alternative to traditional tank models. Unlike conventional systems, which store hot water in a tank and continually reheat it, tankless systems only heat water as needed, significantly reducing energy consumption.
In this comprehensive blog post, we’ll explore the energy efficiency benefits of tankless water heaters, explain how they work, and provide insights into how they can save you energy and money over the long term.
How Tankless Water Heaters Work
To understand the energy efficiency benefits of tankless water heaters, it’s essential first to know how they function. Unlike traditional tank-based water heaters, which store and constantly heat a reservoir of water, tankless water heaters, also known as on-demand or instantaneous water heaters, operate by heating water only when needed.
When a hot water faucet is turned on, cold water travels through a pipe into the tankless unit. Inside the unit, a gas burner or an electric heating element heats the water instantly, delivering a continuous hot water supply. Once the hot water demand is met and the faucet is turned off, the system stops heating, meaning that no energy is wasted on keeping water hot when it’s not being used.
This method of operation results in significant energy savings, as tankless units don’t experience the standby energy loss that occurs with traditional tank systems, where water is constantly reheated to maintain a set temperature.
Key Energy Efficiency Benefits of Tankless Water Heaters
Reduced Standby Energy Loss:
Standby energy loss is one of the main contributors to the inefficiency of traditional tank water heaters. In these systems, water is stored in a tank and heated continuously to maintain a set temperature, regardless of whether hot water is being used. This means the heater constantly cycles on and off to keep the water in the tank hot, even when no one is running a faucet or using an appliance. As a result, energy is wasted in maintaining the temperature of the stored water, especially when the system is left unused for extended periods, such as during the night or when the household is away.
This constant reheating, known as standby heat loss, occurs because the stored water inevitably cools down due to heat loss through the tank walls and pipes, even if the tank is insulated. The larger the tank, the greater the potential for energy waste, as it requires more energy to reheat a greater volume of water. Over time, this can lead to a substantial amount of energy being wasted, particularly in homes with sporadic hot water use.
How Tankless Systems Eliminate Standby Loss
Tankless water heaters, on the other hand, solve this problem entirely by eliminating the need for a storage tank. These units heat water on demand, meaning they only operate when there is an actual need for hot water. The moment a hot water tap is turned on, cold water flows through the system, triggering either a gas burner or electric element to heat the water instantly. Once the demand is met and the tap is turned off, the system stops running.
Since tankless systems don’t maintain a reservoir of hot water, they avoid the continuous energy drain associated with keeping water heated in a tank. This on-demand functionality ensures that energy is only used when necessary, leading to more efficient water heating.
Quantifying the Energy Savings
The energy savings from tankless water heaters can be pretty significant. According to the U.S. Department of Energy, households that use less than 41 gallons of hot water per day can see energy savings of 24% to 34% with a tankless water heater compared to a conventional tank model. This is because the system only consumes energy when hot water is actually required, rather than continually reheating water in a tank throughout the day.
For households with higher water consumption, such as those that use up to 86 gallons of hot water daily, the energy savings are still notable, ranging from 8% to 14%. Even with higher hot water usage, the tankless system remains more efficient because it eliminates the wasted energy associated with standby heating, particularly in homes where hot water is used intermittently throughout the day.
Additional Factors That Influence Standby Energy Loss
Several factors can exacerbate standby energy loss in traditional tank heaters:
- Tank Size: Larger tanks require more energy to maintain a constant temperature, leading to higher standby losses. For example, a 50-gallon tank will consume more power than a smaller tank simply because there is more water to keep hot.
- Insulation: While many modern water heaters have improved insulation, it is still not enough to prevent heat loss fully. Even with the best-insulated tanks, heat escapes gradually, requiring the system to reheat the water periodically.
- Frequency of Use: Homes that use hot water infrequently throughout the day experience more significant standby losses because the system continuously keeps the water hot, even when there’s no immediate demand. For example, during periods like overnight or while the house is empty, a traditional tank heater wastes energy, keeping water hot that may only be used for a short time.
- Location: Water heaters located in colder areas of the house, such as basements or garages, experience more heat loss than those situated in warmer parts of the home, leading to even higher energy use.
Long-Term Impact of Eliminating Standby Loss
Over time, eliminating standby energy loss can lead to substantial reductions in energy consumption and lower utility bills. For households that have high standby losses with traditional systems, the switch to a tankless system can result in noticeable savings each month, which can add up significantly over the lifespan of the unit. While the initial cost of a tankless water heater might be higher, the energy savings from reducing standby loss can help offset this upfront investment, making tankless systems more cost-effective in the long run.
In addition to the financial benefits, reducing standby energy loss contributes to a smaller carbon footprint, as less energy is required to heat water throughout the day. This is particularly relevant for homeowners looking to make their homes more energy-efficient and environmentally friendly.
Standby Loss in Comparison to Tankless Efficiency
The comparison between the standby loss of traditional tank water heaters and the operational efficiency of tankless systems highlights the significant difference in energy usage between the two. While tank systems may seem like a convenient option due to their ability to store large amounts of hot water, their constant cycling to maintain heat is a significant source of energy inefficiency. In contrast, by their design, tankless systems only consume energy when hot water is actively being used, drastically improving their overall energy performance.
By eliminating standby loss, tankless water heaters provide not only a more efficient solution for hot water generation but also a more sustainable approach to energy use in the home. This feature makes tankless water heaters particularly appealing to eco-conscious homeowners and those looking to reduce both energy costs and environmental impact.
The elimination of standby energy loss is a critical advantage of tankless water heaters, resulting in significant energy savings, lower utility bills, and a reduced environmental footprint. This fundamental difference underscores why many homeowners are making the switch to tankless systems as part of their energy efficiency strategies.
Higher Energy Efficiency Ratings
One of the most significant advantages of tankless water heaters over traditional storage tank models is their superior energy efficiency. Efficiency in water heaters is measured using the Energy Factor (EF), a metric that evaluates the overall performance of the unit by considering two key elements: the efficiency of heating the water and the amount of energy wasted, particularly during periods when the system is not actively heating water (known as standby losses).
Tankless water heaters consistently achieve higher EF ratings, ranging from 0.90 to 0.99. This means that 90% to 99% of the energy consumed by the unit is converted into usable hot water, with minimal energy wasted. This high-efficiency performance is due to the on-demand heating system that only activates when hot water is required, eliminating the need for energy use during idle times. Because tankless water heaters don’t store heated water, they do not suffer from standby heat loss—a major drawback of traditional tank water heaters.
In contrast, traditional tank water heaters are much less efficient. Their EF ratings typically fall between 0.50 and 0.70, which translates to only 50% to 70% of the energy consumed being used to heat water, with the remainder lost to factors like standby heat dissipation. This inefficiency stems from the tank design, where water is kept hot 24/7 to be ready for immediate use. Even when hot water isn’t being drawn from the tank, the system must use additional energy to maintain the water temperature as heat escapes from the tank over time—a phenomenon called heat loss through insulation. This continuous heating process, called standby cycling, leads to more tremendous energy waste and higher utility bills.
The difference in energy efficiency between the two systems becomes more pronounced when we consider their annual energy consumption. According to estimates from the U.S. Department of Energy, a traditional gas-fired tank water heater can consume about 150 to 300 therms of natural gas per year, while a comparable tankless gas-fired model typically uses only 125 to 200 therms. Over time, this can translate into significant savings, both in terms of energy costs and the environmental impact of energy consumption.
How EF Ratings Impact Energy Consumption and Costs
Because tankless water heaters operate on demand, they result in substantial energy savings, particularly in households that don’t require constant hot water usage. Homeowners who switch from a traditional tank model to a tankless system can typically expect to save between 10% and 40% on their energy bills, depending on their water usage patterns. The higher the EF rating, the less energy the system uses to produce the same hot water, directly reducing utility bills.
For example, in a household with moderate hot water usage (around 41 gallons per day), a tankless water heater may reduce energy usage by about 24% to 34% compared to a traditional tank model. The savings potential may still be significant in larger households that use even more hot water. However, a larger tankless or multiple units may be required to meet demand without compromising efficiency.
Environmental Benefits of Higher EF Ratings
The benefits of the higher EF ratings of tankless water heaters extend beyond just cost savings; they also have a positive impact on the environment. Energy efficiency translates to lower fuel consumption and, for homes using gas water heaters, fewer greenhouse gas emissions. This reduction in energy use directly decreases the household’s carbon footprint, making tankless systems a more eco-friendly option.
With growing concerns about climate change and the need for sustainable energy practices, opting for a high-efficiency tankless water heater is a meaningful step toward environmental responsibility. According to the Environmental Protection Agency (EPA), water heating accounts for nearly 20% of a household’s energy use, and transitioning to energy-efficient appliances like tankless water heaters can significantly lower overall energy consumption.
In homes powered by electricity, using a high-EF tankless water heater can reduce the demand for grid electricity, which is often generated from fossil fuels like coal or natural gas. For homes using renewable energy sources such as solar panels, a tankless water heater‘s reduced energy demands mean that more of the home’s energy needs can be met through clean energy, further reducing environmental impact.
Minimizing Standby Losses and Reducing Energy Waste
Traditional tank water heaters suffer from standby losses because they constantly heat a large volume of water, even when there is no immediate demand for hot water. Heat escapes from the storage tank over time, even if the tank is well-insulated, causing the system to cycle repeatedly to maintain the water at the desired temperature. This inefficiency is particularly problematic in colder climates or homes where the water heater is installed in an unconditioned space like a garage or basement, where heat loss can be even more pronounced.
Tankless water heaters, on the other hand, effectively eliminate standby losses. They heat water only when it is needed, using either a gas burner or an electric element to provide hot water instantaneously. Since there’s no stored water to maintain, energy is not wasted, keeping water hot when it isn’t being used. This difference in operation is one of the primary reasons why tankless models have such high EF ratings compared to their tank-based counterparts.
Condensing tankless water heaters, a specific type of tankless unit, can achieve even higher efficiency levels by utilizing the heat from exhaust gases that would otherwise be vented outside. This makes them one of the most efficient water heating options available, with EF ratings approaching or exceeding 0.95. These systems are designed to extract every possible bit of energy from the fuel they consume, resulting in even further reductions in energy waste and utility costs.
Long-Term Efficiency and Savings
While the upfront cost of tankless water heaters is typically higher than traditional tank models, their superior energy efficiency can result in long-term financial savings over the course of their average lifespan—often twice as long as conventional tank heaters. The cumulative savings on energy bills can easily offset the initial investment.
Furthermore, many governments and energy organizations offer rebates or tax incentives to encourage the installation of energy-efficient appliances like tankless water heaters. These financial incentives can further reduce the cost burden, making the switch to a tankless system even more attractive for homeowners concerned about energy efficiency and environmental sustainability.
Energy Efficiency as a Key Advantage
In conclusion, tankless water heaters’ higher energy efficiency ratings provide numerous advantages over traditional tank models. They translate into lower energy bills and a reduced carbon footprint and offer a more efficient, on-demand water heating solution that eliminates energy waste associated with standby heat loss. For homeowners focused on reducing energy consumption, conserving resources, and contributing to a more sustainable future, the higher EF ratings of tankless water heaters make them an excellent investment.
Long-Term Cost Savings
Although the initial purchase and installation costs of tankless water heaters can be higher than those of traditional tank models, the long-term energy savings outweigh the initial investment. According to the U.S. Department of Energy, tankless water heaters can save a household approximately $100 to $150 annually in energy costs, depending on the size of the home and water usage habits.
The savings can be even more significant for larger households, where the hot water demand is more critical. Over the lifespan of the water heater (typically 20+ years for tankless models compared to 10-15 years for traditional tanks), the cumulative savings on energy bills can offset the higher upfront costs and potentially save homeowners thousands of dollars over time.
In addition to lower energy bills, tankless water heaters have lower maintenance costs. Traditional water heaters require regular maintenance to manage sediment buildup inside the tank, which can reduce efficiency and lead to costly repairs. Tankless systems, with no tank to maintain, typically require less frequent servicing, reducing ownership costs over the long term.
Endless Hot Water Supply with Improved Efficiency
Another advantage of tankless water heaters is their ability to provide an endless supply of hot water. Traditional tank water heaters can run out of hot water if the demand exceeds the tank’s capacity, leading to long recovery times when the system needs to reheat a new batch of water.
A tankless system allows you to enjoy hot water on demand without worrying about the tank running dry. This is particularly beneficial for larger households or those with high hot water usage, such as homes with multiple bathrooms or frequent use of dishwashers and washing machines.
However, the energy efficiency benefits of endless water heaters are even more pronounced. Because tankless systems only heat water when needed, they save energy, keeping a large tank of water hot all the time. This means that homeowners can enjoy long hot showers, run multiple appliances, and still save energy, provided the unit’s flow rate (measured in gallons per minute) matches the household’s water usage.
Reduced Water Waste
Tankless water heaters also contribute to water conservation. In many homes with traditional tank water heaters, there is a delay in receiving hot water when a faucet is turned on, mainly if the water heater is located far from the point of use. This delay can lead to wasted water as homeowners run the faucet, waiting for it to warm up.
With tankless water heaters, hot water is delivered almost instantly, as the water is heated on demand and doesn’t need to travel from a storage tank. This rapid delivery reduces the amount of cold water wasted while waiting for it to heat, resulting in lower water usage and more efficient overall resource consumption.
Compatibility with Renewable Energy Sources
For environmentally conscious homeowners, tankless water heaters can be integrated with renewable energy systems to enhance their energy efficiency and sustainability further. Many modern tankless water heaters are designed to work with solar water heating systems, which use energy from the sun to heat water. By combining a tankless system with solar panels or other renewable energy sources, homeowners can significantly reduce their reliance on fossil fuels and even lower their energy bills.
Additionally, some tankless systems can be powered by natural gas, which, while still a fossil fuel, is generally more efficient and cleaner-burning than electricity generated from coal or oil. Choosing a gas-powered tankless water heater that runs on natural gas or propane can reduce your home’s environmental impact and increase overall energy savings.
Extended Lifespan and Reduced Waste
One often overlooked aspect of energy efficiency is the lifespan of the appliance. Tankless water heaters generally last 20 years or more, significantly longer than traditional tank models’ typical 10-15-year lifespan. This extended lifespan reduces the frequency of replacements, meaning fewer materials and energy are used to manufacture, transport, and install new units over time.
In addition to lasting longer, tankless water heaters tend to have fewer components that can wear out or fail, especially since they don’t have a tank that can rust or corrode. This prolonged life expectancy contributes to lower long-term costs for homeowners and reduces the environmental impact associated with producing and disposing of old water heaters.
Improved Home Resale Value
Installing a tankless water heater can be a smart investment for homeowners looking to sell their property in the future. Potential buyers are increasingly valued by energy-efficient upgrades like tankless water heaters, who are looking for ways to reduce energy costs and minimize their environmental impact. Homes with tankless water heaters may appeal to eco-conscious buyers and those looking for modern, energy-efficient appliances.
Additionally, because tankless systems have a longer lifespan, they are often considered a premium feature that can increase a home’s resale value. By investing in an energy-efficient tankless system, homeowners can enjoy energy savings during their time in the house and potentially benefit financially when it comes time to sell.
Conclusion: A Smart, Energy-Efficient Choice
Tankless water heaters offer a wide range of energy efficiency benefits, making them an attractive option for homeowners seeking to reduce their energy consumption, lower their utility bills, and minimize their environmental impact. With their on-demand heating, elimination of standby energy loss, and compatibility with renewable energy, tankless systems represent a significant improvement over traditional tank models.
While the initial cost of water heater installation may be higher, the long-term savings on energy bills, combined with the extended lifespan and reduced proper maintenance, make tankless water heaters an intelligent investment for your wallet and the environment. Whether building a new home or upgrading your current water heater, switching to a tankless system can offer lasting benefits for your household’s water quality, savings over time, energy efficiency, and sustainability.
Are you ready to explore the benefits of tankless water heaters in more depth? We invite you to read our previous blog post, “Advantages of Tankless Water Heaters for Homeowners.” Discover how these innovative systems can save space, provide an endless hot water supply, and significantly reduce energy bills. Don’t miss out on the opportunity to make an informed decision for your home—dive into the advantages today!
