Gas. Gas water heaters are usually more economical than electric heaters because gas is generally less costly than electricity on a per-Btu basis. Gas tankless systems also have wider applicability because they produce hot water at higher flow rates. However, centralized tankless systems will often require capacity upgrades to the gas supply. Two types of tankless gas heaters currently offer particularly high performance: hybrid tankless heaters and tankless condensing heaters.
Hybrid water heaters generally have a small tank that’s attached to a tankless unit. Cold water enters the bottom of the tank, flows through the tankless unit to be heated, and then returns to the top of tank to be used. The result is improved efficiency and higher output performance than a standard tank-based water heater.
Condensing tankless water heaters, on the other hand, essentially work the same as standard gas tankless heaters. The difference is that these systems redirect the burned gases through another heat exchanger and condense exhaust air in order to maximize heat output, rather than immediately venting the exhaust fumes. Because the exhaust temperature is much lower than other tankless systems, less expensive polyvinyl chloride (PVC) pipes can be used for venting. In addition to saving money, this also simplifies installation. Companies that currently produce condensing tankless water heaters for residential use include Noritz, Navien, and State (PDF).
Electric. In general, electric tankless heaters are only for point-of-use applications, whereas tankless gas heaters can be installed for both point-of-use and centralized applications. Be aware that depending on its capacity and usage, an electric tankless system could push your facility’s electricity usage into a new rate class, and you could incur new or increased demand charges. This is particularly relevant given that most hot water use occurs during peak demand periods. In general, electric tankless heaters are best suited for locations with low electricity prices and relatively warm groundwater temperatures of 60° to 70° Fahrenheit (F) (typically found in southern states).
Efficiency. The term “energy factor” characterizes the efficiency of both tank and tankless water heaters. The energy factor is the portion of the energy going into the water heater that gets turned into usable hot water under standard conditions. It takes into account heat loss through the walls of the tank, up the flue, and in combustion. Typical energy factors for different types of water heaters are shown in Table 1. The higher the energy factor, the more efficient the heater.
Table 1: Energy factors for water heaters
Because tankless water heaters don’t have the losses associated with tanks, their energy factors are normally higher (although well-insulated, ultra-efficient tank heaters also have high energy factors).
Standing pilot or electronic ignition. Gas water heaters either operate with a standing pilot or an electronic ignition that triggers the burner only when it’s needed. Gas tankless water heaters with standing pilot lights generally waste energy, but they can be cost-effective in applications where water use is high—a hair salon, for example. Where water use is lower (as in a residence), use a tankless water heater with an electronic ignition.
Energy inputs. Electric heating element and gas requirements for tankless water heaters are much larger than for storage water heaters. A typical gas storage water heater has a gas input of 40,000 Btu per hour (h). A centralized gas tankless heater, though, will require at least 160,000 Btu/h and so may require larger gas lines and vents than conventional water heaters. The switch to larger gas lines in a retrofit may make the installation cost-prohibitive if the unit is installed far from the gas meter. Similarly, although a typical heating element for an electric storage water heater draws at most 7,000 watts, a centralized electric tankless heater can draw as much as 38,000 watts and may require upgraded copper wiring and possibly upgraded electrical service.