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Tankless Water Heaters Revisited

Posted October 16th, 2012 under pitfalls, renovations and repairs, money matters.

A recent article printed in the Toronto Sun (Tankless water heaters have many advantages, Mark Salerno, August 31, 2012) discussed a study conducted by the CMHC in collaboration with Enbridge Gas to investigate the potential cost savings of tankless water heaters when compared to tank heaters.

What the Study Found

In the study, existing tank heaters with ages between 2 years and 25 years were exchanged for new tankless heaters. The article cited an average cost savings of 46% (or $69 annually) when switching from tank heaters to tankless.

On the surface, this looks great, but there were some flaws with the study.

Some Flaws in the Study

First of all, some of the tank heaters were far past their prime, but were being compared to a brand new tankless heater. That's like comparing a 1980's 8-cylinder gas guzzler to a brand new hybrid car!

You might save just as much in gas costs if you upgraded that old tank heater to a new high-efficiency tank heater.

So, to compare 'apples to apples', the study should have compared only new tank heaters with new tankless heaters, all installed around the same time.

In addition, the study did not take into account the storage capacities of the tank heaters or the flow capacities of the tankless heaters they were replaced with. If the heaters had different capacities, this may have influenced the behaviour of the families in the study and affected their water use.

For example, if you had a tank heater that ran out after three showers, and your family of four upgraded to a tankless heater, you might expect everyone to start taking longer showers, just because they can.

What About Water Costs?

In fact, the study did note an overall increase in the amount of water used.

However, only the gas bills were compared when calculating costs. There may have been an increase in some of the families' water bills that would cut into their gas savings.

In addition, the gas-used-per-liter-heated was not compared, even though this would be the true measure of cost efficiency, factoring out any difference in use habits.

Slower Hot Water?

The study also noted that about 60% of the families noticed a longer delay in receiving hot water from the tankless heaters, an average of about 20 seconds. This would amount to about 2-3 liters each time hot water was needed (I checked), so this may be another explanation for increased water use.

Rent vs. Own?

One other item not covered by the study was the average cost to buy or rent tank heaters versus a comparable tankless. The tankless heaters generally cost more to rent than a tank heater. Paying just $6 more per month for your rental would eliminate the $69 cost savings from reduced energy use.

70% of the households in the CMHC study were renting their water heater, so they would presumably have to switch to owning the tankless, not renting, to see the cost benefits if the rental prices were higher for the tankless heaters.

When Tankless Works

As I've said in the past, tankless water heaters do offer the possibility of significant savings in gas costs.

However, this generally happens in two specific situations: first, if your water tank is very far from the place where you use your water, and second, in a single-person home where hot water use is infrequent.

In those situations, the heat loss from a tank system has its greatest impact, and the tankless has the opportunity to shine.

The Bottom Line

With so many factors in play (capacity, water use habits, location, and rental vs. ownership), you really need to sit down and do the math for your situation before you make a decision. Saving money and helping the environment are both good ideas, but if you choose a tankless heater in the wrong situation you might end up doing the opposite.

Want to know more about home heating costs? Just ask me, I'll be happy to help.