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How Much Can Tankless Save You?

How Much Can Tankless Save You?

Jon Hubal
5 minute read

Tankless Water Heaters are renowned for their energy efficiency. That means lower energy bills and more money in your pocket. But how much can tankless save you?

We've done the research, exploring the many options available between gas and electric – comparing the cost-saving ability of each to save you time and money!

Tankless Efficiency

Understanding efficiency is key to understanding how much tankless will save you. The more efficient the machine, the less energy you'll use, helping the utility grid and saving you on your bill. The industry uses an Energy Factor (EF) to represent a heater's total efficiency. Simply put, the higher the energy factor the more efficient the heater.

Certain heater models are Energy Star certified. To qualify, they must meet strict standards set by the US Environmental Protection Agency or Department of Energy. This means these heaters are equal to other tankless units but use significantly less energy – at least +14% more efficient than older models. Selecting Energy Star models for your home makes a number of tax credits and rebates available to you, reducing the installation cost as well. These incentives change periodically, and it helps to check before you buy.

Gas Tankless Heaters 

Gas-powered tankless is about 22% more efficient than gas-fired tank heaters. These offset their reduced efficiency compared to electric tankless by providing higher and longer hot water output. They typically peak around 80 - 85% efficiency on their own.

Choosing an Energy Star tankless gas unit will always be the more cost-efficient choice compared to non-rated units. These almost always prove better efficiency than similar models.

The US Department of Energy estimates gas-fired tankless heaters save an average of $108 in energy costs per year over their traditional tank counterparts. State and federal credits, rebates, and incentives can be found to reduce the initial cost of buying gas tankless.

On average, gas tankless units are more expensive than electric tankless for the same output. Gas installation can also be more costly since gas lines and venting are required. Because gas tankless operate differently from gas tank-type heaters, much of this often needs to be reworked by your professional installer. It may be wise to check with a pro about a more straightforward install between gas and electric, then compare product pricing.

Electric Tankless Heaters

Electric Tankless Units

Electric tankless units are typically more efficient than gas tankless, up to 99% efficient and generally no less than 90% efficient. This means more significant savings on the average bill. Install costs can vary depending on pre-existing factors like available wiring and electrical output. Electric tankless is usually easier to install than gas-fired tankless, but not necessarily if wiring or output needs to be reworked.

A good question is, "Which utility is more expensive?" Local electric and gas rates often determine which makes more sense to buy. One benefit of using electric tankless units is that you can offset your power use with alternative sources such as solar. People that generate their own power can reduce their energy bills significantly. This generally is not as possible with gas.

Unfortunately, one downside is that most electric tankless heaters don't qualify for rebates or Energy Star ratings like solar water heaters, so they might not save you as much upfront.

How Much Will Tankless Save You?

Tankless heaters, on average, can save you up to 34% compared to traditional tank-type heaters. This is under ideal conditions, and more realistic savings are likely around 8% to 14%, considering average household water usage. However, this is a broad statistic. You can get closer to your energy saving by comparing your current water bill and tank heater EF to the EF of the gas or electric tankless unit you want to switch to.

A quick method of estimating your possible savings is to:

  1. take the EF of the tankless unit
  2. multiply it by your average bill cost
  3. then divide it by your current tank-type EF

This will give you a rough projection of how much you can expect to save!

Want More Tankless Water Heater Info?

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