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How Tankless Hot Water Heaters Work

How Tankless Hot Water Heaters Work

Maria Alenton
7 minute read

Water heaters are necessary for most homes. You might want to consider switching to a tankless model if you are searching for the best water heater. These units can save energy and money on utility bills and provide abundant hot water. These units can save energy and money on utility bills and provide abundant hot water. Now, let's get into how tankless hot water heaters work!

Breaking Down How Tankless Hot Water Heaters Work

Tankless hot water heaters are more efficient, compact, and reliable than tank water heaters. They also use less energy than a traditional hot-water heater. The main drawback to a tankless heater is the higher cost, but it's worth considering if you have the budget. You'll also need to ensure that your home has enough space for installation.

How Does a Tankless Water Heater Work?

Installing a Tankless Hot Water Heater

Depending on how it is installed, the endurance of a tankless heater can vary, be sure to have the installation performed by a trained professional.

Although the professional installation of a tankless water heater is more expensive than the installation of a water heater with a storage tank, it is worth the additional expense to ensure that your heater functions correctly and lasts longer, thereby saving you money in the long run. Not to mention, there is no tank taking up space in the house; they are pretty small, which can be advantageous for smaller homes.

Take this into consideration as you work with an expert to make adjustments to your home that will extend the life of your tankless water heater. They can also save you substantial money on energy bills and replacement expenses in the future, and they are more eco-friendly. 

More on How Tankless Water Heater Works

Tankless water heaters generally heat water anytime you require it. When you turn on a hot water faucet, the tankless unit will begin to circulate water - activating the heating elements and giving you almost instant hot water - especially if you get a tankless heater with a recirculation system. The recirculation system creates a loop in your plumbing, giving you instant hot water.  

Rinnai SE+ Series 9 GPM Indoor Condensing Tankless Water Heater, NG

Rinnai SE+ Series 9 GPM Indoor Condensing Tankless Water Heater, NG


The Rinnai SE+ Series tankless water heater is a high-efficiency, indoor condensing unit that provides hot water on demand. It has a flow rate of 9 gallons per minute (GPM), making it suitable for residential or small commercial applications. This… read more

Continuously heating and reheating water is inefficient and can increase your energy costs.

Detailed below is the operation of a tankless water heater:

● Turning on the hot-water faucet is the starting point.

● A flow sensor detects water entering the heater and transmits a signal to the control panel to initiate hot water production.

● In a gas-fired unit, the control panel activates the fan, which draws in outside air, opens the gas valve allowing gas to enter, and ignites the burner.

● The heat exchanger absorbs heat from the fire and transmits it to the water circulating through the exchanger's tubing.

● As a result of the mixing valve, the water temperature is lowered, bypassing the heat exchanger.

● Suppose the thermal system senses that the water surpasses or falls short of the desired temperature. In that case, the control panel will correspondingly adjust the gas valve, mixing valve, and flow-regulating water valve.

● A sealed vent (or pair of vents) through a roof or exterior wall removes exhaust gases and supplies combustion air to a burner. 

Rinnai RE Series with Smart-Circ

Indications that your Tankless Hot Water Heater is not Working Efficiently

Now that you know what affects the lifespan of your water heater, let's discuss the warning signs that it's time to replace it

Gurgling Sounds

These peculiar sounds are the result of sediment accumulation within your water heater. If sediments become too clogged, they will become heated and likely explode.

Therefore, if you hear gurgling sounds, take the necessary precautions; otherwise, your basement may flood.

Dampness Near the Heater

Dampness is cause for concern because it may result from an intermittent leak. The water heater will emit steam. There is a possibility of moisture accumulation, which could lead to dampness.

Temperature Fall

Cold water bathing is an awful way to start the day. Once more, cold water indicates that something is wrong.

There are two solutions to this problem. One is to seek professional assistance. In the worst-case scenario, your water heater is getting to the business end of its useful life, and you will need to purchase a replacement.

Water Displays an Unusual Tinting

If you observe that your hot water is discolored, this is likely due to rust. However, your water heater may also contain rust. Typically, this is the first sign of a failing water heater, which will soon begin leaking.

Puddles of Water

Observing puddles of water around your water heater is a critical sign. There is no way to fix a water heater leaking so badly. You must immediately contact a professional and replace it with a new one.

How Tankless Water Heaters Work

How Much Does a Water Heater Cost?

Prices range from approximately $170 for small gas-powered units to more than $2,000 for high-output heaters that can supply two showers simultaneously; the average cost is $1,000.

The price range for tankless electric heaters is $90 to $900. Installing a tank for the first time is more expensive than replacing a tank.

Sizing Your Water Heater

Tankless water heaters are sized based on the volume of hot water your household requires and how many people live in your home.

To calculate the size of the tankless water heater you need, multiply the total volume of hot water required by the number of occupants in your home. If you have a large family or regularly have guests, it's essential to consider this when sizing your tankless system.

A minor tankless system may work best for you if you plan on living alone and don't expect visitors often.

However, suppose more than two people live in one household together, with children who shower daily or adults who like long showers. In that case, we recommend going bigger, so everyone gets what they need without waiting too long!

It's also important to remember that some states require specific minimum flow rates for their systems, so always check with local codes before purchasing anything.

ShowerMate M-550 EC Natural Gas Tankless Water Heater

ShowerMate M-550 EC Natural Gas Tankless Water Heater


The ShowerMate M-550 EC is perfect for the boater who doesn't want to leave the comforts of home behind when on the high seas. Endless hot water, on-demand Designed specifically for the marine environment Weight 30.5 Dimensions 13.5” Wide x… read more

Concluding How Tankless Hot Water Heaters Work

Tankless hot water heaters have a much better energy efficiency ratio (EER) than conventional tank-type water heaters.

Tankless units can save you money on your energy bill because they produce hot water faster, which reduces the heating time needed to raise the temperature of your tap water.

Additionally, tankless units are smaller and take up less space than traditional units; this makes them easier to install in small homes or bathrooms where there is insufficient room for a conventional heater. This means you can use one even if you live in an apartment with limited storage space.

As you can see, there are many benefits to installing a tankless water heater in your home. However, it would be best to research before purchasing to get the right size for your family.

If you're looking for a tankless water heater, feel free to check out our collection of tankless water heaters or shop by brand with Rinnai, Eccotemp, or PrecisionTemp

Want More Tankless Water Heater Knowledge?

Want to read more about Tankless Water Heaters? Read our other related blogs below:

Need Help?

Have questions about how tankless hot water heaters work or need help deciding what tankless water heater is perfect for you? We would love to assist you in finding the best product for you! Please feel free to reach out to one of our real representatives by chatting with the chat button in the bottom right, calling us at +1 (256) 633-6553, or sending us an email at

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