Tankless Water Heaters, Properly Explained

1. How tankless works

When you turn on a hot-water fixture, a flow sensor in the tankless detects water movement and fires the burner (gas) or activates the heating elements (electric). Water passes through a heat exchanger and exits at the target temperature. When you turn the fixture off, the burner shuts down and the unit idles drawing only 2-4W for the control electronics.

Three numbers matter:

• BTU/hr (gas) or kW (electric): rated input heat. 199,000 BTU/hr is the upper limit for residential gas; 36 kW is the upper limit for residential electric whole-home.
• UEF (Uniform Energy Factor): efficiency at delivering heat to the water. Condensing gas: 0.95+. Non-condensing gas: 0.82-0.86. Electric: 0.98-0.99 (the "efficiency" advantage is misleading — see section 3).
• GPM at temperature rise: the practical limit. A unit may be rated 9.4 GPM at 35°F rise but only 5.3 GPM at 70°F rise. Northern homes pulling 40°F water need higher BTU/hr to deliver the same shower performance as a Florida home pulling 70°F water.

2. Gas condensing vs gas non-condensing

• Non-condensing. 80-86% efficient. Older, simpler technology. Vents through 4-inch stainless steel (Category III) with strict 25-50 ft length limits. Hot exhaust (300-500°F). Cheaper equipment by $500–$1,000. Examples: Rheem RTG, Rinnai V series.
• Condensing. 95-98% efficient. Sealed-combustion. Pulls heat from exhaust gas, condensing water vapor inside the heat exchanger. Vents through 3-inch PVC (Category IV) up to 100 ft. Cool exhaust (110-140°F). More expensive equipment but eligible for ENERGY STAR. Examples: Rinnai RUR, Navien NPE-2, Rheem RTGH, Bosch ProTL.

Condensing is the right choice for any new install unless venting routing is impossible. The 10-15% efficiency advantage compounds for 15-20 years of operating cost.

3. Why electric whole-home tankless is usually wrong

Marketing materials emphasize 99% efficiency. Real-world physics: heating water from 40°F to 110°F (a 70°F rise) takes 4.18 kJ/kg/°C × water mass. Math:

A single shower at 2.0 GPM = 0.126 L/s. Heating that 70°F (~39°C) requires 4.18 × 0.126 × 1000 × 39 = ~20,500 W = 20.5 kW continuous. Two simultaneous showers: 41 kW. Three: 61 kW.

A 36 kW whole-home electric tankless (Stiebel Eltron Tempra 36 Plus, EcoSmart ECO 36) can support 1-2 showers in warm-water states (where incoming is 60-75°F, needing only 35-50°F rise). In cold-water states (incoming 40-50°F), it’s barely adequate for one shower in winter.

Then there’s the panel: 36 kW at 240V = 150 amps continuous. That’s 75% of a 200A service. Most existing residential panels cannot accommodate this without:

• 200A → 400A service upgrade ($3,500–$8,000)
• Multiple 50A circuits with their own breakers
• Utility transformer evaluation (sometimes upgrade)

Net: a "$1,200 electric tankless" frequently becomes a $7,000–$12,000 project. Compare to a heat pump water heater for $2,500–$5,500 installed (with rebates often $1,000–$2,500 net) that uses 1/3 the electricity per gallon and has zero panel impact. If you’re going electric, choose HPWH, not whole-home tankless.

The legitimate use case for electric tankless is point-of-use (under-sink) booster for a far-from-main-water-heater fixture: 18 kW or smaller, draws 75A on a 240V circuit, supplies one fixture only.

4. Sizing gas tankless correctly

Calculate peak simultaneous demand at your design groundwater temperature:

• Shower: 2.0-2.5 GPM
• Kitchen sink: 1.5-2.0 GPM
• Bathroom sink: 1.0-1.5 GPM
• Dishwasher: 1.5-2.0 GPM (if running)
• Washing machine: 1.5-2.5 GPM (if running)

Two simultaneous showers + a kitchen sink = 5.5-7.0 GPM peak demand. At 70°F rise (cold-water states), that requires:

• 140,000 BTU/hr unit: 4.5 GPM @ 70°F rise — inadequate
• 180,000 BTU/hr unit: 6.0 GPM @ 70°F rise — adequate for 2 showers + sink
• 199,000 BTU/hr unit: 6.6 GPM @ 70°F rise — adequate with margin

Don’t over-buy. A 199K BTU/hr unit costs $400–$800 more than 140K and requires a larger gas line. If you live alone or have 1 shower + dishwasher overlap, 140K is plenty.

5. Venting and gas line requirements

Venting depends on type:

• Condensing: 3-inch PVC, up to 100 ft total equivalent length, sealed combustion (no indoor air drawn). Cheap material, easy install, condensate drain required (route to a plumbing stack or sump; neutralizer cartridge required in some jurisdictions).
• Non-condensing: 4-inch stainless steel (Category III), max 25-50 ft, vented vertically or through-wall. More expensive material, install constraints.

Gas line: a 199K BTU/hr tankless needs more gas than a 40K BTU/hr tank water heater. The existing 1/2" line that fed your tank may be inadequate. Common scenarios:

• 1/2" line from meter to water heater: usually needs upsize to 3/4" for 180K+ BTU/hr ($500–$1,500).
• 1/2" trunk line from meter feeding furnace + tank + range: load adds up; may need 1" trunk + branch redesign ($1,200–$2,800).

Have a licensed plumber size the gas system before signing the tankless install contract.

6. Maintenance — descaling is not optional

Tankless heat exchangers are thin copper or stainless coils. Hard water (more than 7 grains/gallon) precipitates calcium carbonate scale that builds up on the exchanger walls, restricting flow and eventually destroying the unit. Manufacturers void warranty if you can’t document annual descaling with a vinegar or commercial-cleaner flush.

Three options:

• Install a whole-house water softener ($1,200–$3,500). Adds salt-disposal task. Eliminates scale issue.
• Install dedicated water-softener service for the tankless feed only (single-tank softener $400–$800).
• Manual annual descaling with isolation valves and a pump (Rinnai and Navien sell maintenance kits for $80–$150; flush takes 45-90 min).

Water hardness over 12 grains/gallon makes tankless inadvisable without water treatment. Test your water before buying.

7. When HPWH is the better answer

Heat pump water heaters (Rheem ProTerra, Bradford White AeroTherm, A.O. Smith Voltex, SanCO₂) are the most efficient water-heating technology available — UEF 3.0-4.0, vs 0.95 for condensing gas tankless. They use ambient air heat to warm water in a tank, eliminating the panel-draw problem of electric tankless and the gas-line + venting requirements of gas tankless.

Choose HPWH over tankless if:

• You have ~700 cu-ft of free air (typical basement, garage, or large utility room).
• You want the lowest operating cost.
• You qualify for HEEHRA (income-tiered DOE rebate, up to $1,750).
• You don’t want gas-line work.

Choose gas tankless over HPWH if:

• You have natural gas service and want unlimited hot water.
• You have nowhere to put a tank (HPWH needs floor space and free air).
• You have very large peak demand (6+ GPM simultaneous).