A gas tankless water heater is a type of water heater that heats only water that is being used at the time, rather than storing hot water in a large tank until the time of use. In some residences, a gas tankless water heater is installed centrally in the same way that a tank heater would be. In other cases, especially in large homes, the heaters are placed near the points of use in the home, so that hot water is made available more quickly than if it had to travel from a central unit.
It has been common for many years in Europe and other areas to use a gas tankless water heater. In the United States, however, most homes still use a water heater with a tank. This seems to be a matter of regional preference more than anything else, since the popularity of the gas tankless water heater has begun to grow in the U.S. in recent years. These water heaters can be made to operate with any combustible gas as a fuel, whether natural gas or propane. Butane is also used in many areas of the world for the same purpose, although it is uncommon in the U.S.
The use of a gas tankless water heater offers certain distinct advantages over models that use storage tanks. The most notable advantage is the reduction of energy usage and the cost savings that this generates. Because a tankless water heater uses no energy when hot water is not being used, the cost of operating the device is much lower than that of a tank heater. Also, unlike with a tank heater, tankless water heaters provide hot water that never "runs out," because new water is constantly being heated. In practical terms, this means that many people in a row can take a shower without the last person having to shower in cold water, as can occur with a tank heater.
In addition to the above advantages, tankless water heaters take up much less space than their counterparts. This is important when living space is limited, and is likely a large factor in the popularity of such units in Europe and similar areas, where most of the population lives in apartment buildings. The biggest disadvantage of a tankless water heater is the initial cost. The installation of the unit, as well as any retrofitting of the plumbing, can be quite costly. This is particularly the case in the U.S., where tankless designs are relatively new and uncommon.