An on-demand, or tankless, water heater is a system for heating water as it passes through the pipes, usually very near the point of use.
Traditional tank water heaters bring the water to approximately 140 degrees Fahrenheit (60 C), in order to ensure the water supply lasts long after the heater turns off. Since this is obviously far too hot to be pumped out of a shower of faucet, cold water is added to the mix in the pipes. Coupled with the loss of thermal energy over time, the average tank heater has an efficiency of approximately 80%.
On-demand water heaters have a number of advantages over their tank-using counterparts. While tanks often degrade over time and begin leaking, the apparatus used in an on-demand water heater is much less susceptible to the burdens of age, and will often outlive the house they're installed in. The amount of energy used is a fraction of that used in a tank water heater, due to increased efficiency and a much smaller window during which a heating source is in use. While tank hot water heaters can, and often do, run out of hot water after a number of showers, on-demand heaters provide a never-ending supply of hot water, ensuring that warm water is always available when needed.
A tankless water heater can cost between $500 and $1500, and they most commonly use either electric or natural gas energy to heat the water. Most mid-sized households report an energy savings of approximately 25-45% for a gas or propane heater, and up to 50% with an electric heater, over using traditional tank heaters. Water is usually set to a maximum temperature of 120 degrees Fahrenheit (49 C), though many heaters allow for custom setting of the maximum temperature via remote control. Outflow rates range from 8-14 gallons (30-53 litres) per minute.
Installation for most tankless water heaters is incredibly easy, involving simple plumbing. In the case of electric heaters, all that is required for a fuel source is to plug the heater into an outlet and begin heating your water.
Some modern on-demand water heaters can incorporate a solar preheating system. This system uses a traditional solar heating system and tank to bring the water nearer to the desired temperature, saving substantial energy use in the final on-demand heating. A solar preheating system costs between $500 and $800.