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Hot water heating: A tankless job?

by Josh Mitchell | May 07, 2019

Things to consider before you go “tankless”

 Since about 20 percent of a home’s energy costs come from heating hot water, many customers contact us about alternatives to the standard water tank. One option frequently considered is the on-demand water heater, also known as “tankless” or “instantaneous.” 

Traditional storage water heaters keep water hot at all times, even when it’s not being used, which produces small standby energy losses. In other words, you’re spending money to keep water hot even when you don’t need it. On-demand water heaters provide hot water only as it’s needed. 

Sounds like a good idea, but Chelan PUD does not recommend electric on-demand water heaters. The reason is the high electric demand these units place on the system. An electric on-demand water heater large enough for a family of four will require approximately 20 kilowatts (20,000 watts) of power to operate. This compares to 4 kilowatts for an electric water heater with a storage tank, or 1.87 kilowatts to run a heat pump water heater.

If you’re looking to save energy with your next water heater, consider a heat pump water heater. Chelan PUD offers a $600 rebate on heat pump water heaters. Although this product cannot provide continual hot water, it is more efficient than a tankless (by up to 3 times) because it absorbs heat from the surrounding area and transfers it to the water in the tank. And with a storage tank, you can use more than one hot water appliance at a time.  Customers who want to pursue tankless units might need to upgrade their electric service panel to handle the extra load. Although the initial cost of purchasing a tankless is similar to a tank water heater, the additional cost of service upgrades can make this an expensive project. For example, to upgrade your service from 200 amps to 400 amps, Chelan PUD charges $1,000 plus $500 for wires. This does not include the cost of purchasing a new panel and having an electrician install it.  If you are not sure whether you would need to upgrade your panel, see how many empty breakers you have left and refer to the chart below (click to enlarge). 

Hot water web chart

There are some benefits to tankless water heaters. The product will likely last longer than a tank storage heater and is less likely to flood your floor if it leaks.  If your space is limited, tankless units take up less space.  

One note: Gas and propane on-demand water heaters work well and don’t have a big electrical demand.

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