Are you considering a tankless water heater but want to know the complete costs associated with the upgrade?
You need to consider the all-inclusive costs of this investment, including the tankless water heater, installation, and maintenance. When you figure out the costs associated with the tankless water heater, you can calculate the savings each month to determine if a tankless water heater will save you money in the long run.
In this PlumbingNav guide, we will cover:
- What Is the “True” Tankless Water Heater Cost to Consider?
- What Does the Average Tankless Water Heater Unit Cost?
- How Much Does a Tankless Water Heater Cost to Install?
- How Much Do Tankless Water Heaters Cost to Run Each Month?
- Overall Findings Regarding the “True Cost” of Tankless Water Heaters
|What's In This Guide?|
What Is the “True” Tankless Water Heater Cost to Consider?
When looking into tankless water heaters, you need to appraise the entire cost of switching from a conventional storage tank water heater to a tankless system, including the cost of your water heater, the installation, and your monthly savings.
Here are some considerations to keep in mind when pricing out your tankless water heater:
Cost of Tankless Water Heater
Tankless water heaters cost more than conventional water heaters. These units utilize efficient technology and put it in a compact package, contributing to the higher price tag.
Many units also include connectivity features to help you control your water heater and get reports about the usage and diagnostic notifications.
The installation of a new tankless water heater can cost more than you expect. The highest costs will derive from the need to upgrade the gas line or the electrical circuit to support the new device.
Most homeowners see a significant reduction in utility bills after making the switch to a tankless unit. The savings come from the tankless unit’s ability to heat water on demand instead of storing the water in a tank and constantly needing to keep it warm.
What Does The Average Tankless Water Heater Unit Cost?
Tankless water heaters tend to cost 1.5 to 2.5 times more than conventional water heaters. There are three main types of tankless water heaters: conventional gas, condensing gas, and electric.
The average price for a new tankless water heater are as follows:
- Conventional gas – $1160.00
- Condensing gas – $1760.00
- Electric – $650.00
Should I get an electric or gas tankless water heater?
When choosing between a gas or electric tankless water heater, you should learn about the pros and cons of both options. Electric water heaters generally cost less upfront, but electricity costs more than gas. Gas water heaters will cost more upfront, but gas costs less than electricity.
Both offer highly efficient models, but electric options usually provide higher efficiency. If going with a gas tankless water heater, condensing gas water heaters offer the best efficiency.
Factors to Consider to Determine Tankless Water Heater Cost
After you choose the type of water heater that will work best for your home, you will notice additional factors will determine the cost of the unit you choose.
Some factors include:
- Flow rate
- Energy efficiency rating
- Longevity of unit
Tankless units specify size using their flow rate. You determine the flow rate in gallons per minute (GPM). Tankless water heaters provide hot water instantly, but you need to get a unit that provides enough GPM to satisfy your entire household’s needs at once.
If you get a tankless water heater that doesn’t provide a high enough flow rate, you will experience inconsistent hot water or no hot water to certain fixtures or appliances.
To determine the flow rate requirements for your home, estimate how much water you may use during your peak usage times. Use the following estimates of the flow rate of most household fixtures:
- Shower – 2.5 GPM
- Kitchen sink – 2.5 GPM
- Dishwasher – 1.9 GPM
A water heater with a higher flow rate will cost more. You can use a whole-home system to provide a water heating solution for the whole house, meaning you only need to buy one water heater.
Some people will use multiple point-of-use devices in different areas of the house. Multiple point-of-use units may end up costing more than a single whole-home unit, but you will not need to wait as long for the hot water to reach the distant parts of your house.
Tankless water heaters can cost up to 40% less to operate than conventional water heaters. However, some tankless water heaters run more efficiently than others.
Every tankless water heater runs at a specific efficiency rating known as the Uniform Energy Factor (UEF). You can find the UEF clearly labeled on each water heater. The higher the UEF, the higher the efficiency.
Tankless water heaters with an Energy Star certification guarantee a certain level of efficiency. However, you still need to compare devices to see which ones will make the biggest impact on your utility bills. Condensing gas tankless water heaters generally offer the best efficiency ratings, but some electric models provide equal UEF ratings. Conventional gas water heaters provide the lowest UEF ratings.
Tankless water heaters with higher efficiency units will cost more than ones on the lower end of the spectrum.
Longevity of Unit
Tankless water heaters last longer than conventional water heaters. This means you will save money since you won’t have to pay for a new water heater. Most tankless water heaters last at least 20 years, while most storage tank water heaters last 10 to 15 years.
One thing that sets certain tankless water heaters apart from others is the smart technology capabilities on some devices. Smart devices allow you to control the water heater from an app on your smartphone.
The application will also give you updates on usage, giving you information to help you use your device in the most efficient way possible. Probably most importantly, it will tell you when there is a problem.
How Much Does a Tankless Water Heater Cost to Install?
Tankless water heaters require a more in-depth installation than storage tank water heaters, especially if you are switching from a conventional water heater to a tankless water heater.
Conventional and condensing tankless gas units will require an upgrade to the gas line. Electric water heaters may require an upgrade to the wiring, making up the majority of the increased installation cost. The cost to install a gas tankless water heater also depends on the ventilation requirements.
Conventional tankless gas water heaters require expensive piping that can withstand the heat from the gases expelled by the unit. Condensing tankless water heaters, on the other hand, can use inexpensive PVC piping since the condensing process cools off the gases before releasing them.
Tankless water heaters cost anywhere from $800 – $3500 for initial installation, but you will only need to pay high installation costs once. After the initial installation cost of the first water heater, you will not need to pay as much for the installation of future tankless devices.
How Much Do Tankless Water Heaters Cost to Run Each Month?
You have two options when it comes to tankless water heater fuel sources: electric and gas. We will cover how much you can expect to pay each month for both types to determine how much the initial cost will save you over time.
You will measure the usage of electric water heaters in watts, kilowatts, and therms. One kilowatt equals 1,000 watts. One kilowatt equals .03 therms. We will help you determine how much you will save by switching to an electric tankless unit compared to a tank-style unit.
According to the National Renewable Energy Laboratory, the average amount of energy used for a tank-style electric water heater in a two-person unit comes to 164.67 therms per year. In comparison, the average amount of energy used for a tankless electric water heater in a two-person unit comes to 97.44 therms per year. The more efficient the unit, the less energy you will use.
You will measure the usage of gas water heaters in British Thermal Units (BTUs), or therms. We will help you determine how much you will save by making the switch to a gas tankless unit.
- Natural Gas vs. Propane
Gas water heaters come in either propane or natural gas, and you will determine which you use based on the setup of your home as well as the advantages and disadvantages of each.
Propane costs more than natural gas, runs more cleanly, and it’s available in more places. However, natural gas tends to be more popular due to the lower cost.
- Monthly Usage
For a two-person domicile, you can expect to use 121.774 therms of natural gas or 117.22 therms of propane in a year. For tankless units of the same size, you can expect to use 80.03 therms (natural gas) or 77.06 therms (propane) in a year.
More efficient condensing tankless water heaters will use less than conventional gas tankless water heaters.
Overall Findings Regarding the “True Cost” of Tankless Water Heaters
With tankless water heaters, you will save money since you don’t need to replace the unit as often, and the efficiency will help your electricity or gas bill every year.
The cost varies based on the cost of your preferred fuel choice in your area, but we see that tankless units certainly save money each year. The larger your household, the quicker you will make up the initial cost.
If you have a small home and the installation will cost an absorbent amount of money, you may prefer to stick to the system you already have in your home. If you need to replace the water heater, look into energy efficient tank-style water heaters instead.
Quick Read FAQs for Tankless Water Heater Costs
What is the downside of a tankless water heater?
Tankless water heaters cost more upfront. You may also notice that you don’t get proper hot water when running multiple fixtures at a time if you don’t get a unit that provides hot water at the necessary flow rate.
Is a tankless water heater worth the cost?
Yes! It may take a couple of years, but you will eventually make up the cost. If you have a larger household, you will see a return on your investment faster.
How much does it cost to put in a tankless water heater?
The amount of money to install a tankless water heater can vary. You can expect to pay anywhere from $800 – $3500 on average, but the installation of your next water heater will not cost as much.
Can you run out of hot water with a tankless water heater?
You can run out of hot water if you don’t get a tankless water heater with a proper flow rate for your household’s needs. Get a tankless water heater with the correct gallons per minute (GPM) airflow to make it worth the cost of the change.
How long does it take to recoup the cost of a tankless water heater in saved energy bills?
It can take years to see a return from a tankless water heater, but most households make up the cost in about 10 – 20 years. After the initial upgrade, you will not need to spend as much for the installation of new units in the future.
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