People often ask, “will I really save money if I choose to install a tankless water heater? Aren’t they expensive to install?”
When someone is considering whether to go with a tankless water heater or a traditional water heater, cost and savings are a big consideration.
Manufacturers of traditional water heaters will give reasons why their solution is the most cost-effective while manufacturers of tankless or instantaneous heaters will have a compelling argument for why you should go tankless.
If cost and savings are your main criteria for choosing a water heater, we offer this honest breakdown. In answer to the question, “will I save money with a tankless water heater?” we say, “it depends.”
Yes, the installation costs on a tankless water heater are often a bit higher than a traditional water heater.
In the case of new home construction, those costs are included in the electrical and plumbing design of the home and the price difference will be less significant.
When you are doing a retrofit for a whole house tankless heater, you will most likely need to call in an electrician to add additional wiring in your home. You are probably looking at up to $500 worth of electrical work. This also depends on the hourly rates charged where you live.
You should always weigh the upfront costs with potential future energy savings down the road when making your decision.
You will see anywhere from 15-40% heat energy savings when comparing tankless to tank. Whether you will end up seeing a significant energy cost savings by installing a tankless water heater depends on the source of your energy.
- Electric - If you currently use electricity to heat your hot water you will not consume more electric if you go tankless. Your electric bill will, in fact, probably go down at least 15 percent due to standby loss of the traditional water heater. That savings is because your tankless water heater only heats when you need it, as opposed to heating the water all day, every day.
- Oil/Propane - If you currently use oil or propane to heat your hot water, yes your electric bill will go up when you switch to an electric tankless water heater, but you will see a significant energy cost savings overall. This is because oil and propane are typically much more expensive energy sources than electricity.
- Natural Gas - If you currently use natural gas to heat your water, then we do not recommend switching to an electric tankless water heater for those looking to save money. Natural gas is the most economical heating energy at this time, and while there are natural gas tankless heaters available, they can be very expensive, typically 2 times the price of electric heaters.
To sum things up, if cost, not convenience is the main driving factor in your choice of water heaters, measure your installation costs against potential long-term energy savings of the tankless water heater. Those savings will depend on your hot water usage and the energy source you are using to heat your water.