Do these heaters really make a difference?
You might think an electric tankless water heater is the way to save big on your electricity bill, assuming you currently have an electric hot water tank. The arguments for electric tankless heaters are convincing: why waste energy heating water, only to have much of the heat escape out of the tank walls and hot water pipes, when you could just heat water on demand? And given that any form of electric heating is 100% energy efficient, wouldn’t an electric tankless water heater be more energy efficient than a gas one?
An electric tankless water heater will probably save you money, at least in terms of energy you pay for. But their up front cost can make their payback period longer than a traditional tank water heater, and I have heard arguments by some that the energy they save at the household level is offset by the fact that they can create demand management challenges for utilities and even load challenges at local transformer stations. It’s interesting to note that in Japan, at least, where these heaters have been very popular, there have been reports of government incentive programs to get people to switch from tankless to storage heaters, which heat water very hot when electricity is cheapest (e.g. in the middle of the night) and release it when it’s needed. The reason is simple: while they save energy in terms of how much electricity you use in your home, some people argue that electric tankless water heaters can actually use more energy from the perspective of the power plant. I’ll explain this in more detail below.
The other thing you should know about an electric tankless water heater is that it will require some changes of habit. For example, don’t expect an unlimited volume of hot water coming out the tap – because they heat your water on demand, there’s a limit to how much they can provide. Particularly if the water coming into the electric tankless water heater is very cold (for example, the water in the Toronto water supply in February is usually about 4C), your flow might slow down to a trickle. Yes, you’ll get forever-hot-water, as some people say. But it won’t run fast!
Let’s look at the arguments for and against electric tankless water heaters in detail. You can then decide for yourself whether you think they are a worthwhile investment.
Will a tankless heater save you electricity?
An electric tankless water heater is generally more efficient than an electric hot water tank, because a big chunk of the energy used by a hot water tank is keeping the water in the tank warm.
In an electric hot water tank, heat from the hot water slowly escapes from the tank into the surrounding space. You can tell this by feeling the outside of the tank; even though the tank is insulated, it will feel slightly warmer to the touch than the surrounding room, and chances are the room will feel warmer than an adjoining room, all other things being equal. You can also feel the hot pipe coming out the top of the tank; this pipe will stay warm continuously, even when no hot water is being used.
Because electric hot water is more expensive than hot water heated with gas, electric hot water tanks tend to be better insulated, to reduce heat loss. This is why you can turn off a fully heated electric hot water tank and still get comfortably warm water from it a day or two later. (I know this because my parents heat their cottage water with an electric tank, and you can still wash dishes in hot water after a two-day power failure.) But the fact remains that some heat does escape – and the electric heating element compensates for it by injecting more heat into the water to keep it at a constant temperature. If you leave your tank heater on and never use any hot water, you’ll still be using energy keeping the water hot, which is why you should always set your tank to its vacation setting (a much lower temperature) whenever you leave the house for more than a day or two.
An electric tankless water heater, on the other hand, only heats the water when you want hot water. Almost no heat escapes from the electric tankless water heater when you are using hot water – there just isn’t time for heat to escape, as the water is rushing through the unit picking up all its heat, and most of that heat comes out the tap where you want it. If you were to put an electricity use monitor on both an electric tankless water heater and an electric tank water heater, you would see the electric tankless water heater using about 20-30% less electricity than the tank heater, over the course of a day or more.
If electricity consumption at the meter is your only concern, then the electric tankless water heater definitely cuts your own costs down.
But electricity consumption shouldn’t be your only concern. There are three other things you should worry about:
- Convenience: in my experience with tankless water heaters – from electric tankless water heaters to electric shower heads to gas on demand water heaters – you will make some sacrifices when you switch.
- Cost to you: consumption and cost are not always directly related. You may wind up using less electricity with an electric tankless water heater, but paying more overall, due both to the higher up front cost of these units, and possibly to time-of-use electricity pricing, which is becoming more common for residential customers.
- Cost to the planet: If you’re trying to save energy because you’re concerned about climate change or other environmental effects of wasting energy, you need to think about all the energy used to heat your water, not just the electricity that reaches your meter.
Let’s look at each of these issues on its own.
Are tankless heaters convenient?
As I mentioned earlier, an electric tankless water heater may sound like a good idea, but you may find, once you install one, that it’s a challenge to get used to. There are two key points to be made here: the relationship between how cold your water intake is and how much water you’re likely to use at one time; and something we’ll call the pulse effect.
Water intake temperature and required hot water flow
An electric tankless water heater has an electrical resistance-based heating element – usually a very high-powered one, because it has to impart a lot of heat very quickly from the grid to the water. This element is rated in watts (some are rated in amps but you need to know the voltage as well, since amps on its own doesn’t really measure heat output). Let’s assume, for argument’s sake, a 15,000 watt heating element, which can raise the temperature of one gallon of water by about 1.6 degrees Fahrenheit in one second (that’s approximately correct but let’s not get too bogged down in the physics).
You don’t need a gallon per second of hot water. Typical shower and bath faucets flow at 2.5 gallons per minute, and a low-flow showerhead will flow at about 1.5 gallons per minute. So to give you the low-flow showerhead flow of 1.5 GPM, that 15,000 watt electric tankless water heater could warm the water by 64F, while the regular-flow showerhead the hot water could be warmed by 39F. Assuming an ideal shower temperature of 98F, you could therefore handle water coming into the heater at 34F for the low-flow shower, or 59F for for the regular-flow shower.
In cold climates, particularly where lake or river water is the source of municipal or private water supplies, the water intake temperature can be considerably lower than 59F in winter. In Toronto, Canada, for example, where we draw our water from the bottom of Lake Ontario, the water is 4 degrees Celsius, or 39F, when it is drawn into the pipe, and it doesn’t get much warmer than that flowing through the frigid water mains of the city. So a 15,000 watt electric tankless water heater in Toronto will not be able to provide enough water flow for a shower at the regular 2.5 GPM flow, during the cold winter months. Obviously, a 30,000 watt electric water tankless heater would be able to provide that flow, and there are tankless heaters with wattages up to at least 28,000 for residential use.
Assuming you can get by on the 1.5 GPM flow on cold days, or that your water intake is warmer than the frigid 39F of Toronto water in winter, you still need to consider what happens if you’re showering and someone or something else in the house is using hot water. If the dishwasher kicks in while you’re showering, it will be taking some of that hot water, and regardless how good your household water pressure is, the pressure of the hot water will be limited by how much electricity the electric tankless water heater can pump into the water as heat at any given time. If someone is washing laundry with warm or hot water, or is washing dishes by hand, or having a shower themselves in another bathroom in the house, your shower flow could fall to a trickle. And don’t forget that a 15,000 watt heater at 220 volts is drawing 68 amps of power (on-demand heaters are pretty much always 220 volts, even in areas with 110 volt in-house electrical supplies). If your electrical supply reliability fluctuates, you may not be able to draw that much power at all times. This has been my experience with my on-demand electric tankless water heater in Costa Rica, where an unstable electricity supply means the flow can drop to a trickle at times, even though the water going into the heater is a balmy 75F.
The net of all this is that, the colder the intake temperature, the less flow you’ll get for a given output temperature, or the less temperature gain you’ll get for a given flow. You can compensate for this either by buying a higher-wattage heater, or by installing two heaters in series, so the first one warms the water halfway, and the second finishes the job. But you need to properly size your electric tankless water heater from the outset, and factor in its energy use (and the cost of upgrading the amperage on your home electrical service, if necessary) when you calculate how quickly the tankless heater will pay for itself in electricity bill savings.
One way to compensate for the cold water intake problem is to preheat your water with a rooftop solar hot water heater. This can help when the sun is shining – or if the solar hot water system has a storage tank – because the water available to the tankless electric water heater will often be significantly warmer than what would come from the municipal water supply (or the lake at your cottage). In fact, a combination of an electric tankless water heater and solar hot water system is a great way to cut energy costs and consumption, while still ensuring you always have access to at least some hot water.
Another way to deal with flow problems is to install point of use heaters for specific locations such as a bathroom shower or kitchen sink. These heaters are designed to heat water for a single purpose, so you are not fighting with demand from the dishwasher when you’re trying to bathe. One of the better point of use water heaters I’ve seen is the Chronomite series shown here. See my separate article on the subject (link above) for more examples of these heaters.
The pulse effect
If you currently use a tank hot water heater, you’ll be familiar with the gradual warming of water as you turn on the hot water tap. Some heat travels by conduction and convection from the hot water inside the tank into the first few feet of pipe even when no water is flowing (unless you have a heat trap on the hot water line), and hot water stays in the pipes and slowly loses its heat after you shut off the hot water tap. So if you turn the tap on and off frequently – for example, to rinse dishes you are washing by hand – you can still count on a steady supply of warm or hot water from your tank, even as you pulse the hot water on and off.
With an electric tankless water heater, you can’t count on this steady flow. There are two ways in which tankless heaters can heat water when the tap is first turned on:
- They allow water to flow through at the desired rate at all times, and warm it as best they can. The heater kicks in after the first bit of flow is detected. In this type of heater, the first bit of water after you turn the tap on won’t be hot at all.
- They restrict water flowing out of the heater to water at the desired temperature. Since it takes time to heat up the element in order to heat the first bit of water, you may have to wait several seconds before the water flow reaches the desired level.
For the first type of heater, what you will get when you turn the water on and off frequently is a layering of water in the pipe: sections of alternating cold and hot water will come out the tap. If the pulses are fast enough, you may not get any heating at all, as there may not be a long enough flow to start the heater. The result is that what you would have got for a tank water heater – a steady stream of hot water pulses – could become a steady stream of cold water pulses in an electric tankless water heater.
For the second type of heater, you’ll have to be patient, at the start of each pulse. My electric tankless heater in Costa Rica is of the second type: when I turn on the hot water, the tap just drips for the first several seconds. Then the flow begins, and about a minute later (if I’m in the shower), hot water starts flowing out.
If you believe that the other benefits of tankless electric hot water heaters are worth a little sacrifice in convenience, that’s great. Personally, both in my own house in Costa Rica, and in the houses of friends or family in Toronto who installed gas-based tankless hot water heaters, which have similar behavior when it comes to the pulse effect, I have found the adjustment is a real challenge.
We’ve already established that an electric tankless water heater will result in less electricity being consumed at your house, at least as measured in kilowatt hours. But that doesn’t necessarily mean you’ll save money.
Electrical utilities are always faced with a tricky balancing act. They can’t produce electricity that doesn’t get used – it has to go somewhere, and instantly. And they have to produce enough electricity to meet the demand that exists on the grid at any given moment, otherwise brown-outs can occur. On the other hand, you can’t vary the heat output of a nuclear or coal fired plant, or the water flow of a large hydroelectric turbine, second by second. Utilities manage this gap between supply and demand by allowing water flow without generation, or heat without generation, or occasionally by sending the excess electricity to some kind of short-term storage device, for example pumping water into a storage reservoir to generate electricity later. They manage demand at an industrial level by drastically varying the price of electricity to industry on a minute by minute basis, so that, for example, when it seems a surge in use is imminent from commercial and residential users, industrial users are encouraged to ratchet back consumption because the spot price for a megawatt hour of power becomes more expensive. Conversely, when commercial and residential use is about to scale back, the price for industrial users can be dirt cheap; I’ve even heard that some industrial customers get paid money to consume electricity in certain situations. There are also vast amounts of energy moving across nationwide or continent-wide electrical grids in a second-by-second electricity spot market.
The reason I mention this is that, from a utility’s perspective, it may be easier to manage a constant demand than a fluctuating one, and that also means it can take less of the source fuel used to generate the electricity, if the electricity is drawn at a constant rate. Spikes in demand often require a more expensive, instantaneous form of fuel (such as natural gas), or require massive overproduction for several hours before the expected spike is used (firing up all boilers in a coal-fired plant hours before the daily peak demand is expected).
Now, imagine if every household in a city like my home town of Toronto, which has 2,500,000 inhabitants, were to switch to an electric tankless water heater. Further, imagine if 10% of those inhabitants decided to take a 10 minute shower at some time between 7 am and 8 am on a cold winter day, when the cold Lake Ontario water feeding our municipal water supply means that the tankless water heater needs to run at its full 15,000 watts just to keep us comfortable in the shower.
Fifteen thousand watts used for 10 minutes translates into 2.5 kilowatt hours per shower. Multiply that by 250,000 (the 10% of Torontonians taking a shower at that time) and you get 625,000 kilowatt hours, or 625 megawatt hours, of electrical consumption between 7 and 8 am in the city, just for showering. That means that for an hour long period, the demand from just showers is 625 megawatts.
An electric tank water heater, of course, doesn’t draw this full 15,000 watts at a time, and so one argument made by the pro-tank side is that you will create fewer peaks in demand using tank water heaters, which typically have much lower wattages (e.g. 4,500 watts for a 40 gallon electric water heater tank).
I’m not entirely convinced by this argument. To understand the implications, let’s consider a smaller town – a hamlet, say, where there are seven houses and a ten minute shower is taken in each house between 7am and 8am, with each house starting ten minutes after the previous one. If we look at the electrical consumption for seven houses with on-demand hot water heaters, we see this:
Scenario 1 – 15,000 watt tankless electric water heater
As you can see, the peak usage at any given time in this staggered scenario is 4,500 watts. Of course, if all seven houses decided to shower at 7am or at 8am then the peak use would in fact be 105,000 watts.
Now let’s consider the same showering habits, but where the hamlet inhabitants have 40 gallon hot water tanks, with a 4500 watt element. First of all, since tank heaters are said to be about 30% less efficient than tankless, we need to assume that instead of using the equivalent of 15,000 watts in a 10 minute period, a tank heater would need to use 19,500 watts in a 10 minute period (which translates into 4,500 watts for 4 periods of 10 minutes, followed by 1500 watts for one 10 minute period). Assuming the hot water tanks are already fully heated, and that the heating element only engages after cold water has been entering the tank for 10 minutes (in other words, we don’t start using power until the shower is done), we get a different pattern of use:
Scenario 2 – 4,500 watt electric tank water heater
As you can see, the peak power use in this scenario, between 7:50 am and 8:10 am, is higher than in the tankless electric heater case – 19,500 instead of 15,000, which is not surprising since this matches the 10-minute power consumption of the less efficient tank.
So in this simple scenario it appears that the tankless hot water heater would cause less of a draw. But notice how the total power use jumps from 0 to 15000 watts at 7am in the first scenario, and then falls from 15000 to 0 after 8am. In the second scenario, the wattage draw never changes by more than 4500 watts per 10 minute increment. This is where, according to some people, the problem with electric tankless water heaters lies: they can create sudden surges in demand or sudden drops in demand, in situations where a large percentage of people have the heaters installed and happen to use them all at the same time. While in theory this should average out, in practice the random nature of people’s behavior can result in spikes and valleys at different times, and it is conceivable that the spikes can be quite a bit higher in a situation where an electric tankless water heater is drawing 15000 or 28000 watts instead of just 4500 or 9000 for a tank water heater.
That is the argument I’ve heard some people make to the effect that tankless electric water heaters present a challenge for utility demand management: spikes in demand caused by these heaters mean utilities may need to generate electricity over long periods to be able to meet a peak demand that could spike up at any moment as a result of thousands of people happening to turn on these very high-draw devices at the same time. I’ll leave it to you to decide how true that is, but I should note that I wrote a randomized computer model to test the impact of tankless versus tank water heaters on electrical supply peaks and found that, except for extremely small communities, tankless heaters seem to reduce overall demand at any given time.
Will an electric tankless water heater save the planet?
The other reason some people want to use an electric tankless water heater is that they believe the energy they save will mean less pollution, and therefore less harm to the planet.
As you might have gathered from the previous sections, while electric tankless water heaters use less electricity at the meter than electric hot water tanks, it’s not entirely clear that they save energy in the overall grid. So switching to a tankless electric heater may or may not help save the planet. (Even if your electricity comes from benign sources like wind and small-scale hydro – so called green electricity – you are still causing pollution because if you hadn’t used that green electricity it could be used by someone else who winds up using dirty electricity.) You might save money in the short term, but if it is true that tankless heaters causing demand spikes will drive utilities to raise prices during peak periods, it could mean in the longer term these heaters may be less economical.
Are there other alternatives?
There may be a better solution, from all perspectives, than an electric tankless water heater. What is the problem we’re trying to solve here? The whole premise of an on-demand water heater is that you don’t waste energy to the heat that is lost from the tank. And one possible issue we’ve raised is that tankless electric water heaters may create demand spikes that could translate into increased energy use, at the power plant if not in our homes.
So why not start with the hot water tank, and find a solution that addresses its shortcomings, without having to deal with potential demand spike management issues or the pulse effect with on-demand electric water heaters?
An alternative to tankless electric water heaters is a very well insulated storage hot water tank. This type of tank is becoming increasingly popular, in countries such as Japan that have had electric tankless water heaters for decades. The storage hot water tank solves the problem of heat loss of a conventional tank, by making the tank extremely well insulated, so there is little heat loss to the room in which the tank is installed. Remember that heat loss through the tank walls is one of the reasons hot water tanks are supposedly 30% less energy efficient than electric tankless water heaters.
The storage hot water tank also solves the problem of spikes in demand by varying the temperature of water inside the tank based on the time-of-use cost of electricity, and blending hot water from the tank with cold water from the water supply, to provide a steady temperature of water at any time of day. For example, since electricity tends to be cheapest overnight, a storage hot water tank can heat the water to a much higher temperature between midnight and 7am, and let the water drop gradually down through the day, only heating it up to the bare minimum required while electricity is expensive. As long as the tank is well enough insulated to keep most of this heat inside the tank, it makes the job of the utility demand managers much easier, and they reward you for it. (In Japan these heaters are eligible for major subsidies, to encourage people to buy them.)
In fact, an electric storage tank heater may be an environmentally better choice than a gas water heater, even though burning coal to generate electricity produces far more CO2 and smog than burning methane to heat a gas hot water tank, for a given heat output. Why? Because the electricity used to heat a storage electric hot water tank is electricity that would go to waste otherwise. Remember, it takes a long time to ramp up a coal or nuclear power plant, and as long as we’re stuck with these dinosaurs for some of our electricity needs, it makes more sense to use their excess power to heat our water, than to just send that heat up the flue and use natural gas to heat our water. And if it happens to be windy at night and you get some of your electricity generation from wind turbines, turning that wind energy into heat in your storage tank is better than just turning off the generators in the turbines because of low demand.
We can even overcome some of the heat loss disadvantage of a regular electric hot water tank by retrofitting the tank, in several ways.
First, we can add an insulating jacket to an electric hot water tank that substantially cuts down on heat loss. You can buy hot water tank jackets that are as much as 3-4 inches thick; this will have a big impact on how much energy you lose to heat loss into the room where the tank is located.
Second, we can add a heat trap to the hot water pipe coming out of the tank. A simple loop of pipe, or a special valve trap, will stop some of the heat from escaping up through the pipes, as heat rises, and the loop or trap prevents much of this heat rising effect from letting heat escape. A plumber, or anyone handy with copper and solder and a propane torch, can put either type of heat trap on a hot water heater in an hour or less.
Third, we can insulate the pipes leading out of the hot water heater, so that hot water in the pipes stays hot. Then you won’t have to run the hot water tap as long to get back to hot water, after the tap has been off a while.
And finally, we can lower the temperature in the electric hot water tank, from the factory default of 140F to a safer and more energy efficient 120F. The smaller the temperature difference between the room the tank is in, and the water in the tank, the less heat will escape through the tank insulation.
The electric storage hot water heater definitely seems like an attractive alternative to both tankless electric water heaters and regular tank electric water heaters – assuming you can find one, and of course assuming its storage tank is well enough insulated to substantially reduce the reported 30% heat escape from regular tank water heaters.
But aren’t all electric hot water heaters 100% energy efficient?
It’s true that both electric tank water heaters and electric tankless water heaters are 100% energy efficient at converting electrical energy to heat. That compares quite favorably to gas hot water heaters, which typically convert less than 60% of the thermal energy in the natural gas into heat inside your hot water (the rest goes up the chimney or out the wall vent). But electricity starts off with a natural disadvantage over natural gas, if your electricity was produced from a thermal source in the first place, for example a coal or natural gas fired power plant. That’s because the maximum efficiency of most such plants is around 35-40%. So in terms of overall system efficiency, for any power grid where some of the electricity comes from coal or natural gas, electric tankless water heaters start off with a significant built in disadvantage in terms of system efficiency. This is reflected in the price of heating with hot water compared to natural gas. The real advantage of an electric tankless water heater is that, given all that extra cost of heating your hot water with electricity, you at least don’t lose a bunch of that energy to heat leaking out through the tank walls.
So should you buy an electric tankless water heater?
I certainly have not had good experiences with electric tankless water heaters, or even gas fired tankless water heaters – I lived with a unit for a year in Costa Rica (granted, not a very high wattage unit) and I have several friends who had tankless gas water heaters who had issues with both the pulse effect and with reliability of the heater and its ability to handle cold Toronto water intake. I also appreciate the argument that these heaters may cause problems with utility load management, but it’s not clear to me whether this issue is that significant; this may not become clear until a great many more people install these heaters.
But I can definitely see the appeal of these heaters to people trying to cut their energy costs. As I said before, a tankless electric water heater does use less electricity at your meter. And especially if you can preheat the water with a solar hot water heater, you’ll save both on what the utility bills you, and on any fossil fuel or nuclear based generation from the utility, because this hybrid solution lets you rely primarily on solar heat for your hot water, but provides a backup source that uses less electricity than an electric tank water heater.