How Do Tankless Water Heaters Work?

Posted by James Memije on Sep 3, 2015 9:50:00 AM
James Memije
Tankless Water Heater

Tankless water heaters use a heat source (electric or gas) to warm up cool water on-demand, whenever you need it, rather than storing hot water in a tank. What happens is: they receive cold water through the pipes in your home when a faucet is used or an appliance calls for hot water. The incoming water is instantly heated as it passes through heat exchangers in the unit. This method prevents "standby" energy losses that occur with storage, or tank-type water heaters.  

So, how are tankless water heaters rated and how can you select the size that best fits your needs? Tankless water heaters are rated differently than the traditional tank style water heaters. Instead of total gallon capacity, they are rated in gallons per minute (GPM) and in their ability to heat the water at a given gallon per minute rate, called temperature rise. Correctly sizing a tankless water heater for your needs can be done in three simple steps: 

  1. Add up the total amount of hot water that you may be using at one time. For example, if you want to be able to run the shower and dishwasher at the same time, you would have a usage of 2.5-6.0 gallons per minute, depending of the flow rate of your shower and dishwasher fixtures. 
  1. Find your average groundwater temperature on the map at the right. Subtract this from 120°F to find your needed temperature rise (Note: 120°F is hot enough for most applications; however, if hotter water is needed, a higher number can be substituted). 
  1. Now that you know your maximum gallon per minute water usage and required temperature rise, you can find the best fit for your application. How much hot water do you need at one time? Do you need to run 2 showers at the same time or maybe a shower and a couple sinks? The chart below  shows the range of water usage and average water temperatures for various fixtures. We suggest using 2.5 GPM for a shower and 1.0 GPM for a bathroom as a reference point in determining your total simultaneous water needs.



  • Energy savings - According to, for homes that use 41 gallons or less of hot water daily, they can be 24-34% more energy efficient than traditional systems. At a presentation delivered at the U.S. Department of Energy at the Building America Technical Update meeting on July 24-26, 2012, it was reported that tankless models rated higher in performance for all homeowners in a ten-year study and reported significant energy savings of 25-75% in comparison to domestic water heater container units. They can have up to .99% EF (energy factor); for instance, a condensing tankless water heater by Navien has this EF. Total operating costs with a condensing tankless unit will be nearly 40% less than the operating costs of standard combustion tank water heaters. 
  • Space savings - They are small and can be installed in more places than traditional water heaters – even on the outside of an exterior wall. You can save a minimum of 4 square feet of living or storage space with tankless wall-mount systems. There is no need for a large storage tank that holds tens of gallons of stagnant water and is being continually heated and re-heated. 
  • Longer life span - They can last 20+ years, almost double a traditional water heater’s life. Units have parts that are easily replaceable and can extend the system’s life by several years. Navien offers a 15-year warranty. 
  • Better for the environment - They heat water only when a tap or an appliance is turned on. This means lower energy consumption – a green advantage. Water is heated on a need-only basis. They erase the threat of tank leakage that could greatly impact the homeowner through unforeseen expenses and personal loss.

Now that you know how these work, how to select the right size unit for your needs, and key benefits of tankless, it’s time to make your home a more comfortable, energy efficient, and sound environment. 

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Topics: Water Heaters

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