On-Demand Hot Water Heaters 
Buying Tips, Pros, and Cons

Rinnai on-demand water heater

Is buying an on-demand hot water heater a good idea?

This article will present facts, reviews, and opinions from professionals and most common user comments about on-demand water heating, advantages, sizing costs, and manufacturers.

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Are you overwhelmed with water heating options, types, and models? I was.

It took me lots of reading and hands-on experience before I was able to repair and sell one.

A vast number of websites and "gurus" are dealing with the topic: on demand vs. tank or traditional (conventional) type.

One group prefers an old traditional way with the tank-type heater, while others, especially those who experienced on-demand water heating, like tankless technology.

How on-demand heating works.
On-demand vs. tank

On-demand hot water heaters, often called tankless, can be powered by natural or propane gas, and electricity. It provides hot water whenever you need it (as soon as you open the hot water tap), and delivers it in continuous supply to one or multiple applications, simultaneously.

The cold water passes through the heat exchanger, where it is heated instantly by a built-in gas burner or heating elements (electric on-demand units).

This type of appliance provides endless hot water, so it is perfect for homes with a high demand for hot water or occasional use (cottages or camping, for example). Use this article to find more about tankless.

Contrary to on-demand heaters, water tank heaters heat the water inside the large tank, and hot water is almost always ready. If all of the water from the tank is gone - used, you have to wait for water to reheat before you can use it again (depends on the recovery and tank capacity). More about tank-type heaters here.

Water heater types

  • Indoor models – models installed only inside the house.
  • Outdoor models – installed outdoors only.
  • Point of use (POU) – small on-demand water heaters that are installed mainly under the sink in the kitchen or bathroom, and close to the hot water fixture.
  • Whole-house – powerful heaters that are installed mainly on the wall to save space and provide enough hot water from small to large homes.
  • Portable – this type is used mainly when camping or when hot water is needed outside and off-grid (washing pets on the farm, for example).
  • Mobile – this type is used in RVs or the marine industry, and the most common are those running on propane fuel.

Selecting and sizing demand water heaters

Before buying a water heater, you need to consider the following:

  • Size
  • Fuel type and availability
  • Efficiency
  • Costs


Sizing an on-demand hot water heater is not hard to figure out. It would be best if you determined the flow rate and the temperature rise for the applications in your home. List the number of applications you expect to use at the same time and add up their flow rates, calculated in gallons per minute (GPM).

The temperature rise is also easy to calculate; subtract the temperatures of the incoming water temperature and desired output temperature. Different values for temperature rise are usually given in the manufacturer's manuals.


On-demand water heaters are more efficient than conventional types – most have an energy factor of 0.82, Energy Star – 0.87 or higher, and the most advanced, such as condensing, have an energy efficiency of over 90%.


On-demand water heaters more expensive than the traditional tank type. The price is often two times higher. Venting is also very expensive, as the non-condensing models use stainless steel vents due to the high exhaust gas temperature and acidic nature of condensation. Tankless heaters have more sophisticated elements; they need more care, making the service and maintenance more expensive.

On average, one on-demand water heater can save up to 40% of heating costs when properly installed.

Popular gas tankless manufacturers for residential use

Popular on-demand manufacturers for RVs and camping

Popular on-demand electric heaters


The main advantage of the on-demand hot water heaters over the storage tank-type is the use of sophisticated components, which are replaceable and serviceable. For example, if leaking happens on the water tank heater, you have to replace the whole unit, while if the heat exchanger leaks, no problem, you just have to replace this particular element.

Tank-type heaters operate at the constant gas input rate, while tankless have a modulating burner (actually, the gas valve provides more or less gas), which adjusts its power based on the water flow. Since the tankless heaters do not have a tank but a heat exchanger, they can provide hot water up to its maximum rated output. If the system is not sized correctly, the unit cannot meet the demand if the demand exceeds the maximum result. On the other hand, tank-type can handle peak demands.

Most tankless units utilize the self-diagnostic system and remote controller to monitor the water heating and change the settings, making them convenient to operate. Advanced electronics allow easy troubleshooting, so in some cases, homeowners can fix the problem.

An on-demand hot water heater does not require the anode rod since there is no water storage and the inner components are made of copper and stainless steel, so there is no corrosion as it happens on metal tanks.

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Other requirements

All tankless heaters need a minimum water flow to trigger the ignition, so properly sized plumbing pipes are a must. Tank-type can work with any flow or pressure. Also, the correct size of the gas pipe should provide sufficient gas for gas combustion, so when switching from tank to tankless, a proper size should be provided and the new vent pipe. Every on-demand water heater consumes a large amount of gas at the beginning.

According to consumerreports.org, on-demand water heaters are more efficient but not economical.

Installation and maintenance tips

Installing an on-demand water heater is much more expensive than conventional tank-type, especially in the case of the venting system where stainless steel pipes should be used.

Direct vent tankless models are designed for the installation in any part of the house as they come with the sealed combustion chamber and vent system that gets the air from outside and transfers the flue gases out safely.

In retrofit situations, when replacing the tank heater with the tankless, installation costs are higher. Due to its higher gas inputs, tankless units require larger venting and gas lines.

Periodic water heater maintenance can greatly extend the unit's life and reduce service costs.


Almost every on-demand hot water heater has a 12-year warranty, some 15 years, on the heat exchanger and five on other elements, while most tank-type heaters are 6-9 years, rarely 12.

Life expectancy

On-demand water heaters have an average service life of up to 20 years while tank-type of 10-15 years. While almost all the elements of tankless units can be replaced, this is not the case with conventional models.


Based on the facts from above, on-demand hot water heaters are more energy and water efficient with long draws, and that's why they are recommended in situations with high hot water demand. Since tankless heat water only when needed, they are also recommended in places where not used frequently.

One of the frequent complaints about tankless operation is the "cold water sandwich," which is minor when taking into account the great number of positive reviews. With the new advanced technology implemented in some models, water heaters today are capable of reducing the number of temperature fluctuations significantly.

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