According to www.thegreenguide.com, tankless water heaters, also known as "instantaneous" water heaters, are up to 34 percent more efficient than storage tank water heaters. Tankless water heaters heat water as needed, unlike conventional storage heaters that heat water and store it in a tank where it cools and is reheated until it is used.
According to a Lawrence Berkley National Laboratory study, households waste 6.35 gallons of water a day just waiting for water to heat up. Tankless water heaters can deliver hot water in as little as five seconds, while storage tanks take 30 seconds or more.
Tankless water heaters cost between $650 to over $3,000. Although the initial cost is more expensive than a conventional water heater, you benefit financially in the long run with reduced energy and water use.
Before you purchase a tankless water heater, do your homework. Find out what your groundwater temperature is. Tankless water heaters draw directly from underground supply lines, and knowing the temperature will help determine the number of degrees the water will need to be heated as it moves from underground to your tap. Calculate your desired flow rate. Think about how many hot water appliances you may run at the same time (dishwashers, washing machines). Add up the gallons of water you will use at peak demand, and buy a water heater that can heat them to your desired temperature.