Aug 30, 2010

Actual Savings and Performance of Natural Gas Tankless Water Heaters (Report)

Mary Sue Lobenstein, Tom Butcher


Water heating is the second largest energy use in residential homes in the USA. It is also a very inefficient use of energy, with typical equipment efficiencies around 60%. The Center for Energy and Environment with funding from the Minnesota Office of Energy Security ran a two year field monitoring project to determine if high efficiency tankless water heaters could be part of the solution to this large inefficiency.

A 37% savings of water heating energy per household was found for replacing a typical natural draft storage water heater with a tankless one. However, this savings was not enough to offset the high incremental cost resulting in paybacks from 20 to 40 years.

Tankless water heaters saved energy and provided homeowners with acceptable hot water service at a reduced monthly cost without increasing total hot water consumption. Tankless water heaters have achieved about 5% of the new water heater market despite the long paybacks. Improving the payback could increase installations and a significant amount of energy could be saved.