Actual Savings and Performance of Natural Gas Tankless Water Heaters

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.

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