Tankless hot water heaters come with a variety of promises, including that they'll save you money through lower energy consumption. While they do use less energy than tanked water heaters and therefore reduce your monthly utility bills, other costs associated with the units mean they'll actually cost you more money in the long run compared to traditional tanked units.
Will installing a tankless hot water heater save you money? Yes, but...
Our love of hot water accounts for 30 percent of a home's utility bills, according to Consumer Reports. And the U.S. Department of Energy reports that a tankless hot water heater is 24 to 34 percent more efficient than a tanked unit. Consumer reports states that on average, a homeowner can expect to save $70 to $80 annually on their utility bills when they swap out their tanked water heater for a tanked unit.
...You'll have to fork over considerable cash up front
The cost of tankless water heaters vary greatly but they all cost significantly more than tanked water heaters. Consumer Reports states you can expect to pay between $800 to $1150, but some tankless water heaters cost as much as $1,500. On the flip side, tanked units are generally in the $400 to $500 range.
Unless you're putting a tankless unit in new construction, there will be a considerable amount of work required to retrofit your gas and water lines for the tankless water heater's installation. This extra work means on average, you'll spend approximately $1,200 to have a tankless water heater installed, compared to $300 for a tanked unit, according to Consumer Reports.
Let's look at the numbers
Assume that you get a tankless water heater on the low end of the price scale and you'd be looking at approximately $2,000 for the purchase and installation. That's $1,300 more than if you had purchased a moderately-priced tanked unit and paid for it to be installed.
Even if you were to save $80 per year on utility costs, it would take you 16.25 years to recoup the cost, and 18.5 years if you saved $70 annually on utility costs.
The average lifespan of a tankless hot water heater is approximately 20 years. So it's quite a gamble on whether or not you'll actually save money, and if you do, it's marginal at best. Through this year, you can get up to a $300 tax credit for installing an energy efficient hot water heater, such as a tankless one, which will cut down the initial cost a bit.
Other options to cut hot water heating costs
There are many more cost-effective ways to cut your water heating costs.
- Install a water heater timer. You can set it to go on and off according to your hot water usage needs. For example, it can be set turn off the hot water heater one hour before you go to bed and then turn on two hours before you'll need hot water in the morning. In addition to reducing your energy consumption, it will also extend the life of your hot water heater because it's not constantly running.
- Lower the temperature setting on your hot water heater. For every 10 degrees F you reduce the temperature on the hot water heater, you'll reduce your hot water energy costs 3 to 5 percent.
- Insulate your hot water heater with an insulation blanket. By insulating it with insulation that has a rating of at least R-24, you can reduce your energy costs by up to 9 percent.
Chad Merda - Chad Merda
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