It would be an understatement to say there is controversy in the industry over traditional storage type versus tankless water heaters.

Some see tankless water heaters as the way of the future. Others believe the recent spike in sales of on-demand units was artificially driven by government and utility rebates and marketing promises of “endless hot water.”

“The homeowner who is buying the tankless, they are seeing the rebates, and they think it’s a great value, then they go to fill up their whirlpool tub and they don’t have enough hot water, or they have body showers and it’s not supplying enough unless they reduce the flow,” remarked Paul McDonald, director of sales and marketing for Bradford White Canada, Mississauga, Ont.

Today, just about every water heater manufacturer offers both technologies. It’s up to the contractor to explain the advantages and disadvantages to the homeowner and help them choose the product that best suits their needs.

If one says “water heater” to the average North American, the picture that comes to mind is that “tank thing” in the basement. Not so in Asia and Europe. There, tankless or “on-demand” water heaters have long been the norm.

Tankless hot water heaters bring a number of advantages to the homeowner. They are efficient, take up little space and last 20 years or so.

While some early models had problems, today’s tankless water heaters are largely trouble-free. “We’ve been through seven generations. We’ve had very few returns,” remarked Dan Rooney, product manager for Rheem Canada, Brampton, Ont.

However, many in the industry question marketing that promises “endless” or “unlimited” hot water. “It’s endless hot water, but the caveat is that it’s four gallons (4 gpm) of endless hot water,” remarked Bill Egnatis, manager of GE water solutions for Gordon R. Williams, Mississauga, Ont. As long as the water draw is within the unit’s maximum flow rate, it will provide it all day long.

Cold winter groundwater can reduce the output temperature or capacity. A tankless unit can struggle to achieve the necessary 70ºF heat rise in the winter, said McDonald. There can also be brief lag time for the water to warm up when the tap is opened.

However, says Rooney, it’s not enough to make a significant difference. The National Building Code now requires hot water tempered to 49ºC at the tap, so this isn’t as much of an issue as it used to be, added Skip Hayden, senior research scientist at Natural Resources Canada in Ottawa. As well, some tankless manufacturers have incorporated a small buffer tank to deal with lag time.

For many applications, rebates or not, on-demand water heaters make sense. “You are going to see more and more use of tankless water heaters in condos and town homes, where space savings are needed, or where they are looking for a higher efficiency or a green product,” remarked Rooney. 

Some on-demand heaters, such as this Rheem Prestige unit, are doing double duty an providing space heating as well.

The conventional water heater has a lot going for it. They are inexpensive to buy, easy to install and a 60-gallon tank provides all the hot water most homeowners need.

There is no maintenance and, at current natural gas prices, they are inexpensive to operate.

The downside to the traditional water heater is that they take up more space than a tankless unit, they can be heavy and cumbersome and they are not quite as efficient as a tankless unit, none of which are major issues to the average contractor or homeowner.

Installing storage tank water heaters is old hat for a plumber. Not so with tankless heaters. They are compact and can be installed almost anywhere, but the contractor has to be mindful of how he is going to vent the unit.

Ideally, mounting it on an outside wall allows the venting to run straight outside. In warmer climates, sometimes the entire unit is mounted outside. “In Canada we don’t use a lot of outdoor units because they freeze up,” said Rooney.

Some tankless units vent with standard S636 vent piping, others use concentric venting and some use special piping from the manufacturer, which can be costly.

As well, depending on the size of the unit, the gas line may have to be upsized to ¾-inch.

“We have many working on half inch and they work quite well, but typically many people upsize their gas piping to ¾ and in some cases they have to upgrade their water piping too,” says Rooney.

In rural areas, the water should be tested for hardness. If it’s more than 12 grains, a water softener should be installed inline with the water heater.

On-demand water heaters must be flushed out periodically to prevent the buildup of calcium on the heat exchanger. Manufacturers typically provide a small service kit with a circulation pump and detailed instructions that the homeowner must follow. While it’s not difficult, it is helpful for the contractor to show the homeowner how to do this just, if nothing else, to plant in their mind that this is something they need to do.

Hot water heaters are rated by energy factor, which NRCan defines as: <it>The ratio of the energy delivered to the end user as hot water divided by the total energy consumed by the water heater over a 24 hour period, in a simulated use test.<endit> The higher the energy factor number, the more efficient the unit. There is considerable controversy over whether the current test is representative of the way people actually use hot water (Please see sidebar).

The energy factor for the typical non-condensing tankless unit is in the low 80s while a storage tank heater typically achieves about 70. Condensing tankless units operate in the mid-90s and some storage tank heaters get into the low 90s.

McDonald questions the energy efficiency claims made for some tankless water heaters. “The unit is operating at full bore at 180,000 Btu’s. That’s a lot of gas. It’s only on for a certain amount of time, but if you look at a tank type water heater, with the codes and standards that we all have to manufacture to today, the average heat loss is anywhere from half a degree to a degree per hour. It’s not losing as much heat as people think.”

A storage tank, unless it has been run dry, must only heat the water by 10 to 20 degrees from the setpoint, unlike a tankless unit that heats the water from the groundwater temperature.

Hayden disagrees. Some tankless water heaters modulate so that they only fire at the highest rate if the demand requires it.

NRCan field testing has shown that in a typical family home there are about 90 draws of hot water per day and they are usually pretty small – up to two gallons or eight litres. Egnatis questions whether these short draws allow the unit to condense. “Everyone’s claiming 95 to 97 percent efficiency (for condensing units) but, in real life, how often do they achieve those factors?”

Still, in NRCan efficiency tests, tankless DWH heaters almost always outperform storage tank units, noted Hayden.

At the end of the day, the plumbing contractor is the expert and needs to direct the homeowner to the equipment that best suits their needs, regardless of any rebates or marketing that the homeowner may have seen. Step one is to do an honest assessment. How much hot water do they use and what flow rate from the DHW heater is going to satisfy those requirements?

“They have to have the balls to say to the customer: ‘It may sound like it gives you all this hot water, but it’s not the right product for your application,’” says McDonald.

McDonald installed a tankless unit in his parent’s house because it’s just the two of them. In his own house, a tank type heater works well because of the volume of water his family goes through. However, he’s building a new home with two tankless units, one for the shower and bath and the other for the laundry and kitchen. But he admits the equivalent capacity could be achieved with a single 60-gallon storage type DHW heater.

“If you’re using it for one appliance at a time, it’s a great application (for tankless). If you’re not, it’s really not a smart application.”  

This clean installation of a Rinnai tankless unit demonstrates one of the biggest advantages – DHW heating in a small space.

Natural Resources Canada (NRCan) has done considerable testing on both storage type and tankless water heaters at its CanmetENERGY laboratories in Ottawa. “We’ve done a field trial as well looking at real usage patterns of hot water as opposed to what the energy factor test does, which is totally non-representative,” reported senior research scientist Skip Hayden.

The current test, designed over 25 years ago, assumes six draws of 40.6 litres (10.72 U.S. gallons) per day for a family of four. Both people’s habits – showers instead of baths, for example – and family size have changed.

NRCan’s field test revealed that there are many draws of water of much shorter duration over the course of the day and that actual water use has been reduced by about one third. For the test, NRCan recruited 40 volunteers from among the staff at NRCan. A plumber installed a flow meter in each home, 79 percent of which were single family detached and, in 70 percent of homes, there is one or two people home during the day. Seventy percent had Energy Star laundry machines, which is probably higher than the national average.

The daily draw of hot water for each home averaged 163 litres or 43.1 U.S. gallons, substantially less than the energy factor test which is based on a daily draw of 243.4 litres (64.3 U.S. gallons). And there were an average of 86 draws per day at 2.1 litres (0.6 U.S. gallons), dramatically different from the six in the EF test.

There were an average of 17.8 showers or baths per week per household. Each person averaged 50 litres per day, versus 61 litres in the energy factor test. A 15-minute shower used 80 litres, a 10-minute shower used 45 litres and a six minute shower used 33 litres.

The various relevant tests – CSA P.3-04, P.7-10 and ASHRAE 118.2 – are currently under review. NRCan would like to see them revised with a more realistic draw schedule and split into different parts – standby, steady state and cyclic performance, using all three to calculate the energy factor, said Hayden.

“The energy factors for both are not representative and don’t give you the right clues about how you could make (water heaters) better,” he added.