Tankless Water Heater Cost
Tankless water heaters cost around 2-3 times more than traditional storage tanks. The average cost for a tankless water heater installation is $1,985, or between $1,470–$2,510. If your home needs to be rewired, it can easily add $3,000 or more to the cost of installing a tankless water heater.
|National Average Cost||$1,985|
|Average Range||$1,470 to $2,510|
Traditional hot water heaters are quickly becoming extinct as new tankless technology is paving the way. With a tankless water heater, consumers receive a quick and almost endless supply of hot water on demand. Do tankless water heaters save enough energy and money to make the investment?
Table Of Contents
- Tankless Water Heater Cost
- Tankless Water Heater Installation Costs
- Tankless Hot Water Heater Costs By Type
Tankless Water Heater Installation Costs
Most homeowners spend between $1,470 and $2,510 to install a new tankless water heater. The two main cost factors for installation is the plumber's labor, as well as the heating equipment chosen. You will also need to include the costs of parts and materials necessary for installation.
Accessories include a gas connector kit, a vent kit, 2-piece brass valve set, along with fittings and mounting hardware. Typically, you will spend $50-$100 for a vent kit, while piping and insulation will cost $10 per foot.
Labor Cost To Install A Tankless Water Heater
When hiring a plumber, you can expect to pay $50 to $125 per hour. For a simple install with no need to run additional gas lines to a new hookup, an install will take an average of around 3–4 hours for a total installation cost of $150–$600.
If you have a current water heater that needs to be removed, or if your home needs electrical or structural updates to hold the new unit, these will add on to your final cost. If there is currently no gas hookup at the house, and one has to be put in to facilitate the new tankless water heater, that will cost extra. The national average to run a new gas line to a house is around $500.
To make sure a building stays up to code for the safety of the inhabitants, all renovations, retrofits to the infrastructure, and structural improvements will have to get a permit to ensure compliance with federal and local building, construction, and zoning codes. Expect to pay somewhere in the region of $200 to $500 for the permits.
Tankless Hot Water Heater Costs By Type
Tankless water heaters or “on-demand water heaters,” as they are also known, are either gas powered or electric and are either sold as a single point unit or an entire house water heater. Understanding what type you need is the first step.
- Single point heaters cost around $150 each and are suitable for areas with smaller capacity demands such as bathroom showers, and they are generally electrically powered.
- Whole house heaters cost around $1,000, are more commonly gas powered and, like a traditional water heater, have a pilot light running, which ensures the system is already ready to heat as soon as hot water is needed.
For some homeowners with a tank water heater/boiler already installed, it is far more efficient to install a few tankless water heaters in bathrooms as the family grows in size and the demand for simultaneous hot water increases.
Tankless Vs. Tank
The cost to install a tank water heater ranges from $650 to $1,611 because lower unit prices and less labor will be involved. Traditional storage water tank heaters, also known as "boilers" are the most common water heaters installed for the last 120 years or so and are used for central heating and can also heat the water for your home using steam. The hot water heater is one of the most efficient options for your home. These units are less expensive than tankless models but take up more space.
Whole House or Single Point
Your GPM will determine your need for an entry-level, single-point tankless heater, a whole house heater, or a combination of both. For a single-point tankless water heater suitable for a faucet in a laundry room or a shower, prices start at about $150, depending on the brand. You could go all the way up to almost $5,000 for a whole house gas-powered tankless water heater.
Gas or Electric Tankless Water Heater?
Gas-powered heaters typically cost more than their electric counterparts; however, the gas heater will cost about a third less to operate—depending on how much gas the pilot light consumes in your model. An intermittent ignition device rather than a pilot light can cut costs on this gas usage.
Gas Tankless Water Heater Costs
On average, natural gas and propane models have an installation cost of around $1,000 to $1,500. While these units will similarly fuel your system, the main differences occur in operating cost.
- Natural gas units are the least expensive choice and are powered from a city utility supply which costs an average of $200 per year.
- Propane costs an average of $350 per year to run a heater. Propane is a more efficient and cleaner fuel but comes with a higher BTU than natural gas.
Tankless gas models are available in a wide range of styles and size and produce output from 140,000 BTUs to 380,000 BTUs.
Electric Tankless Water Heater Costs
Less expensive than gas, electric models cost an average of $800 to $1,600 to install. With no need to vent, the installation work is not as complicated. Electric models run consistently, produce high energy ratings, and are easier to maintain than gas. Tankless electric units emit zero greenhouse gasses and are 20%-30% more efficient than ones with a tank. However, you may need to hire an electrician at $50-$100 per hour to rewire your home because they require much more energy than gas units.
- Electric Hybrid Water Heaters – Although these units are not categorized as tankless, they are very similar and do not need any ventilation. These units heat faster and are more economical than standard electric models. However, their upfront costs are more expensive and only go up to 8,700 BTUs.
- Point-of-Use Electric Water Heaters – These units are built for small areas and are perfect for campers, bathrooms, under sinks, or even in boats. These units are relatively inexpensive at $100 to $200 each, are lightweight, insulated and non-corrosive.
Solar Heating Systems
Solar heating systems come with a large up-front cost ranging from $2,500 to $6,000, before counting the average savings of $1,200 from the tax credit. Hooking your tankless heater up to a solar system yields the best energy savings and reduces water heating expenses by 50%-80%. It's the most environmental-friendly setup, and the government offers a 30% tax credit on the cost of installation for solar-powered water heating systems.
Energy Cost Savings Of Tankless Water Heaters
In addition to not heating water unnecessarily while you are not home, tankless water heaters are 24%-34% more energy efficient and don’t lose any heat, which traditional tank water heaters do. That reflects savings close to the cost of the system throughout 10 years of use.
Tankless Water Heater Brands & Costs
There are many manufacturers in the tankless water heater market, and below is a list of some of the known brand names and their prices. Keep in mind that the capacity, wattage, and output of the water heaters vary dramatically, hence the flux in prices.
|Gas Tankless Brands||Average Prices|
|Gas Tankless Brands||Average Prices|
What Size Tankless Water Heater Do I Need?
Choosing the size
Traditional tank water heaters are sold clearly marked with their capacity in gallons on a label on the tank. Tankless water heaters are different in their rating system—they are sold according to the demand they can meet, the flow rate, and are measured in gallons per minute (GPM).
The average GPM capacity of most residential tankless water heaters is between 2–5 gallons per minute, with many gas-powered units producing a higher flow than electric units. Following is a list of average household water demands with respect to their gallons per minute usage in the typical household.
- Bathtub - 27 gal to fill
- Dishwasher - 15 gal each load
- Faucet - 2.5 gal
- Garden hose - 8 gal
- Hot tub - 470 gal
- Lawn systems - 3–10 gal
- Pressure washer - 2–5 gal
- Showerhead - 2.5–7 gal
- Toilet 2.55 gal
- Washing machine - 34 gal each load
Calculate the maximum simultaneous demand for hot water in the house, and you’ll know which system(s) should be installed and where it should be located. Because of the demands of larger households, it might make sense to install one or more additional tankless units.
Measuring the BTUs
The difference between the temperature of the water from the local supply coming into the home and the temperature of the water that the water heater produces is called rise.
A house in a warmer climate will require a tankless system with a lower gallons-per-minute rating than a home in a more northern state: In those colder states with a more drastic rise from the temperature of the incoming water to the desired temperature, the tankless water heater is not able to produce as many GPM.
For example, for a home running a shower, dishwasher, and sink on water at 120 degrees at the same time in North Dakota’s winter will require 195,000 BTUs, while a home in Texas with the same appliances running and water demand will only need 100,000 BTUs.
Most gas tankless water heaters fall between 95,000–195,000 BTUs.
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Tankless Water Heater Pros and Cons
The benefits of a tankless water heater system far outweigh those of a stored-water tank heater. The following is a list of the aspects you can look forward to:
- Energy efficient - The tankless system only consumes either gas or electricity when someone needs hot water.
- Unlimited hot water supply - The right tankless setup can give users unlimited hot water from more than one outlet at the same time, and they can have it immediately. This gives users the freedom to have a hot shower even if there is a load of laundry going at the same time.
- Long lasting - Traditional tank water heating systems generally come with a warranty of up to 6 years. Most tank heaters are expected to last 8–10 years. In contrast, tankless units usually come with a warranty of 10–15 years and often last as many as 20 years before the unit will need to be replaced. In the same amount of time, most homeowners could have already replaced one or two tank water heaters.
- Cost effective - A tankless water heater can cut energy costs from heating water by as much as 35% or more each year, which really adds up.
- Can be installed anywhere - Because there is no big tank involved, they can be installed in multiple locations inside or outside the home, and are not just restricted to a closet or garage, saving valuable closet or floor space—other than a whole house tankless heater, which can be installed in the location of your old heater. There are two category names that heaters of different sizes fall into:
- Cleaner water - A tankless unit provides cleaner water too. Standard water heaters can potentially build upscale and rust inside the tank over time, but a tankless unit gives you cleaner and fresh hot water all the time.
- Reliable - With a properly sized unit, you’ll always have a continuous supply of hot water at a preset temperature. The units provide as much as 7 gallons of hot water per minute and will never run out of hot water.
- Safe - The units also score highly in terms of safety. The latest hot water on demand models come with innovative safety-enhancing features such as water pressure and flow monitors. They automatically turn off in case of system failure.
- Return on investment - You will see a return on your investment whenever you put your home on the market. Homes with tankless water heaters will sell for more than households with traditional water heaters, especially if they are whole house water heaters.
- Higher installation cost - You might run into a higher installation cost because of venting requirements, as well as the placement of additional tankless units around the home. The larger-capacity electric tankless unit may require upgrading a portion of your electric line to 240 volts to power it. You may have to redo the plumbing because of older, corroded or narrow water pipes.
- Hard vs. soft water If you have hard water and no water softener, cleaning a tankless system can be time-consuming. The fittings connected to the unit must be disconnected before the remaining contents can be emptied, and then a cleaning solution is cycled through to de-lime the insides. With soft water, you can service your tankless system every 4–5 years. Homeowners with hard water should descale their tankless water heaters every year.
- Maintenance - Unfortunately, because your tankless water heater has more internal components and subsystems, if it does need maintenance, it is generally more expensive than maintenance on a traditional tank system.
Tax Credits & Rebates
Tax credits for Energy Star-compliant tankless water heaters expired in 2016 but were recently renewed for gas-powered, whole home tankless water heaters. According to the US Department of Energy’s website Energy Star, “ Tax credits for all residential renewable energy products have been extended through December 31, 2021, and feature a gradual step down in the credit value.”
Also, the government offers a 30% tax credit on the cost of installation for solar-powered water heating systems. You can read more about this cost reduction credit via Energy Star's website.
Some state energy providers offer rebates. These rebates are different for electric and gas tankless systems and can be as much as three times the value of available rebates for traditional water heaters, ranging from $100–$650 for the more expensive whole home water heaters. Whenever you are ready to move forward with your tankless water heater project, your plumber or licensed installation professional should be well versed in the current status of rebates available and add that information to his recommendations. Check Energy Star to see examples from across the US.
Venting Considerations for Tankless Water Heaters
To prevent serious health issues from interior air contamination, gas-powered tankless water heaters require special venting to remove the hot carbon monoxide exhaust fumes and expel them to the outside air.
- Exterior tankless water heaters, can be installed on an exterior wall to have no impact to the space or appearance on the interior of the home. Because the unit is mounted on the exterior, no extra effort or expense is needed in setting up the venting required for internal systems.
- Interior tankless heaters need to bring in air from the outside, and there are two different methods to accomplish this: power vent and direct vent.
Power Vent Systems
The power vent systems only need an exhaust vent, and the unit has to be installed in a location that provides the right amount of air required for combustion to take place. A power vent tankless water heater will function best when it is installed in an area with adequate airflow around it for combustion to take place. One significant benefit from a powered vent system is that it will eliminate the possibility of back drafting—toxic fumes coming back down the pipes and releasing them into the house.
Direct Vent Systems
The direct vent system draws in air from outside, and instead of just one vent, it has a second one for intake in addition to the exhaust vent. One of the upsides to the direct vent system is that because of the second vent, these systems can be installed in tighter spaces. Typically, the systems are set up to vent through the roof or exterior walls, using fans to assist in the process.
Hiring a Tankless Water Heater Pro
Choosing a lower cost installer for the work of putting in your tankless water heater could end up costing you more because of a higher potential for substandard installation work—resulting in unnecessary, expensive repairs in the future.
When looking for a contractor for your tankless water heater installation, create a top list of 3 to 5 companies which you can make your final selection from. To get the best companies onto that shortlist to request bids from, look for installers who have as many of the following as possible:
- Are A+ rated members of the Better Business Bureau
- In business for many years
- Offer a warranty on their work
- Licensed, insured and bonded
- Respond quickly and clearly to your questions
- Give an itemized bid estimate to include cleanup
The more experienced the contractors, and the more highly rated they are, the higher the bid will likely be, but if they meet the recommendations above, the extra price could be worth it.
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Frequently Asked Questions
How do tankless water heaters work?
In this system, the heater heats up the water in the tank and then feeds it through the house through a hot water line. Tankless water heater systems are usually installed really close to the location where the water is needed—sometimes on the wall near the faucet or by the shower—and they use a gas burner or electric heating coils to heat the water as it passes through, enabling them to deliver constant, instant hot water for hours. Compare this to a setup in a home with a small water heater where, potentially, the second or third person wanting to take a shower might have to wait for 20–30 minutes for the water heater to heat enough water.
What are BTUs in tankless water heaters?
BTUs are the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
Do tankless water heaters save energy and money?
Tankless water heaters are a higher initial cost, but they will cost less to operate because they only need to heat water as it is required and use less energy. The Department of Energy computes average annual operating costs of $388 for a storage-tank heater and $272 for a tankless heater. That's $116 in savings. That reflects savings close to the cost of the system throughout 10 years of use.
What is the average cost of installing a tankless water heater?
Granted no other work needs to be done, the average cost to install a tankless water heater is $150 to $600, and currently, these costs can be offset to a small degree by a tax credit.
What temperature should you set a tankless water heater?
For most residential water heaters, the maximum temperature most homeowners will set their heaters to is 120 degrees, because beyond that can cause scalding.
How long does it take to install a tankless water heater?
For a simple install with no need to run additional gas lines to a new hookup, an install will take an average of around 3–4 hours.
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