Tankless vs. Volume Water Heating Costs

Norm Hall
February 29, 2016
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When designing a high-efficiency service water heating system, you must often balance energy savings with your client’s budget. Tankless water heaters save energy, but at what cost? Today, we identifiy tankless vs. volume water heating costs. 

In the last few Monday Morning Minutes (MMM) posts, I identified the efficiency savings using tankless water heaters vs. volume water heaters. But what about the costs?

Initial Cost of Tankless Water Heaters

Whether using tankless or a volume water heater with a storage tank, high-quality condensing water heaters cost more than non-condensing or residential style water heaters. For today’s article, we’ll assume you’re comparing a high-quality condensing tankless water heater with a high-quality condensing volume water heater.

The BTUH capacity of the tankless water heater will be greater than the volume water heater because it has the capacity to handle the immediate demand without the flywheel effect or crutch of the storage tank. Remember, in the volume water heater, the demand flow is from the tank and the heater just recovers the heat lost from the tank. The larger the storage tank, the smaller the heater needs to be. For this reason, the tankless water heater will have a higher capacity and, therefore, a higher price than the volume water heater.

In addition to size, the tankless heater must have the complex control system to react to changes in flow rate and load while maintaining a tight, ±4°F exiting water temperature. There is no tank to buffer large swings in temperature.

You may plan on the tankless water heater having a higher price tag compared to the volume water heater.

Additional Equipment and Installation Costs

Although at first glance the tankless heater costs more, the volume water heater has other components that need to be factored in when comparing total cost. The tankless heater does not require the tank, the tank-and-heater circulating pump, the electrical wiring to the pump, the piping between the tank and heater, the temperature controller at the tank, or the wiring from the tank sensor to the heater.

Another cost is simply the needed space. Since the tankless water heater doesn’t require the tank, pump, and piping, it doesn’t need the valuable mechanical room floor space for those items.

Comparison of required space of tankless vs. volume water heating costs

Left side: installation of Volume water heater system. Right side: Aerco Innovation tankless water heater system. Both selected for the same system.

Venting: The Overlooked Cost

Most volume water heaters require a separate vent for each heater. The venting for the Aerco Innovation tankless system can be headered together. This results in less venting pipe and only one set of roof or side wall penetrations to the building. This can reduce both first cost and space used in the building.

Thermostatic Mixing Valves

Often the plumbing engineer will design storage tank systems for 140°F storage temperature to avoid any issue with storing lower temperature water. Then an ASSE 1017 valve, similar to the quality of the Lawler model shown below, is used to drop the supply temperature to 120°F.


If you’re designing a system to supply 120°F water and you use a tankless heater, the water temperature could be set from the heater at 120°F since there is no tank with thermal stratification issues.

Note: In addition to water heater controls, some codes may require a separate mixing valve similar to an ASSE 1017 or 1070 style valve. Verify all code requirements when designing a plumbing system.

Maintenance Requirements

If you’re specifying high-efficiency condensing water heaters—whether tankless or volume water tank and heater types—plan on the cost of annual maintenance in the life cycle costing. These products require a regular tune up to maintain their high-efficiency operation. This maintenance is regardless of manufacturer, and the owner should check the IOM for more details. There is no advantage of one over the other.

Energy Costs

The last item in our list of costs is the return from the cost of energy. Previous Monday Morning Minute articles have described the value of tankless over volume water heaters for energy usage.

When comparing costs of tankless vs. volume water heaters, make sure you look beyond the original equipment costs. Look at the entire installation and life cycle costs and you may be surprised.

So when and how do you specify tankless water heater design? Visit the R. L. Deppmann Monday Morning Minutes next week.

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