A tankless water heater doesn't have a storage tank to store preheated water in advance. Water is heated right away instead. How Tankless Water Heaters Work A tankless water heater heats cold water when the hot water tap is turned on. The heating system can be either an electric element or a gas burner. A typical tankless water heater will deliver around 2-5 gallons of water per minute, with gas able to handle larger capacities than electrical versions. Advantages of Going Tankless For large families demanding a lot from their hot water system, it may struggle with delivering the volume needed. A tankless system can provide significant energy savings of around 30% only using 40 or fewer gallons a day. The energy savings drop to approximately 12% when water demand reaches about 90 gallons a day. One way to get around dropping efficiency rates versus rising demand is to install a tankless water heater at every outlet, which can increase efficiency by as much as 50%. More units mean extra installation costs, but the energy savings will offset this. Other Advantages of Going Tankless The initial cost is more than a conventional hot water system. However, lower maintenance costs, energy savings, and longer service life bring the total cost of ownership down to comparable levels. Conventional hot water systems will give you around ten years of reliable service, or 15 if you are lucky. A tankless water heater typically lasts about 20 years. Using a Gas Tankless Water Heater You will have the option to install either an electric or gas system. Choosing a pilot light or not will affect what route you will take. A pilot light delivers heat in a conventional gas hot water system to the water with less waste. A continually burning pilot light in a tankless heater is an energy loss. An Intermittent ignition device (IID) will turn the pilot light off when the water is hot. Tankless water heaters offer many advantages in energy savings, but they're not the best solution for all situations. Discuss your options with PSI to discover how you can lower your energy costs by making the best choice in hot water system.