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Water Heaters: Why Tankless 'On Demand' Heaters Don't Make Cents!

Posted by Bonnie Bornstein Fertel on Tue, Jul 02, 2013 @ 08:36 AM

Bornstein Sons speaks about the non savings of Demand Water HeatersDemand Water Heaters Are Supposed To Save You Tons of Money.

Here's why they really don't...

There's always the next new-new thing. Consumers enjoy learning about new products that are current topics of interest, particularly when they're reported to save them money. And we like new innovations, and saving money.

But...sometimes things are just not what they're supposed to be, and here's why...



On Demand...Instantaneous...Tankless. These are the descriptive words used of late to let you know that this is the best thing ever in the field of hot water. But, early into the process we began to see why we felt it just wasn't all it was cracked up to be. We actually were early believers, and then once we drilled down deeper, we became disillusioned and removed any material about this product from our website. (Just our humble opinion in what we deem our effort to bring the best to our customers.)

Hot water is a necessity, there's no doubt about that. While a refreshing splash of cold water is desirable on a hot summer day, and an ice cold drink sublime when you're in the heat, there's less of an interest in the commodity when you're showering or bathing, or providing water to your washing machine for a load that requires hot water.

Automatic Water Heaters were invented in 1889 by Edwin Ruud, a Norwegian mechanical engineer, according to About.com. Emigrating to Pittsburgh Pennsylvania, Mr. Ruud "pioneered the early development of the residential and commercial water heater and founded the Ruud Manufacturing Company."

This appliance is definitely something no one can do without.

There have been many iterations of the water heater along the way, particularly the indirect water heater, which we especially like, installed to operate along with those fortunate enough to have a hot water baseboard heating system. With a "priority valve" setup, this proud stainless steel-lined tank provides hot water rapidly with little or no chance of running out of supply, and boasts the end of glass-fractured leaking tanks, which unfortunately is the downside of a glass-lined water heater. But, for most consumers there is no alternative. (And since the average life of a glass-lined water heater is 8-11 years, there is no day-to-day worry, although we always suggest our customers be proactive and have experienced plumbing professionals inspect their water heaters on a somewhat frequent basis.

Along comes the creation and design of the 'Tankless' water heater. A nifty appliance that  provides a supposed "endless" supply of hot water when you 'demand' it. In otherwords, when a hot water faucet is "opened" the tankless water heater hears the call and there, you've got it. Once the demand is no longer called for, the tankless heater goes into 'Standby' mode.

Sounds pretty terrific, doesn't it? First you should know that there is a 15 second delay in waking up the tankless heater and that could translate into a burst of cold water while showeirng because the hot water has to travel to where it's needed. Not fun!

We originally liked the concept of on-demand water heaters very much, until we sat down and deciphered the actual difference in installation cost to our customers and what the real 'pay-back' period would be.

According to several manufacturers, some energy experts, and bloggers, the installed cost of a Tankless Water Heater is two to two and one-half times more costly than the installation of a traditional residential water heater. However, the savings are 'supposedly' well worth the expense.

We think not. It's been said by several 'experts' that the savings realized can be actually $9-$15 per month, and some say not nearly as much. And, again, it's been reported that the operating expense of a tankless or demand water heater typically saves you 30% less than a gas-fired water heater and 40% less on an already more expensive to operate electric water heater on annual energy costs. Sound intriguing? At first glance, yes. BUT...the national average cost in 2013 to operate a traditional 40 gallon gas-fired water heater is $300 annually (Thanks to our friends at Lawrence Kantor in Orange, NJ). So, in theory, the installation of a sparkling new high-tech state of art tankless heater might save you a whopping $90 dollars each year on your gas bill.

WOW?! Not really, in our most humble opinion. When you factor in the anticipated cost that is roughly, according to some manufacturers, 2 and one-half times more expensive than the installed cost of a traditional water heater and the pay-back time to realize any savings can be anywhere from 10-20 years, we came to the determination that it just makes no sense.(Consumer Reports puts the pay-back period at 15-22 years.) The payback period might be decades.

It appears, also, that hard water can be problematic for tankless water heaters and special maintenance may be required to avoid or treat that situation. Additionally, most plumbers do not stock parts for tankless water heaters, and the frustrating part is that these high-tech heaters have printed circuit boards and therefore, repairs after the initial warranty, which is shorter than traditional water heaters, can also be costly.

At the end of the day. A traditional water heater is typically the best value for the consumer and can be replaced usually the same day, by most local plumbers.

Need your water heater serviced or replaced in northern or north central NJ? Contact us today!


Topics: water heater costs, tankless water heaters, water heater efficiency

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