How Tankless Water Heaters Work

If you grew up in a home with lots of people taking showers and running appliances, you probably already know what it feels like when that big tank runs out of hot water. It’s not too fun, especially during the winter. This is where a tankless water heater comes very handy. Why, you ask? A tankless water heater system heats the water as you need it, instead of continually heating water that is stored in a tank. If you go to Japan or Europe, these tankless water heaters have been the norm for several years now, but they haven’t gained a lot of traction until recently in the U.S. This is largely because of the green movement. What you get from a tankless water heating system is that you can save a substantial amount of money every year on your monthly bills. At the same time, you can conserve natural gas. Plus, these tankless water heaters also last about five to 10 years longer than an ordinary tank heater. It also takes up considerably less space and will provide you with an unlimited amount of hot water. The only downside to this type of water heating system is that it can cost up to three times as much as an ordinary tank heater. It also often requires costly upgrades to your natural gas line and an expensive venting system. Consider it a long term invest that will pay dividends after a couple of years. But how do these water heating systems work? Read on to find out.

How Do They Work?

In order to get a good grip on how a tankless water heater works, you must first understand how a standard tank heater operates. A traditional heater system usually has a large tank that holds and heats water in order to give you hot water when you need it. The tank will continually heat the water to maintain a constant temperature. Energy is being used to keep the water hot even when it’s not being used. This is called standby heat loss. Tankless systems on the other hand, avoid standby loss by heating incoming water only when you need it. That’s why these systems are also referred to as “on demand” water heaters. Eliminating the standby heat loss is what makes a tankless water heater more efficient.

Here’s the breakdown of how this type of water heating system operates. As mentioned above, a tankless water heater will heat water directly without the use of a storage tank. When you turn on the hot water tap, cold water will travel through a pipe into the system. Then the system will use either a gas burner or an electric element to heat the water. Thus, the tankless water heater will deliver constant supply of hot water. You don’t have to wait long for a storage tank to fill up with enough hot water. The downside is, a tankless water heater’s output will limit the flow rate.

Normally, a tankless water heater will provide hot water at a rate of 2–5 gallons per minute (gpm). A Gas-fueled tankless water heater will produce higher flow rates compared to an electric-fueled type. But sometimes, even the largest gas-fueled model cannot supply enough hot water if there are multiple users using hot water tap simultaneously. This is especially true in large households. A good example is taking a shower and running the dishwasher at the same time. This can stretch a tankless water heater to its limit. In order to rectify this situation, you need to install two or more tankless water heaters that are connected in parallel. This will allow you to use hot water taps simultaneously. You can also install a separate tankless water heater for specific appliances like a washing machine or dishwater. These appliances normally use a lot of hot water in your home.


To recap, when the need for hot water arises by turning on a shower, washing machine, dishwasher or faucet, the cold water will flows into the tankless water heater from the inlet pipe at the bottom of the heater. Water is then preheated as it passes through the heat exchanger, capturing any extra heat before it escapes into the vent system. Water is then continuously heated as it passes through the heat exchanger and exits from the hot water outlet pipe. It will then travel through the pipes of the home to the water fixture where hot water is needed. You can adjust the tankless water heater as needed to ensure the temperature set point is maintained. When the hot water fixture is shut off, cold water will stop flowing into the tankless water heater. The tankless water heater is now turned off until the next time hot water is needed. That is the complete process.