Tankless water heaters have several advantages over conventional storage type water heaters that store a large volume of water in a tank.

One advantage is that since the tankless unit does not have a tank, there is no continuous heat (energy) loss from the large volume of stored hot water, as there is with a traditional storage type heater. Typically tankless heaters do not have standing pilot lights like tank type units, saving even more energy. There is no question tankless water heaters are more energy efficient.

Another advantage is that you have virtually unlimited hot water, you will never run out. This could be a double edged sword though, as there is a tendency for humans to use what is available. Some users might end up taking much longer showers for instance, leading to an increase in water and energy usage.

This effect was common back when the government provided large tax credits for installing solar water heaters. Homeowners believing they now had cheap hot water tended to use a lot more hot water than before the solar heaters were installed. They used so much more that the monthly water heating more…