What are tankless water heaters and how do they work?

Every homeowner with a family knows the disappointing experience of running out of hot water on a busy morning. That happens because you exceed the total amount of water that your standard water heater has heated before the morning even started. In contrast, tankless water heaters (also known as demand-type water heaters) heat water as it’s needed at the tap. This can save you money and headaches.

For a free estimate on a new tankless water heater, call Wagner. Our plumbers are the very best in Albuquerque. We can professionally install a new tankless water heater in your home and put you on the path to less-stressful mornings and lower energy bills.

What are tankless water heaters?

As the name itself implies, tankless water heaters do not have a tank. This puts them in direct contrast with standard (also sometimes called conventional) water heaters, which heat water and then store it in a tank until it’s needed at the tap. Instead, tankless systems heat the water as needed, running it through a heated pipe until it reaches the right temperature. That’s where the name “demand-type” comes from: they heat water on-demand.

While the exact means of generating heat varies by system—natural gas systems combust gas to generate heat energy, while electric systems run a current through heating elements to do so—the fundamental concept is the same across all tankless systems.

Why install a tankless water heater?

Tankless water heaters have several advantages over standard tank models. Here’s what you need to know:

Continuous hot water

With a standard water heater, it’s entirely possible for a family of four to exhaust the stored supply of hot water in the morning. Once that hot water is gone, you’ll have to wait for the system to heat up more water before you can continue showering, doing the dishes, or running your washing machine. Tankless water heaters don’t have this problem. Since they heat water as it’s needed at the tap or showerhead, they’re constantly “refreshing” their supply. There’s no running out of hot water in the morning when you have a demand-type system.

For many families, this is a game-changer. When everyone’s getting ready in the morning, the last thing you want to do is leave the last person to take a disappointingly cold shower.


Storing hot water in a tank, no matter how well-insulated it is, requires a standard water heater to expend energy. If you left a pot of water on your stovetop, you’d have to continually turn on your range to keep it at a certain temperature. The same thing is true of your water heater. As it turns out, keeping hot water stored in a tank for use just isn’t the most-efficient way to do things.

Since they don’t have this problem, tankless water heaters end up being far more efficient than conventional water heaters. According to the U.S. Department of Energy, homes that use 41 gallons or less of hot water per-day can see an efficiency boost between 24-34%. Over the course of multiple weeks, months, and years, those energy savings can really start to add up.

While it’s true that most tankless water heaters cost more than standard models, take those long-term energy savings into account. If you think about your total cost—not just what you pay upfront for the system, but what it costs you throughout the years to come—you’ll find that tankless systems are very price competitive.


On average, tankless water heaters last about twice as long as standard water heaters. When you think about their key differences, this starts to make sense: a tankless water heater isn’t storing hot water that can lead to faster corrosion inside of a tank. With maintenance and upkeep, most standard water heaters last about 10-15 years. A tankless water heater, in contrast, can live for 20-25 years.

Here’s the upside: if you invest in a tankless water heater, you might only need to purchase one system in the time you would have had to install two standard ones. If you’re planning on staying in your home long-term, a tankless water heater is a no-brainer for this reason alone!

Lower risk

As conventional water heaters age, they often start to run into a series of predictable problems. First, their sacrificial anode rod—a metal rod inserted into the top of the water heater—is slowly but steadily eaten away by corrosion. This leaves corrosive elements free to attack the tank walls. This weakens the overall structure of the tank.

You may not think about your water heater tank as being under pressure, but the truth is that the entire system is pressurized. Any weakness in the tank shell could lead to a rupture, which will send water flowing into your home. Unless you have an emergency shutoff switch, you could be looking at thousands of dollars in water damage.

Tankless water heaters don’t have this problem or carry this risk. There’s no tank that can be damaged by corrosion. As such, they represent significantly lower risk to your home.


As anyone who has a water heater in their garage, utility closet, or basement knows, these systems take up a good deal of space. The tank itself needs significant room. One of the benefits of upgrading to a tankless system is that you get much of that space back. Most demand-type water heaters are wall-mounted. No need for a tank means there’s no need for a large, space-consuming footprint.

Every square foot counts. Reclaim some of your home by switching to a tankless water heater.

What are the downsides of these systems?

As mentioned earlier, tankless water heaters do cost more upfront to install. Just remember to think about your total costs—your future years of energy savings will probably end up offsetting most, if not all, of the cost difference between a tankless system and a conventional one.

Tankless water heaters are limited by how much water they can run past the heating elements at one time. If you’re trying to take a shower, run your dishwasher, and wash a load of laundry all at once, this might end up exceeding the maximum output of the water heater. To get around this limitation, you’ll need to either plan out your use of hot water or consider installing a second system somewhere in your home. For large, multistory households, this latter option might be the best course of action.

When getting an estimate for your water heater installation—regardless of which system you’re getting—talk to your plumber about what else might be needed to make the new water heater work. If you’re installing a gas or propane water heater, for instance, you may need ventilation installed, as well. If your tap has very low water pressure, you might need that raised so that the system can work properly.

Is a tankless system right for my home?

Here’s the bottom-line: tankless water heaters are often well-worth their cost. There’s a reason why they’ve become so popular amongst homeowners. If you’re on the fence about upgrading to a tankless system, talk to a plumber before you rule it out. It might be the perfect fit for your property.

If you’re at the point where you need to replace your old water heater, consider upgrading to a tankless system for these benefits:

-Energy savings for decades to come
-Increased home value of having a tankless water heater
-Unlimited hot water
No risk of a water heater tank burst

How much will my tankless system cost?

According to data from HomeAdvisor, tankless water heaters cost about $2,200 on average to install. That’s about $1,000 more than the average conventional water heater costs to install.

However, as we’ve noted in the sections above, that difference in upfront costs can be made up with your annual energy savings. If your tankless system saves you $100 per-year, as suggested by the U.S. Department of Energy, it only takes a decade to see a return on your investment. Your savings beyond that are just gravy.

One final note: talk to your plumber about local, federal, or utility rebates available in your area. Nationwide, there are many programs designed to incentivize homeowners into upgrading to tankless systems, which—thanks to their lower energy needs—relieve pressure on the electric grid and help reduce carbon emissions.

Talk to our team

If you’re ready to make the switch, or if you need more information about this dynamic water heating alternative, contact Wagner today to talk to a professional plumber about your particular situation. With a demand-type water heater, you’ll never run out of hot water again.

Installing a new water heater—tankless or not—is not a DIY-friendly project. You’ll want the help of our professional plumbers at Wagner to ensure your water heater is installed safely, is working properly, and is set up to provide your home with reliable and efficient hot water for many, many years to come.