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What is a Tankless Hot Water Heater?

Tankless hot water heaters, commonly referred to as instantaneous or on demand water heater systems are an energy efficient option for hot water. Tankless hot water systems only provide hot water as needed. This means you can avoid the energy loss of maintaining the water temperature throughout the day that comes with tank storage hot water systems.

Tankless hot water heaters come in two types:

Whole house systems

Both whole house tankless hot water systems and single point systems heat the water directly once a hot water outlet has been turned on. However, because the water is heated as needed, whole house hot water systems have a limited flow rate. This means that if multiple outlets are turned on at once, for example, the washing machine and the shower, the hot water flow rate will be significantly impacted.

Single point systems

Single point systems are cheaper and smaller than whole house systems. They can be used to provide hot water to one or two outlets, for example, the dishwasher and the kitchen sink. The use of single point systems for appliances that use a lot of water can compensate for the limited flow rate of a whole house system. This means that if you have a single point system on your dishwasher, your shower water pressure won’t be affected by running both simultaneously.

The use of single point hot water heating systems can also minimise water temperature lost while traveling from the system to the tap. This is because the smaller system can be installed closer to the outlet for example, in the cupboard under the kitchen sink.

Reducing the distance between the water heating system and the hot water outlet can significantly reduce water consumption. This is especially important in larger houses where the distances between the system and outlets are greater.

How does it work?

In a tankless hot water system, once a hot water outlet has been turned on, cold water travels through the pipe to the water heater. Both electric and gas systems consist of a heat exchanger and a heat source. In a gas system, the heat source is a gas burner whereas in an electric system the water is heated by an electric element.

When the hot water system detects flowing water, the heat exchanger is activated and the electric element turns on or the gas burner ignites. Once it has been activated, the element or burner heats the heat exchanger and heat is transferred to the cold water passing through the pipes of the heat exchanger. A thermostat is used to ensure that the water is heated to the preset temperature of the system.

Because tankless systems supply on demand hot water that is heated as required, this type of system can produce unlimited hot water. That means long showers without the fear of using up all the hot water.

However, the on demand heating also means that there is a limited amount of hot water that can be heated at one time. This means that the simultaneous use of multiple outlets will affect the flow rate of the hot water. So a single tankless hot water system is not always the best option. Larger houses with multiple bathrooms and hot water appliances may require multiple systems or the use of a single point system as well as a whole house system to augment the water flow rate.

Tankless or Storage Hot Water Heater?

So which system is the best type of hot water heater? The answer to this question depends on the specific requirements of your household. However, below is a list of differences between tankless and storage hot water heaters to help you decide. If you want expert advice on which hot water system is the best fit for your home, call 1300 728 122 to speak with a Brisbane hot water system specialist.

Tank – The obvious difference between tankless and storage hot water systems is the storage tank. Storage systems require more space for storage and installation for the water tank. Conversely, tankless hot water systems require much less storage space and are generally wall mounted. Not only will you need extra storage space for the hot water tank, the tank required for a storage system also makes the system limited to the amount of hot water it can produce at one time.

Water Limitations – One of the main difference between storage and tankless hot water systems is the water limitations of each system.

With a storage hot water system, the size of the storage tank is the total amount of hot water that can be used at any time before there is a delay while the tank is reheated. This limits the amount of hot water you can use at a time.

Additionally, storage systems don’t account for different water usages over different seasons. This means that you will need to purchase a tank large enough for your hot water usage in peak seasons (usually winter) even if you are using a lot less water for the majority of the year. That also means that you will be heating the whole tank of water year round though you may not use anywhere close to the amount of water that you are paying to heat and maintain the temperature of throughout the day.

Tankless hot water systems heat the water as each outlet is turned on. This means that they can supply the exact amount of hot water you require year round. However, the on demand heating system does come with flow rate limitations. Because the water is heated as needed, there is a limited amount of water that can be heated at one time by a single system. When multiple outlets are in use the hot water has to be divided up to each outlet in use. This can reduce the flow rate of hot water significantly for each outlet in use. This means that a single hot water system may not be a viable option for a large house where multiple outlets are often used simultaneously.

Energy Efficiency – Another difference between tankless and storage is the energy efficiency of the system. Though this may vary between gas and electric systems, in general, a tankless system is more energy efficient than a storage system.

This is because hot water in a storage tank will lose heat throughout the day. Additional heating is required to maintain the preset water temperature. However, a well-insulated tank can significantly reduce the energy required to maintain the water’s temperature.

Tankless hot water systems are more energy efficient than storage hot water systems as the water is heated on demand. This eliminates any additional energy required to maintain the water temperature throughout the day. This system is especially energy efficient because unlike with a storage system, you will not be heating any water that you may not use.

Price – There is a significant difference in the upfront cost and running cost of tankless and storage hot water systems. The upfront cost of a storage hot water heating system can be up to 50% less than a tankless system.

However, according to energy.gov, tankless water systems can be up to 34% more energy efficient than storage systems. This means that on average, a tankless water system would make up the difference in unit price between storage and tankless after a single year of use.

Average Lifetime – On average, a tankless hot water heater will last longer than a storage water heater. With an average lifespan of 20+ years, a tankless hot water system will be around long after the 10 – 15 year expected lifetime of a storage system. Tankless hot water systems also have readily available replacement parts than can extend the life of the hot water heater by years. This alone is reason enough for the price difference between the two systems.


Correct installation of a hot water heater can optimise the energy efficiency of the system. Sun City Hot Water and Plumbing are your hot water specialists. We offer professional installation on all hot water heaters at great prices! If you’re looking for quality call 1300 728 122 today.


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