How does a tankless hot water heater work?

In the United States, the spread of tankless water heaters has been a relatively modern phenomenon. Traditionally, tank-based water heaters have been the norm among the average American households and businesses. However, rising environmental concerns have led to demands for green alternatives in the area of water heating. In response to this new demand, U.S.-based manufacturers and distributors are increasingly offering cost-effective heat systems — including long-lasting, efficient tankless gas water heaters. So, let’s learn how a tankless hot water heater works.

But first…


A tankless hot water heater is much smaller than tank-type water heaters or boilers. This type of water heater does not store hot water, reducing its size tremendously, requiring less space in the boiler room. Often referred to as an on-demand water heater, it heats water instantly, which helps conserve energy and time wasted waiting on heating hot water.

Tankless water heaters are a great alternative to the traditional tank-style water heaters. The advantage of tankless heaters is the ability to use a small amount of water to generate a large amount of hot water when needed. If you have a business that needs hot water all the time, then you should consider installing a tankless water heater. They can be more expensive at the start than your standard tank system, but they will save you in the long run, as they are much more energy-efficient.


Tankless water heaters run on energy either from gas, propane, or electricity. When the tap is turned on, the cold water flows through the unit inside the stainless steel heat exchanger heating the water adjusting to keep a consistent water temperature as needed. The unit discontinues heating when the water is turned off.  It’s that simple!

Tankless hot water heater animation video


Step 1: Determine the number of devices you want to run and their total flow rate. Then, add up those numbers. This is the desired flow rate you’ll want for the demand water heater.

Step 2: Determine the required temperature rise. To determine temperature rise, subtract the incoming water temperature from the desired output temperature. If you don’t know otherwise, assume that the incoming water is 50°F.

Tankless water heaters are rated by the maximum temperature rise possible at a given flow rate. Thus, to size an on-demand water heater, you need to determine the flow rate and the temperature rise you’ll need for its application. It is important to note that you should never try and save money by under-sizing your tankless. Use this job calculator to make sizing easier.


Most tank-type water heaters last only 10-15 years. A tankless water heater can last more than 20 years. Even with a higher cost upfront, tankless water heaters help save money in the long run. A tankless water heater benefits the environment in several different ways. Since they only operate when there’s a hot water demand, tankless heater systems use less energy than conventional systems. Since a tankless water heater lasts nearly two times longer than a traditional unit, it will also help to free up space in the landfill.

A tankless water heater will save you money and provide reliable comfort and convenience. Plus, help save the planet for your children…. And your children’s children. 

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