How Tankless Water Heaters Save You Money in the Long Run

If you’re in the market for a new water heater, you’ve probably heard about tankless water heaters. Unlike traditional models with large storage tanks, compact tankless water heaters provide hot water on demand. While tankless models often have a higher initial cost, the long-term financial benefits are significant. If you are unfamiliar with the advantages of this type of water heater – or if you are trying to decide between tank and tankless options – SquarePeg is here to help you make the best decision for your home and budget.

How Much is a Tankless Water Heater?

Tankless water heaters typically come with a higher upfront cost than traditional storage tank heaters, both in terms of unit price and installation. However, the initial expense is offset by significant long-term savings, making them a practical choice over time.

Tankless models also have the advantage of longer lifespan and lower operating costs. On average, tankless heaters can last up to 20 years, nearly twice as long as storage tank heaters. This extended lifespan means fewer replacements over the years, saving you money in the long run!

For another look at the costs and benefits of a tankless water heater, we recommend this blog: Will a Tankless Water Heater Save Me Money?

Energy Efficiency and Monthly Savings
Tankless water heaters are incredibly energy-efficient. Unlike traditional water heaters that constantly heat and reheat water in a large tank, tankless models only activate when you need hot water. This "on-demand" approach prevents energy waste and can reduce energy bills by 24-34% compared to conventional water heaters, according to the U.S. Department of Energy.

If you're in a household that uses about 41 gallons or less of hot water daily, you can expect even greater savings over time. Larger households can still see savings, especially with high-efficiency models.

Long-Term Financial Benefits of Going Tankless

When weighing your options, consider the potential for savings over the life of the water heater. Here’s where tankless models shine.

• Lower Utility Bills: With their efficient heating process, tankless water heaters reduce monthly energy consumption. Although individual savings vary based on water usage and energy costs, many homeowners report reductions in energy bills after switching. The more hot water your household uses, the higher the potential savings from a tankless model.
• Reduced Maintenance and Fewer Repairs: Tankless water heaters generally require less maintenance than traditional units, which is another cost-saving benefit. Since they don’t rely on a tank that can corrode or build up sediment over time, the risk of issues such as leaks and rust is lower. This translates to fewer repair costs and fewer disruptions, so you won’t be caught off guard by unexpected expenses.
• Eco-Friendly Benefits That Can Lead to Tax Credits: A tankless water heater’s energy efficiency isn’t just good for your wallet — it’s also good for the planet. Many tankless water heaters qualify for tax credits or rebates, which can offset the initial cost. Check for state and local incentives that reward eco-friendly upgrades, as they vary by location and model.

For basic information about how tankless models work, whether a tankless water heater might be right for your home, and what criteria to use when selecting the right model, Energy.gov has you covered: Tankless or Demand-Type Water Heaters.

Is a Tankless Water Heater Right for You?

If you’re looking for long-term savings, lower energy bills, and a more sustainable home, a tankless water heater is a smart choice. It may require a bit more up-front investment, but the financial and environmental benefits make it a worthwhile consideration for your home.