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Advantages

Demand (instantaneous or tankless) water heaters provide hot water only when needed. They do not produce the standby energy losses relayed with storage water heaters, which can save you money. In relation to the traditional method of keeping 40 to 80 gallons of hot water at the ready in an insulated tank, on-demand heaters produce hot water only when it is needed. Since hot water is generally required for less than a few hours each day, owners and occupants can take advantage from high efficiency designs that provide hot water on demand. Some manufacturers claim that you should earn 50% savings when compared to conventional hot water tanks.

Savings

Assuming that you consume the same amount of hot water at the same temperature as before, you can save a lot of energy and money by eliminating the slow leakage of heat from the hot water tank and piping. Actual savings will depend upon how much water you use, how far it must be piped from your existing heater, and the extent to which that piping travels through unheated spaces. You should find improvements in your hot water bill of 20 cents on the dollar. For a monthly water-heating cost of $50 dollars, you may expect savings of $10 per month on your energy bill. If the switch to on-demand water heating is made when your old hot water tank conks out, the effective net cost of change will be much lower.