Among other things, architects should know that on-demand units cost twice as much as traditional tanks. Additionally, installation can get expensive in a retrofit situation. Replacing a tank heater with a similar unit can run $500 to $800, but replacing a tank with a tankless product will cost up to $3,000, the site says. There's little difference in cost for new-construction installs.
Architects should also consider fuel type. A gas-fired tank, for example, is ideal for whole-house use. The American Council for an Energy-Efficient Economy, a nonprofit advocacy group in Washington, D.C., also says gas-fired is more energy-efficient. Electric, on the other hand, is less effective in whole-house applications and, according to James Facer, a regional sales manager for Noritz America, better-suited to point-of-use applications such as a dedicated faucet. “The cost of operation [for an electric unit] is also higher,” he adds.
Richardson acknowledges that neither technology is perfect. “There is one drawback to tankless units: they need to be in a central location of the home,” she says. “But that goes for traditional hot water tanks, too, so it's not really a big deal.” Indeed. As much as possible, you'll want to shorten the water lines from the unit to the delivery point for better efficiency.
DOE describes an efficient setup as one in which the hot water uses are relatively close together, with short hot water lines between them. “One of the major costs in installation is the price of the vent,” Hitchner explains. You can reduce venting costs by locating the unit for the shortest runs, he says, adding that installing the unit outside is cheapest. Blatt says his firm does, in fact, favor a direct vent unit mounted on the exterior of the house.
Still, remember that even a large gas-fired unit can't supply enough hot water for multiple simultaneous uses in large houses. In those cases, multiple units work well—especially if they're set for dedicated areas that use a lot of hot water. Says Blatt, “Multiple smaller units are always better than one big unit.”