Tankless Water Heaters: Sizing, Gas vs Electric, and Installation Considerations

How They Work

When you open a hot water tap, cold water flows through the unit and a gas burner or electric heating element heats it to the set temperature as it passes through. There's no stored hot water — the unit produces hot water on the fly. When the tap closes, the unit shuts off. You pay to heat water only when you're using it.

The key specification is flow rate, measured in gallons per minute (GPM), at a given temperature rise. A unit rated at 5 GPM at a 77-degree rise can heat 5 gallons per minute from about 50 degrees (typical groundwater temperature in northern states) to 127 degrees. If the incoming water is warmer (like in southern states where groundwater is 70 degrees), the same unit can deliver higher flow or hotter water.

Sizing by Flow Rate

Add up the flow rates of the fixtures you expect to run simultaneously. A shower uses 2 to 2.5 GPM. A kitchen faucet uses 1.5 GPM. A dishwasher uses 1 to 2 GPM. A washing machine uses 2 GPM. If you want to run a shower and a kitchen faucet at the same time, you need at least 3.5 to 4 GPM of capacity.

Then determine your required temperature rise. Subtract your incoming cold water temperature from your desired hot water temperature. In northern states (50-degree groundwater, 120-degree hot water target), the rise is 70 degrees. In southern states (70-degree groundwater), the rise is only 50 degrees — which means the same unit can support higher flow.

Gas tankless units produce 5 to 11 GPM at typical temperature rises, enough for 2 to 3 simultaneous fixtures. Electric units produce 2 to 5 GPM, which is often enough for only 1 to 2 fixtures at a time. If your household runs multiple showers simultaneously, a gas unit (or multiple electric units) is necessary.

Gas vs Electric

Gas tankless heaters (natural gas or propane) have higher flow rates, lower operating costs in most areas, and are the standard choice for whole-house applications. They require gas line capacity (typically 3/4 inch minimum, sometimes 1 inch), combustion air supply, and venting — either category III stainless steel vent through the roof or direct-vent through an exterior wall.

Many homes don't have adequate gas line capacity for a tankless unit. A standard tank water heater might run on a 1/2 inch gas line, but a tankless unit drawing 199,000 BTU needs a 3/4 inch line — possibly all the way back to the meter. Upgrading the gas line adds $500 to $2,000 to the installation cost. This is the hidden cost that catches people off guard.

Electric tankless heaters are simpler to install — no venting, no gas line. But they draw enormous amperage. A whole-house electric tankless unit needs 100 to 150 amps of dedicated electrical capacity (two to four 40-amp circuits with 8-gauge or 6-gauge wire). Many homes with 100-amp or 150-amp service can't accommodate this without a panel upgrade. For point-of-use applications (a single sink or shower), smaller electric units are practical and affordable.

Installation Costs

The unit itself costs $500 to $2,000 depending on size and brand (gas is generally more expensive than electric). Installation costs are where tankless gets expensive — $1,000 to $3,500 for gas, $500 to $1,500 for electric, in addition to the unit cost.

Gas installation variables: venting (new vent run, $200 to $800), gas line upgrade ($500 to $2,000 if needed), condensate drain (condensing units produce acidic water that needs to be drained, $100 to $300), and removal of the old tank.

Total installed cost for a gas tankless unit: $1,500 to $5,500. For an electric whole-house unit: $1,000 to $3,500. Compare this to $800 to $1,500 for a conventional tank water heater installed. The energy savings (typically $100 to $200 per year) take 5 to 15 years to offset the higher initial cost.

Realistic Expectations

The cold-water sandwich: when you turn on hot water shortly after someone else finished using it, there's a slug of hot water in the pipe followed by cold water (the pipe cooled between uses) followed by freshly heated water. This is a characteristic of tankless units, not a malfunction.

Minimum flow activation: tankless units need a minimum flow rate (typically 0.5 GPM) to fire. If you crack a faucet to a trickle, the unit may not activate and you get cold water. This is rarely an issue with normal use but can be noticeable with low-flow fixtures.

Maintenance: gas tankless units need annual flushing with vinegar to remove scale buildup, especially in hard-water areas. Hard water scale reduces efficiency and can damage the heat exchanger. An inline isolation valve kit ($50 to $100 installed) makes annual flushing a 20-minute DIY job. Electric units also benefit from flushing but are less prone to scale damage.

Lifespan: tankless units last 15 to 20 years with proper maintenance, compared to 8 to 12 years for tank heaters. This longer lifespan partially offsets the higher upfront cost.

Frequently Asked Questions