What makes a tankless water heater so much more efficient than a conventional tank water heater?
Larry Janesky, president of Dr. Energy Saver, was recently On the Job in Florida, answering that very question.
A tank based water heater loses heat in many ways. First there is what we call the "standby heat loss". The water in the tank, when not in use, cools down and when it gets too cold, the unit has to re-heat the water so that you always have hot water when you need it. This process is repeated over and over again, 24/7, 365 days a year, whether you are asleep or awake, at home or on vacation.
To prevent some energy loss, this homeowner wrapped the tank as an attempt to insulated it, and installed a timer that would turn the water heater off while the house was empty, and turn it back on close to the time when the family came back home.
In this case, the tank cover wasn't providing proper insulation. A lot of heat was being lost through the top of the unit and through the uninsulated pipes. The timer caused the water to cool down completely and then make the unit work at full blast at the end of the day, to reheat all that water in the tank.
Tankless water heaters, as the name suggests, do not have a tank. They heat water on demand, as much as you need and when you need. Unlike tank units that run out of hot water, tankless units provide an endless flow of water, shower after shower. High efficiency units also modulate. They operate at full blast when the hot water demand is bigger, and at lower settings when you only need a little bit of water to wash a dish or your hands. There is virtually no waste in newer models, operating at 90% of efficiency. That means that 90% of the energy you pay for to run the heater is actually converted into hot water. Tank based water heaters, specifically older models, operate at an efficiency at or less than 65%.
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