Do tankless water heaters save money?

drops of water

I’mma keep this short today: NO.  A tankless water heater will cost about $1,700 over ten years versus a conventional one.  Stick with what works brothers and sisters.

While tankless water heaters are more efficient, they don’t save money because the actual units cost a lot more money, plus then they require more expensive installations. Consumer reports estimates that it would take more than 20 years to break even on a tankless water heater, if it even lasted that long.

So I’m looking at the following scenario: you need to replace you water heater, and you decide to go with a conventional tank water heater rather than a tankless one.

Here is what the ROI looks like:

  • 10-Year NPV: $1,666
  • 10-Year ROI: 39%
  • 10-Year Payback: 0.4 years

Okay, so not the most exciting ROI, but most people are going to need a water heater, regardless of the ROI, so that’s that 🙂

Bottom line is that going tankless is sort of like the story of the emperor with no clothes on (he’s going tankless too, get it??).  He thinks he’s looking really really snazzy, but the reality of the situation is a lot different.  So don’t make the same mistake… keep it classy and keep it basic with conventional tank water heaters.


These are all from the Consumer Reports article linked above.

  1. Annual energy costs: $360 for conventional, $280 for tankless
  2. Installation costs:$300 for conventional, $1200 for tankless
  3. Unit costs: $400 for conventional, $1,000 for tankless
  4. Water softener installation / purchase: $0 for conventional, $300 for tankless (sort of a guess on my part, but definitely on the low side)
  5. Costs calculated for typical household, not an individual

Leave a Comment