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Tank vs Tankless - the big decision

 

Comparison of buying a tankless vs tank water heater.

Here I compare buying a tankless heater with that of a tank heater. There are many variables to consider here, and I won't get them all, but present a number of calculations and references that hopefully help with your decision.

Consideration Navien NR-240A 41 Gallon NG Tank

Notes

Unit Price Prices approximate and in Canadian dollars
Delivery
300
0
Delivery/fees of unit purchased on Ebay
Installation Estimated installation cost Navien tankless, GE tank Natural gas water heater quote from "Installation Services at Home Depot Canada"
Taxes
286
102 13% in Ontario, Canada
Total
2786
886
 

Now we look at the above, and see that at a glance the tank water heater is so much cheaper that it would seem unlikely that the premium for the tankless heater would pay for itself in a reasonable amount of time. However, read on and decide for yourself.

First, consider the life expectancy of the each type of unit.

The average life expectancy of a water heater (tank) is: 12 years

The average life expectancy of a tankless water heater is: 20 years (this number is quoted in many places, but no concrete reference I can find). In looking at the warranty though, the major component (heat exchanger) is guaranteed for 15 years on the Navien.

In the comparison above, the tank price was based on a unit with a 9 year warranty. However, for this example, lets say it last 12 years - the average. For a tank unit, you would have to buy a second tank water heater to last to the 20 year life span of the tankless water heater (as well as pay for it's installation and taxes). Ergo, your total cost would in fact be 2x the $886 calculated above or $1772:

Consideration Navien NR-240A 41 Gallon NG Tank

Notes

Unit Price Prices approximate and in Canadian dollars
Delivery
300
0
Delivery/fees of unit purchased on Ebay
Installation
215
Estimated installation cost Navien tankless, GE tank Natural gas water heater
Taxes
286
102 13% in Ontario, Canada
Lifespan adjustment
0
886
tanks must be replaced more frequently, so include this cost here (which you likely won't pay if you go tankless)
Total
2786
1772
 

 

Here we can see that after accounting for the expected life cycles that we are still paying just over $1000 more for the tankless heater. The next large cost factor is government rebates. In Ontario Canada, the ecoEnergy rebate program which I qualified for provided me with a rebate of $750 ($375 Federal and $375 provincial). There is no rebate for a tank water heater. So if we take our $2786 and subtract our normalized cost of the tank heaters of $1772, we get a difference of 1014. If we then subtract the rebate off this difference of $750, we see that the premium paid on the tankless is down to $264.

The next savings to look at is the savings in gas consumption. Here is the calculation of how much I've saved and expect to save - $142.56 per year. If we multiply this by 20 years, we would get a total of: $2851.20 - more than what we paid for the tankless in the first place. If we reduce this profit by the premium from above of $264, we could expect savings of $2587 over the lifetime of the unit with what we've considered so far.

 

Other things to consider with respect to cost/savings (but are harder to put an estimate of cost or savings):

The Pros:

1) Fuel prices. Although natural gas prices are not likely to go up much in the near future (next year or two), the long term trend for fuel prices is most likely "up". As prices climb, your tankless heater would save you more. And to add insult to injury, as your bill goes up, so does the calculated amount of tax.

2) Tankless heaters have no pilot and therefore do not generate heat into a room like tank heaters do. In the summer, a tank water heating adds to the cooling load. In the winter, it adds heat to an area where (in most cases) it wouldn't be used (who lives in the utility room of a basement).

3) Tankless take less space. If space is tight in your home, having more is a good thing (allows for more efficient use of space).

4) Chimneys - if your furnace doesn't require a chimney (because it is condensing, etc.), by going tankless you can do away with your hot water tank chimney. Without this chimney, you will reduce the amount of warm air that is sucked out of your house in winter (and cooled air in summer) - both of which you paid to condition.

Cons

1) Tankless heaters have more moving parts e.g. exhaust fans. Perhaps they are more prone to failures. There is not a lot of history for many of the condensing units out on the market.

 

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