Is a Tankless Water Heater Worth It? Pros, Cons & Cost Savings
For most southern New Hampshire homes that are replacing an aging water heater and have gas service (natural gas or propane), a tankless water heater is worth the investment. The combination of unlimited hot water, longer expected lifespan, recovered floor space, and reduced operating cost over the unit's life typically outweighs the higher upfront cost. There are scenarios where a tankless does not make sense, and homes where a heat pump water heater (HPWH) is the better answer instead.
Here is the full breakdown.
What "tankless" actually means
A tankless (or on-demand) water heater heats water as it flows through the unit, rather than keeping a 40 to 80 gallon tank hot around the clock. When you open a hot water tap, the unit fires and heats water on its way to the tap. When the tap closes, the unit shuts off. No standby tank, no continuous heat loss, no fixed gallons-per-recovery limit.
The honest pros
Unlimited hot water
As long as the unit is sized for the home's peak simultaneous demand, you cannot run out of hot water. Long showers, multiple back-to-back showers, and large soaking tubs all work fine. For families with teenagers or homes with high simultaneous hot water demand, this alone justifies the switch.
Long expected lifespan
Modern condensing tankless units typically last 15 to 20 years with annual descaling. Standard tank water heaters last 8 to 12 years. Over the life of a home, that often means one tankless replacement versus two tank replacements.
Compact, wall-mounted design
A tankless unit mounts on the wall and recovers the floor space a 40 to 80 gallon tank would have occupied. For NH homes with small mechanical rooms, this matters.
Lower operating cost
No standby losses from a stored tank means lower fuel use for water heating, especially for homes with moderate or low hot water use where standby losses dominate. Modern condensing tankless units reach 95+ percent efficiency.
Cleaner water at the tap
No tank means no sediment accumulating at the bottom of a stored tank for years, eventually finding its way to fixtures.
The honest cons
Higher upfront cost
Installed cost is typically 1.5 to 2x the cost of a comparable tank water heater. The price difference comes from the unit itself, the gas line (tankless units often need a larger gas supply line than a tank), and the venting (typically PVC sidewall venting for condensing units).
Gas line upgrade may be required
A tankless unit fires at high BTU input during use (typically 180,000 to 199,000 BTU/hr) compared to a tank's 35,000 to 75,000 BTU/hr. The existing gas line may not be sized for the higher instantaneous demand and may need to be upgraded.
Sized to peak simultaneous demand
If the unit is undersized for the home's peak hot water demand, the result is lukewarm water during high simultaneous use. Sizing matters more than for a tank, where storage capacity absorbs short demand spikes.
Cold-water sandwich on some models
The brief slug of cooled water between hot water draws can be noticeable at fixtures with intermittent use. Some manufacturers (notably Navien) include a built-in recirculation feature that minimizes this.
Requires annual descaling
The heat exchanger is sensitive to mineral scale, especially in homes with hard water. Skipping annual descaling shortens the unit's lifespan substantially.
Power requirement (electric ignition)
Tankless units require continuous electrical power for the ignition and electronics. During a power outage, even gas-fired tankless units stop producing hot water. A standby generator addresses this.
Where tankless wins
- NH homes with natural gas or propane service
- Families with moderate to high hot water demand (multiple bathrooms, teenagers, soaking tubs)
- Homes where mechanical room floor space is at a premium
- Replacing an aging tank that is already at end of life
- Owners planning to stay in the home long enough to capture the lifespan benefit
Where tankless does not win
- All-electric homes (a heat pump water heater is usually the better fit)
- Homes with very low hot water demand (the efficiency advantage is small relative to a small standard tank)
- Homes where the existing gas service cannot support the higher instantaneous demand without expensive upgrades
- Homeowners with short ownership horizons (the upfront premium does not have time to pay back)
The math (rough)
For a typical NH home spending $450 to $600 per year on water heating with a propane tank water heater:
- Tankless reduces annual operating cost by roughly 15 to 25 percent
- That is $70 to $150 per year in fuel savings
- Upfront premium over a standard tank: roughly $1,500 to $2,500
- Simple payback: 15 to 30 years on operating cost alone
The math looks bad on operating cost alone, but the picture changes when you factor in:
- Doubled expected lifespan (avoiding one tank replacement)
- Unlimited hot water (quality of life and family conflict avoidance)
- Recovered floor space
- Faster recovery and consistent hot water temperature
The alternative: heat pump water heater
For NH homes with electric water heating, or homes that want maximum operating-cost savings, a heat pump water heater is often a better choice than tankless. HPWH operating cost is roughly 60 to 75 percent lower than a standard electric tank, and NHSaves rebates apply. The federal 25C tax credit ended December 31, 2025, so plan around utility rebates and financing instead.
Schedule a water heater consultation
If your current water heater is approaching end of life, or you are considering an upgrade, contact A.J. LeBlanc Heating. Our licensed plumbers will walk through which option fits your specific home, fuel, and demand pattern. Serving New Hampshire families since 1928.
Frequently Asked Questions
Is a tankless water heater really cheaper to run?
Yes, but the savings are smaller than the marketing suggests. Typical fuel savings are 15 to 25 percent over a tank, more for low-use households where standby losses dominate.
How long does a tankless water heater last?
15 to 20 years with annual descaling. Hard water shortens that significantly if descaling is skipped.
Can I run two showers at once with a tankless?
Yes, if the unit is sized for it. A correctly sized residential condensing tankless typically supports two simultaneous showers plus a kitchen sink in NH winter conditions.
Do I need a gas line upgrade for a tankless?
Often, yes. Tankless units fire at much higher BTU input than tank water heaters during use. A licensed plumber sizes the gas line as part of the install assessment.
Is a tankless or heat pump water heater better?
For gas homes with moderate to high hot water demand: tankless usually wins. For electric homes or homes pursuing maximum operating cost savings with rebates: heat pump water heater usually wins.