Tankless water heaters, also known as "demand" or "instantaneous" water heaters, are indeed very efficient. In fact, they're up to 34 percent more energy efficient than storage tank heaters, because tankless heaters heat water as needed, unlike conventional storage heaters that heat water and store it in a tank where it cools and is reheated over and over until you get around to using it. That standby heat loss can account for up to 9 percent of your water-heating costs.
This says nothing of tankless heaters' water efficiency—particularly important when so much of our country is experiencing drought. According to a study by the Lawrence Berkeley National Laboratory, households waste 6.35 gallons of water a day just waiting for water to heat up. Tankless heaters can deliver steaming hot water in as little as five seconds, as opposed to 30 seconds or more with storage tanks. Learn what steps to take to determine which one to choose.