Makers of gas-fired tankless water heaters tout their energy savings and operating benefits, but they are not all that attractive. Consumer Reports tests indicate a 20 to 22% overall energy savings over conventional gas fired water heaters. However compared to total installed costs, it can take 16 to 22 years to payback their costs. This is longer than the life expectancy of most units, longer than high efficiency tank unit paybacks, and longer than solar thermal system paybacks. In addition, high efficiency gas-fired water heaters were evaluated, and their savings were fairly low and paybacks also were in the 16 year range. By the way, electric tankless water heaters were not even tested as they cannot deliver hot water fast enough to replace conventional water heaters at cold/cool groundwater temperatures. In addition, tests and operating experience indicate other negative issues : they are not instantaneous; water actually can run hot and cold; upfront costs including electrical outlets/upgraded gas pipe capacity/new ventilation hardware are higher than expected; they can need more care and maintenance; they do not eliminate or avoid future fuel cost increases. See the entire unbiased test report, look up Consumer Report , October 2008 issue, pages 28-29. Remember, solar water heating systems produce FREE energy from the sun throughout their lifetime. The Velux Solar water heating systems can provide 60- 90% savings. | 
