Energy-efficient hot-water heaters are making inroads in the US market. But when is tanklessness the right thing to do?

By Penelope Grenoble

No doubt about it—water and energy are locked in a dependent embrace that becomes more and more constrictive as energy costs rise and water supplies are squeezed. In California, where water and energy can always be counted on to spark headlines, the California Energy Commission (CEC) reports that 30% of the natural gas consumed statewide is associated with water, much of it to heat that water for residential and commercial use.

Tankless hot-water heaters are emerging in these murky waters as an energy-efficient and cost-effective alternative to traditional methods of generating hot water. The push began in the residential market just over five years ago, when whole-house tankless units (as opposed to appliance-sized models) became available in the United States. Environmentalists, government, and energy conservation agencies latched onto the technology to the point that both California and Texas now offer a $300 tax credit for installing tankless water heaters in new construction.

The fact is tankless technology has been around for some 50 years. Tankless is used in Europe and widely throughout Asia. In Sarasota, FL, Tankless Inc. claims to have invented the electric alternative to gas-fired models and is serving the US with a client list that includes the Smithsonian Institution and the US Navy. However, such providers of conventional storage-type heaters as A.O. Smith Water Products Co. in Irving, TX, predict that tankless is destined to capture only a small share of the domestic market. “We make them and sell them in Asia,” says Bill Hoover at A.O. Smith’s corporate technology center. “But we don’t see them as appropriate to the American market right now.”

Hoover’s view is countered by Richard Ponce, a consultant who began his tankless career with Rinnai Tankless Water Heaters and now claims success convincing apartment buildings to get rid of their boilers, persuading fast food restaurants to mount tankless heaters outside (easily done in temperate climates, generating space for income-generating equipment like ice machines and bread racks), and, since he’s been on his own, being responsible for the largest tankless installation in the country: a 28-unit system installed on the roof at the Snak King manufacturing plant in southern California.

Instead of getting bogged down in the tank versus tankless debate, CEC Energy Analyst Gary Klein recommends that managers who are interested in saving energy and reducing carbon footprints should begin with a thorough assessment of what they want out of their hot water systems. How much hot water do they want, how hot do they want it to be, and how fast do they need it? It’s also important to be precise about a facility’s hot-water flows, the typical duration of hot-water “events,” and the peak demands for hot water occurring within a system. Klein also recommends being accurate about the number and location of fixtures and what’s typical of one’s hot-water draws in different areas of the system—from short draws for cleaning dishes and hand-washing to the longer demands typical of laundries and manufacturing. Managers should also be clear about what they want in the way of convenience and reliability as well as safety regulations pertinent to their industry. With tankless in particular, they will also want to be accurate about the temperature of incoming water.

A typical tank-type hot-water heater system uses a glass-lined tank mounted over a gas burner. Energy created in the burner is converted into hot water, which is stored in the insulated tank until it’s needed. When a draw is made, hot water flows from the top of the tank, and cold (unheated) water flows in at the bottom. A primary liability of tank-based hot-water systems is that once the hot water in the tank is depleted the outlet temperature will drop, and additional hot water will not be available until the burner heats an additional supply. Hoover points out that the basic efficiencies in both storage and tankless heaters are very similar, the big difference being that in tankless systems no energy is consumed until a draw is made, which means no energy is expended to keep stored water at the set temperature—what the industry refers to as standby energy losses. On the other hand, Hoover points out that while tankless heaters top out at 80% efficiency, commercial tank-type heaters are available that are 98%–99% energy efficient. “If you’re using 1,400 gallons a day, a little standby loss is irrelevant,” he says.

In contrast to its storage-type cousins, a tankless unit stores no water but uses intense on-demand spurts of energy to fuel a large modulating gas burner (up to 200,000 Btus), and a large heat exchanger that doesn’t ignite until the unit senses a demand for hot water. The heater then adjusts its intensity to match the demand, which turns out to be a factor of the amount of water flowing through the system (the flow rate), the temperature of the incoming water, and the set point, which is your target water temperature. Other tankless components include a water-flow sensor, multiple temperature sensors, a modulating gas valve, a variable speed combustion blower, and the necessary electronics to control all of this.

As standby loss is the Achilles heel of tank-type heaters, water flow rate can compromise the performance of tankless heaters. Given current technology, water must flow into a tankless unit at a minimum of 0.5 gallon per minute to activate the heater. Likewise, if the temperature differential between incoming hot water and the set point is too large of a spread for the heater to handle, the unit restricts the flow of hot water so that whatever water it does heat reaches the target temperature.

Functional characteristics aside, on-the-ground experience varies. Gary Han, owner of Pratt Plumbing and Heating Co. in Amarillo, TX, has more than five years of experience with tankless systems, including a Rinnai he installed in his own home. “My professional opinion is tankless is not the answer to everything,” says Han, “but it does have its place. My personal opinion is tankless hot-water heaters are wonderful. But I understand the physics of how they operate, and I know their limitations.

“One of those limitations is that they don’t work well with systems that use circulating loops. Tankless is not really designed for this kind of application, even though the manufacturers say it is. The idea is that circulating hot water through a piping system at slow speed will virtually guarantee hot water when you need it. With a tank-type heater this works fine because the water returning from the loop reenters the tank, is heated, and eventually goes out the other side. With tankless, since the water isn’t heated until there’s a demand to activate the burners, this means, first of all, that the loop may not move enough water to bring the burner switch on, and conversely what you may end up with is a scenario where the burner cycles on and off all day.” Han says one way to solve the problem is what he’s done in his home, which is to install a small tank-type electric hot-water heater for short draws.

Tankless manufacturers claim space savings as another plus, but energy is primary among their arguments—despite the fact that Klein says managers he speaks with typically put energy at the bottom of the list of what they’re looking for in hot water.

The US Department of Energy considers the energy factor of a water heater a measure of a unit’s overall efficiency, determined by comparing the energy supplied in heated water to the total daily consumption of the heater. The testing protocol measures the energy required for heating the water and for overcoming tank-type standby losses. On the face of it, tankless energy factors are impressive: ranging .62–.83 compared with tank-type heaters, which range .54–.64 for residential applications. But Jim Lutz, research associate in the environmental technology division of the Lawrence Berkeley National Laboratory, points out that the devil is in the details, the big bugaboo being whether laboratory conditions properly simulate real life. “For the current test, the pattern is six draws an hour for the first six hours of a 24-hour period, after which the unit is on standby for most of the time. But a typical house [or perhaps a restaurant restroom] will have more like 40 or 50 much smaller hot-water draws a day.” This, says Lutz, means the Energy Factors cited for tankless are probably exaggerated. Even with that, he suspects gas-fired tankless are probably more energy efficient than tank-type water heaters. “The difference between laboratory and field tests is probably eight points, which makes the Energy Factor maybe .72. Your standard gas-fired storage water heater has an energy factor of around .60.”

All of this aside, tankless manufacturers say they’re making inroads among commercial users. “Without a doubt, tankless water heaters are an emerging market,” says Peter Blaha, product manager for Rheem Water Heaters. “Business owners are realizing they are an investment that immediately pays off. Add to this a longevity factor of 20 years or more.” Along with restaurants, laundries, and apartment buildings, Rheem has installed tankless heaters in the Miscoggee County Jail in Columbus, GA. There, according to the facilities manager, Lt. Charles Schafer, the challenge was getting water hot enough to wash uniforms for the jail’s 1,000-plus inmates.

Because the laundry is located at the opposite end of the facility from the boiler, by the time the hot water passed through a series of tempering valves to make it suitable for inmates’ showers, the water temperature had fallen to 90°F, which is considerably below the 140°F set point required for the jail’s four 125-pound commercial washers. County managers weighed the relative cost of buying an additional boiler and constructing a building to house it, but decided instead to take a flyer on tankless.

“The 15 Rheem units we mounted on the wall outside the laundry cost us half what it would have cost us to building another boiler room,” says Schafer. “We’re saving money on energy, and we no longer have to answer questions from the health inspectors about the laundry water temperature. And the inmates are happier. Their clothes were always clean; now they’re bright.”

The tankless units from Rheem Water Heaters were mounted on the wall outside the laundry of the Miscoggee County Jail in Columbus, GA.

According to Ed Strickland, owner of Strick4 Plumbing Co. in Columbus, the 15 Rheem units are sequenced in an on-call system so each comes on as needed. To keep track of things, Strickland installed an extended version of Rheem’s MIC 180 controller, which automatically matches the number of units to the demand. The unit rotates the load between the individual units to reduce wear and tear, and Schafer can actually disconnect individual heaters and keep them offline for backup. “We were able to mount them outside the laundry,” says Strickland, “which saved roof penetrations, vent piping and space inside the building, which was already limited. I also put a regulator at each individual unit because their gas was 5 pounds per square inch, which is high pressure.”

“Fifteen was probably overkill for the flow rate we need now,” says Schafer, “but it’s better to have and not need than need and not have.”

According to Ponce, this type of redundancy is a big plus of tankless systems. “If your boiler system goes down, your operation is down until you get the unit up and running again. On the other hand, if one tankless unit goes down, you’ve got capacity left with the others still running.”

At the Miscoggee County Jail in Columbus, GA, the 15 Rheem units are sequenced so that each comes on according to hot-water usage.

At James Logan High School in Union City, CA, for example, six Rinnai Integrity tankless heaters are manifolded in parallel to supply the hot-water load for the school’s gym showers and cafeteria. The system replaced two 400-gallon commercial tank type heaters. The challenge with two 2,000,000-Btus-per-hour Teledyne boilers installed at the West Hollywood (CA) YMCA was meeting the South Coast Air Quality Management District’s low-emission limits for nitrogen oxide. To solve the problem, ten Rinnai Integrity Units were plumbed in parallel on the roof. The system supplies 120°F degree hot water to 42 showers and 12 lavatory sinks. Besides bringing the facility in compliance with air quality regulations, the new hot water facility qualified for a $6,000 rebate from the local gas utility.

Farther inland, in Anaheim, five Paloma PH-28COF tankless units were installed to supply 25 one-bedroom apartments in the five buildings of the Twin Pines apartment complex. The installation was the second phase of the complex retrofit and replaced an 800,000-Btu boiler. Managers report that gas consumption is down 30%.

But all of these are small potatoes compared to the Snak King manufacturing facility in the City of Industry, CA.

October 2004 monsoon rains severely weakened a 12,000-square-foot section of the roof of the Snak King factory, which subsequently collapsed. Snak King is one of the largest snack food manufacturers on the West Coast, producing a line of tortilla chips, corn snacks, popcorn, nuts, and organic fruit chips. The efficiently run company was named 2006 Snack Manufacturer of the Year in 2006, and chief executive officer Barry Levin was named Los Angeles County 2007 Entrepreneur of the Year. So when it came time to repair the monsoon damage, management decided to seize the opportunity to make the 177,000-square-foot facility more efficient and competitive. High on the list was a better system for generating the hot water required by the plant.

“Energy savings was the number one priority,” says Kamal Iskander of Kamal S. Iskander & Associates in nearby Walnut, CA, who designed the new tankless-based system in coordination with Ponce. “The processing machines were consuming tremendous amounts of hot water.”

Analysis of the plant’s hot-water needs, in fact, identified a demand load of 120 gallons per minute, with potential long-term plant capacity increases to 165 gallons per minute for up to four-hour intervals, a total of 7,200 to 9,900 gallons per hour. Matching the set point with the roughly 63°F incoming water meant a 65°F rise in temperature, which was well within the capacity of the 28 Paloma WaiWela PH-28COF outdoor commercial hot-water heaters Snak King elected to install. “With each unit capable of continuously producing 5.2 gallons per minute of hot water at the 120°F set point,” says Ponce, “the system is capable of producing 145.6 gallons per minute, which is 8,736 gallons an hour.”

The tankless units are mounted on two galvanized steel skids installed on the facility’s roof, one with 16 tankless units plumbed in parallel with a one-eighth-horsepower circulator pump, the second with the remaining 12 units and room to add four additional heaters. Both installations are light enough that they don’t increase the load on the roof.

To meet the company’s goal of servicing the heaters without interrupting their function, each unit was installed with an isolation valve kit by Webstone. Tru-Flex Metal hose Corp.’s Home-Flex high-volume gas connectors allow for the high Btu volume (199,900 Btus per hour). Falcon Stainless Steel water connectors were also installed to eliminate plumbing rigid copper pipe from the 4-inch manifolds to the individual units.

“The tankless heaters are particularly efficient in this application, because they modulate continuously to produce the amount of additional heat needed by the demand in the system,” says Ponce, who also reports that, like the West Hollywood YMCA, the installation qualified for gas company rebates as well as federal tax credits.

The Snak King system has been in place for less than a year and is not yet running to capacity, but President Ron Jones says the company is satisfied so far. “It wasn’t a huge stretch for us to go tankless,” says Jones. “Our goal was to use energy only when we needed it—and no more than what we need. In the long run, there’s a cost savings in being able to do just that. And the process seemed much simpler than installing a tank of the size we would have needed, along with pumps and whatever else would have been required. I don’t think there was anything about this that was complicated.”

Tankless Inc. supplied Charlotte County (FL) Utilities’ sewage treatment plant with electric tankless units that heat water to the 180°F the facility needs to clean out sludge tanks at its sewage treatment plant. The company has been pushing this alternative to tank-type heaters for over 25 years, and General Manager Bernie Bowman says he’s enthused about the recent entry of gas technology in the marketplace because it’s helped raise awareness. As far as he’s concerned, however, electric units are more efficient. “The element is submerged in water so you’re getting approximately 98% efficiency. With gas, you lose about 20% of your efficiency up the flue. And you have to be a position where you can build a flue.”

The Smithsonian Institution installed one of Tankless Inc.’s electric units in the kitchen of its Castle Museum. The goal, says John Perry, who selected the tankless option, was to provide a backup heater for a commercial hot-water converter system. “We were replacing the hot-water system, and we needed a backup. I didn’t want to go with a big tank that we would have to remove when the replacement operations were completed. What I wanted was to install something that could suit our temporary need during construction but which we would always have as a backup, to use it when the other system needs maintenance, for example. And if we lose steam, we’ve always got the tankless unit.”

Based on 10 years of talking with people about their hot water needs, Klein thinks neither tankless or tank-type heaters fit the bill. What’s really needed he says—and what managers he speaks with say they really want—is a melding of the two types that includes a larger burner than conventional tank type units and a larger tank than tankless models. Klein says the good news is that manufacturers are attempting to comply; the bad news is that so far the perfect solution has eluded them. Which means for the time being facility managers are stuck with a black-and-white decision of going tankless—or not. 

Penelope Grenoble specializes in topics related to the environment and technology.

DE - November/December 2007