Almost everybody has a water heater story. I have four. Here’s my latest.

Just days before Christmas, there was a familiar pool under the water heater stand in the garage. It was hard to accept because I was pretty sure we had replaced it not very long ago. A little research in the file showed it had been replaced exactly six years and one day earlier. Of course, the warranty on the unit was… six years.

Apparently, recent Federal energy efficiency requirements mean that tanks have thinner metal than ever before. This reduced thickness ensures heat from the gas burner below is more quickly transferred into the tank and reduces the amount of total energy required to heat it. It also means that the tank will rust out faster. In my case, exactly as long as the manufacturer predicted.

There has been a lot of talk recently about tankless water heaters. They used to be called instantaneous heaters, but tankless seems to imply a reduced risk of exactly the kind of failure I had. There are more pros and cons.

First, tankless water heaters have been around a long time. Electric coffee brewers are essentially the same technology. Water is heated in small quantities as it is needed. The unit is sized to blast heat into water passing through a pipe as it flows. Instead of a coffee, they are scaled up for a home, adequate for a shower, clothes washer, or bath tub. This requires a tremendous amount of energy for just a few minutes, although theoretically cheaper than heating 40 gallons of water continuously day and night.

It is true that the energy savings is considerable. The trade-off is that the equipment and the utility service must be increased to manage the short bursts of gas or electrical energy required to heat the water so quickly. Current whole-home tankless heaters have 25 year warranties. These are mostly new models without testing long enough to prove it. Economically speaking, long warranties indicate untested or unreliable performance, from cars to electronics to water heaters. Incidentally, there are also fiberglass tanks with “lifetime” warranties that have been on the market for five years.

In our area, a lot of existing homes have gas tank water heaters. In the region’s building boom twenty years ago, gas was cheap and burning fossil fuels wasn’t considered as taboo as today. Electricity is now popular again because it is relatively more competitive. It is also more flexible across the many types of potential utility energy generating methods like coal, hydroelectric, and photovoltaic. However, converting a gas tank water heater to an electric tankless one requires an enormous (and expensive) electrical circuit to be added. Some homes don’t even have the electrical service to handle it.

To work around this limitation in retrofitting an electrical tankless heater, there are gas models. These still require electricity to ignite the fuels, but the circuit is small and reasonable. So the implementation becomes more feasible. But there is still one major drawback as I see it.

The most significant issue with instantaneous water heating is that if the utility service goes out for even a minute, the unit ceases to operate until the utility is restored. The best benefit of a tank is that momentary blips and even short outages don’t impact hot water availability. Even better with gas is that it remains functional throughout electrical power outages. Although we rarely have ice storms, the few memorable ones are enough to second guess depending on electrical utility power for hot water.

Another issue is cost. Tankless heaters are 50-100% more expensive. I got a good quote to replace my hot water heater at $1,800. The tankless gas heater would have been $2,700. Electrical tankless wasn’t even an option, my panel is simply not large enough.

For a new house, the equation is a bit different. Since the electrical service, panel, and circuiting can be properly sized from the outset, upfront costs are a much lower barrier to installing a tankless heater new. While it is important to size the unit to handle the expected hot water load for the likely extremes (such as multiple teenager showers and laundry loads), monthly energy savings may pay back in only a few years.

One final consideration is the actual configuration of the unit. My water heater failures have been restricted to the garage. But it is common in this area to find them located in attics over living spaces with poorly installed containing pans that create catastrophic water damage when they fail. A tankless type can reduce the size of the failure and can also save some space in the garage or attic since they are several times smaller.

I was fortunate that my water heater’s manufacturer decided to replace my water heater under warranty. It covered the cost of the unit even though I still had to pay $600 for the labor. For a repair, payback alone is unlikely to justify replacing a tank type with a tankless. However, instantaneous water heater disadvantages may be outweighed in new homes or in repairs by homeowners with environmental, energy saving, risk managing, and space making interests.