Tankless Water Heater Installation Guide

Tankless water heaters provide endless hot water on demand while using 24-34% less energy than traditional tank water heaters for homes that use 41 gallons or less of hot water daily. These compact units heat water only when you need it, eliminating standby energy losses from keeping 40-50 gallons of water hot around the clock.

However, tankless water heater installation is significantly more complex than tank water heater replacement. Gas models typically require larger gas lines (often upgrading from 1/2-inch to 3/4-inch or 1-inch), special venting through exterior walls or roofs, and precise combustion air requirements. Electric tankless heaters usually demand dedicated 240V circuits with substantial amperage (often 100-150 amps total), which may require electrical panel upgrades.

Because of these complexities and safety concerns with gas lines and high-voltage electrical work, professional installation is strongly recommended for tankless water heaters. Professional installation costs $2,500-4,500 including the unit, compared to $1,000-1,500 for tank water heaters. This guide provides detailed information for understanding the process, though most homeowners should hire licensed professionals.

Size Your Tankless Water Heater Properly

Unlike tank water heaters sized by capacity, tankless units are sized by flow rate (gallons per minute) and temperature rise. Calculate your peak demand by adding simultaneous uses: typical shower (2.5 GPM) plus washing machine (2 GPM) plus dishwasher (1.5 GPM) = 6 GPM minimum capacity needed. Calculate temperature rise by subtracting your incoming groundwater temperature from your desired output temperature (typically 120°F). Colder climates need more powerful units to achieve adequate temperature rise.

Gas Line Requirements

Gas tankless water heaters have significantly higher BTU demands than tank heaters (150,000-200,000 BTU vs 40,000 BTU). This almost always requires upgrading your gas line size. A 1/2-inch gas line that adequately served a tank heater won't provide sufficient gas flow for tankless operation. Expect to run 3/4-inch or 1-inch gas lines, which requires professional gas plumber work.

Electrical Requirements for Electric Models

Electric tankless water heaters for whole-house use typically require 100-150 amps at 240V, which is more power than most homes have available. This often necessitates electrical service upgrades costing $1,000-3,000 additional. Multiple smaller tankless units for point-of-use applications are often more practical than one whole-house electric unit.

Venting Considerations

Gas tankless heaters require Category III stainless steel venting (concentric or separate intake/exhaust). These special venting materials cost significantly more than standard water heater vents. Indoor units vent horizontally through an exterior wall or vertically through the roof. Outdoor units (available in mild climates) don't require venting but need freeze protection.

Tankless water heater installation is heavily regulated and typically requires permits and multiple inspections:

• Permits: Required in virtually all jurisdictions for gas and electrical work. Costs typically $100-300.
• Gas Line Work: Must be performed by licensed gas fitters. Requires pressure testing and inspection.
• Electrical Work: High-amperage circuits require licensed electricians in most areas. Multiple inspections required.
• Venting Requirements: Must follow manufacturer specifications and International Fuel Gas Code (IFGC) requirements for clearances from windows, doors, and air intakes.
• Combustion Air: Adequate combustion air supply is mandatory for safe operation.
• Temperature and Pressure Relief: Required on all water heaters, must discharge to safe location.
• Earthquake Straps: Required in seismic zones to secure the unit to the wall.
• Carbon Monoxide Detectors: Required near fuel-burning appliances in most jurisdictions.
• Minimum Clearances: Must maintain specified clearances from combustible materials.

Regular Maintenance Is Critical

• Annually: Flush the heat exchanger with descaling solution (vinegar or commercial descaler) to remove mineral buildup
• Annually: Clean or replace the inlet sediment filter
• Annually: Check the air filter on the combustion air intake (gas models)
• Every 2-3 years: Have a professional inspect the burner, heat exchanger, and venting system
• As needed: Clear any debris from the vent termination outside

Hard Water Areas Need Extra Attention

In areas with very hard water (15+ grains per gallon), consider flushing every 6 months or installing a water softener. Scale buildup is the primary enemy of tankless water heaters, restricting water flow through narrow heat exchanger passages and dramatically reducing efficiency and lifespan.

Monitor for Problems

• Temperature fluctuations - May indicate scale buildup or inadequate gas supply
• Error codes on display - Consult manual for meaning and solutions
• Unusual noises - May indicate flame problems or sediment accumulation
• Reduced flow rate - Usually indicates clogged filters or heat exchanger

Equipment Costs

• Gas tankless water heater (whole house): $800-1,500
• Electric tankless water heater (whole house): $500-1,200
• Point-of-use electric tankless: $150-400

Installation Costs

• Gas line upgrade: $500-1,500
• Venting system: $300-600
• Electrical work (gas models): $200-400
• Electrical panel upgrade (electric models): $1,000-3,000
• Professional installation labor: $500-1,200
• Permits and inspections: $100-300
• Sediment filter and isolation valves: $100-200
• Total professional installation: $2,500-4,500

Operating Costs and Savings

• Energy savings vs tank heater: $100-300 per year
• Annual maintenance: $100-150 if done professionally
• Expected lifespan: 15-20 years vs 10-12 for tank heaters

Payback Period: Tankless water heaters typically pay for themselves in 6-12 years through energy savings, longer lifespan, and avoided replacement costs. The endless hot water and space savings are additional non-monetary benefits.