How it Works
The tankless water heater works by directly heating water on demand, as it is required. Unlike traditional hot water heaters using a storage tank, the tankless units have no storage tank and thereby have no standby heat loss. Standby heat loss is the heat lost and energy wasted by heating water only to store it in a tank and is characteristic of traditional hot water heaters. Avoiding standby heat loss is primarily how tankless water heaters make their claim of being energy efficient.
Whether a tankless water heater is point-of-use like the illustration above or a whole-house unit, they work the same basic way. Cold water enters the unit and is heated by a heating element (heat exchanger) which is turned on by a flow activated switch. The heat exchanger can be electric resistance heating coils or a gas fired burner using natural gas or propane. (Gas units generally have more heating capacity and larger whole-house units are typically gas fired.)
Now here's the rub. There are three variables that have to be considered in sizing the unit.
Those three factors, as you will see later in this tutorial, are what determine the type, size and possibly even the quantity of tankless water heaters you need.