(rough thoughts for now, will polish later)
There are many articles on the subject of on demand hot water heaters vs. the more common (in the USA) hot water tank, but this one is tailored to new construction of an earth sheltered home. I personally plan to install some on demand electric hot water heaters because they suit my situation. Your situation may require a different choice.
Check your sources. Most of the sites that talk about how great on demand hot water heaters are are selling them. Most of the sites that talk about how bad on-demand hot water heaters are, especially electric ones, are “electric cooperatives” who would rather sell you more electricity over a longer period of time. If you focus on articles written by consumers groups, they tend to be more neutral and articles written by end users tend to be very pro tank-less.
Also check the logic behind the complaints. Often they may say something general like, “On demand hot water heating costs so much that it will fall apart due to old age before it pays its self off.” If you check the actual numbers you may find that they spent thousands on a very expensive gas unit which had to be professionally installed in existing construction. In your situation, you may pay off your investment much more rapidly.
Retrofit vs New Construction?
If you are in an existing home with fixed wiring and you are happy with the performance of your perfectly good hot water tank (gas or electric), just keep it. Energy is energy and the heat capacity of water is the same in both cases. While there are probably some inefficiencies with the way the energy is imparted to the water, the biggest efficiency difference between a tank or tankless water heater is how much of that energy is lost thru the walls of the tank into the home. Modern methods of insulation make the tanks pretty good at holding on to their heat.
If your hot water heater simply lacks capacity, think about how old it is. Hot water heaters only last 10 or 15 years so you probably don’t need to feel too guilty about replacing it with a larger capacity hot water heater.
However, if you are building a new home and can design your electrical service and plumbing with tank-less in mind, I really think it is the way to go.
Gas vs Electric
For well-sealed underground homes (or well sealed above ground homes), you should probably try to avoid combustion. Electric is much cleaner inside your home even if it is generated with natural gas some where else, and you won’t need a chimney. Of course, electricity can also be generated with clean technologies and you can even create it yourself. It is a lot harder to make your own natural gas.
Many argue that natural gas heat is cheaper than electric. This is only because the cost of natural gas is cheaper per btu than the cost of electricity, at the moment. Electricity is actually much more efficient at putting its energy into heating the water. Natural gas is a non-renewable resource and the cost is expected to rise (in the United States) while the technology for generating electricity is getting cleaner and cheaper every year so the cost for electricity is expected to fall.
The cost of a natural gas on demand hot water heater is many times higher than for an electrical hot water heater, both in terms of installation and the equipment its self. This initial cost leads to long or infinite pay back times. Electrical equipment is much cheaper, and if your electrical service has watts to spare, the install is also relatively cheap and easy and within the realm of “do-it-yourself.”
Some people claim that natural gas has the capacity advantage, in that it can heat more gallons per minute. But in reality, it is just that they have a larger natural gas capacity. If you have a lower gas pressure or if you have the capacity (120 amps) for a larger electric on-demand hot water heater, things could be reversed.
Electric on demand hot water heaters win hands down in terms of temperature control and low flow rates. People who are complaining about a lack of control or needing flow rates of 1/2 to 1 gpm are probably using natural gas on demand hot water heaters.
The Big Catch
I checked many electric on demand hot water heater sites and none of them mentioned the big catch… Powering the thing.
An electrical water heater tank uses electricity much slower, so you only need about 30 or 40 amps. It just runs for much longer. This means you can get by with a pretty typical electrical service and certainly save money in the short term.
Most on-demand hot water heater companies have a high end model that can produce hot water for 2 or 3 showers (in the northern states), but it takes about 120 amps. Adding this to your your home will usually require stepping up to a larger electric service, unless you like your lights flickering when you run your hot water.
Of course, upgrading an electrical service is very expensive. But building with a larger electrical service in mind can be done more affordably… The equipment for a 400 amp service is a few hundred dollars more than for a 200 amp service, but the hook up (where most of the money is) is only 15% more. You will also pay more for wire, etc. It is expensive, about $1500 more in my case, but considering the heater its self costs less than $500, the total is not bad. Certainly, it is cheaper than running a new construction or retrofit natural gas line.
If you have a home with 3 showers plus a kitchen and laundry and maybe even radiant floor heat, you may actually want to install two of these. You could possibly locate them close to the points of use, which is great, but you would need 240 amps to run them all. If your house has an electric stove (50 amps) and an electric dryer (20 amps) and a single lighting circuit (15 or 20 amps), you are already past the 320 amp capacity (80%) of a 400 amp service. Now you are talking 600 AMP service. The jump from 400 amps to 600 amps is significant costs thousands of additional dollars.
The solution is pretty simple… You just need to talk to your electricity provider about adding a separate 200 amp service for your hotwater/hvac needs. This will cost far less than going with a larger service and you will be able to separately track your hot water costs. In some areas, you can actually get special low rates for a dedicated meter.
Solar Hot water?
I discuss solar hot water more over here. Here I will just say that you need a tank to store the solar hot water, but you definitely don’t want to use the heating element in the tank. Get a tank without the heating element and save some money if you can. If you heat the water in the tank, it will be less able to collect heat from the sun. Ideally all the heat in the tank should all come from the solar. The output from the tank should then pass thru an on-demand electric hot water heater to add just the right amount of extra energy needed to bring the temperature up to what is desired.
See, we can all get along. Tanks and tankless, electric and solar, together in perfect harmony… Now if only I could afford it.
Heat pump hot water heaters?
You can get heat pump hot water heaters. Basically, these are a small heat pump mounted to the top of a hot water tank. They are the most expensive of the hot water tanks by a factor of 3 or 4.
They are considered very efficient if you just look at how much electricity you put in and how much hot water you get. But if you zoom out and look at the bigger picture, you see that they have to get that extra heat from somewhere.
These devices work by “pumping” the heat out of the room and dumping it into your hot water tank. In summer, this is great because they actually help cool your home (like a small air conditioner). As a bonus, the surface of the exchanger gets very cold and dehumidifies the air around it, which is usually helpful in an earth sheltered home. However, in winter, these hot water heaters are stealing heat from the home which simply needs to be replaced by the homes heating system. The energy use just moves upstream from the hot water heater to the main house heater.
One can imagine a humorous situation where a heat pump hot water heater would be used to heat hot water for a radiant floor home heating system… It would steal heat from its self.
A slight twist on electrical resistance heating
Most electrical resistance water heating runs electricity through a resistance element which heats to over 1000 degrees. The heat energy is then conducted to the water. In the process, minerals from the water may be transferred to the heating elements (scale), reducing its efficiency and ultimately causing the heating element to fail. The thermal expansion cycles of the heating element also contribute to its failure.
There is new technology on the market that uses graphite electrodes to conduct the electricity through the water. The water is the resistor and the electrodes never need to heat up more than the water. This saves energy and wear and tear and should be cheaper to produce (even if it isn’t quite yet). It also operates at lower flow rates than other on demand hot water heaters.
Note: For more information, check out http://myheatworks.com/