Article Title: Try a tankless water heater on for size

Excerpt: While the higher front-end cost of a tankless system is an important consideration factor, the system's location is critical for efficient operation. "Its exhaust and intake needs are very specific, unlike an electric water heater, which you can put anywhere," says John Petrucelli, production manager for Crane Builders. Crane's business is about 90 percent remodeling, and Petrucelli says given the rigid specifications for venting, installing such a system in an existing home is not always possible or logical.

Excerpt: Homeowners who install a tankless system can recoup some of the higher cost with a one-time $300 tax credit for systems installed in homes by Dec. 31, 2007. The tax credit also is available for energy-efficient new windows, insulation, doors and roofs. For details, see www.energy.gov/taxbreaks.htm). Only a few percent of American homes are using tankless water heaters, but that number is growing, says Lutz.

Article Title: Tankless heaters deliver hot water on demand

Excerpt: Advantages: Conventional water heaters, which hold an average of 60 gallons of water, require off-and-on heating as well as large insulated tanks to maintain a substantial hot water supply. With tankless water heaters, you heat only the water you use, which means you should never "run out" of hot water. Most units are about 2 feet tall, 18 inches wide and 6 inches deep and can be installed in small spaces, such as a bedroom closet or on the outside of your house for easy venting. Most tankless heaters have a life expectancy of about 20 years, compared to 10 to 15 years for conventional models.

Excerpt: Limitations: If you don't buy a heater equipped to deliver enough BTUs (units of heat) for your demands, you might not be able to provide enough hot water to your home. Gas-fired tankless water heaters produce higher flow rates than electric ones. Wiring in most homes generally will not support a tankless electric water heater with large enough capacity to serve an entire home. Tankless water heaters can also increase the amount of time it takes for water to run hot after you turn on the faucet.

Excerpt: Cost: Tankless water heaters start at about $600 for basic models. High-end units cost $3,000 or more. Conventional water heaters, meanwhile, typically cost $300 to $1,000. Energy savings estimates vary widely, but according to the U.S. Department of Energy, homes that use 41 gallons or fewer of hot water daily, tankless heaters can be 24 percent to 34 percent more energy efficient than those using conventional tank heaters. In the end, it will depend on your usage and the type of tankless water heater you buy.