Should I Replace My Propane Water Heater with Tankless?

Replacing a propane water heater with a tankless model can be a wise decision for homeowners looking to improve energy efficiency and reduce long-term operating costs. However, the choice between a traditional storage tank and a tankless water heater involves several important factors to consider. This comprehensive guide will delve into the technical details, energy efficiency comparisons, cost analysis, and maintenance requirements to help you make an informed decision.

Energy Efficiency: Tankless vs. Propane Storage Tank

One of the primary advantages of a tankless water heater is its superior energy efficiency. Tankless models only heat water on-demand, rather than continuously maintaining a full tank of hot water like a traditional storage tank. According to the U.S. Department of Energy, homes that use less than 41 gallons of hot water per day can achieve a 24-34% improvement in energy efficiency by switching to a tankless system.

The key factors that contribute to the energy efficiency of tankless water heaters include:

  1. On-Demand Heating: Tankless heaters only activate when hot water is needed, eliminating the standby energy losses associated with maintaining a full tank of hot water.
  2. Condensing Technology: Many modern tankless models utilize condensing technology, which extracts additional heat from the exhaust gases, further improving efficiency.
  3. Modulating Burners: Tankless heaters can modulate their burner output to match the exact hot water demand, avoiding unnecessary energy consumption.

In contrast, traditional propane storage tank water heaters must continuously maintain the temperature of the entire tank, even when hot water is not in use. This results in higher standby energy losses and a less efficient overall system.

Cost Considerations: Upfront vs. Long-Term

should i replace my propane water heater with tankless

While tankless water heaters offer superior energy efficiency, they also come with a higher upfront cost. The average cost of a tankless water heater, including installation, ranges from $2,000 to $5,000, compared to $800 to $1,500 for a traditional propane storage tank model.

However, the long-term energy savings of a tankless system can offset the higher initial investment. According to the U.S. Department of Energy, the annual energy savings from a tankless water heater can range from $100 to $300 per year, depending on usage patterns and local utility rates.

To determine the potential return on investment, consider the following factors:

  1. Household Hot Water Demand: Homes with higher hot water usage (more than 41 gallons per day) will see greater energy savings from a tankless system.
  2. Utility Rates: Areas with higher propane or electricity rates will experience more significant long-term cost savings.
  3. Lifespan: Tankless water heaters typically have a longer lifespan of 15-25 years, compared to 10-15 years for a traditional storage tank model.

By weighing the upfront costs against the long-term energy savings and extended lifespan, you can better assess whether a tankless water heater is a worthwhile investment for your home.

Maintenance and Installation Considerations

Tankless water heaters require regular maintenance to ensure optimal performance and longevity. This includes:

  1. Flushing the System: Tankless heaters should be flushed every 12-24 months to remove mineral buildup and scale, which can impair efficiency and lifespan.
  2. Filter Cleaning: The water inlet filter should be cleaned periodically to prevent clogging and maintain proper water flow.
  3. Anode Rod Replacement: Some tankless models may require the replacement of the anode rod every 3-5 years to prevent corrosion.

In addition to the maintenance requirements, the installation of a tankless water heater may involve additional costs and considerations:

  1. Electrical or Gas Upgrades: Tankless heaters often require higher-capacity electrical service or gas lines, which can add to the overall installation cost.
  2. Venting Requirements: Tankless models may require specialized venting systems, such as direct-vent or power-vent configurations, to ensure proper exhaust of combustion gases.
  3. Space Constraints: Tankless water heaters are typically smaller than traditional storage tanks, but they still require adequate clearance and access for maintenance.

It’s important to factor in these maintenance and installation requirements when comparing the total cost of ownership between a tankless and a propane storage tank water heater.

Matching Household Needs

The final consideration in the decision to replace a propane water heater with a tankless model is the specific hot water demands of your household. Tankless water heaters are generally well-suited for homes with moderate hot water usage, typically less than 41 gallons per day.

However, for households with higher hot water demands, such as large families, homes with multiple bathrooms, or those with appliances that require significant hot water (e.g., washing machines, dishwashers), a tankless water heater may not be able to keep up with the demand. In these cases, a larger tankless model or a traditional storage tank water heater may be a more appropriate choice.

To determine the right size tankless water heater for your home, consider the following factors:

  1. Peak Hot Water Demand: Identify the maximum simultaneous hot water usage, such as running a shower, washing machine, and dishwasher at the same time.
  2. Whole-Home vs. Point-of-Use: Whole-home tankless heaters are designed to serve the entire household, while point-of-use models are better suited for smaller, localized hot water needs.
  3. Climate and Groundwater Temperature: Colder climates and lower groundwater temperatures may require a higher-capacity tankless heater to maintain the desired hot water temperature.

By carefully evaluating your household’s hot water usage patterns and requirements, you can select the most suitable water heater solution, whether it’s a tankless or a traditional propane storage tank model.


Replacing a propane water heater with a tankless model can be a wise decision for many homeowners, offering improved energy efficiency, long-term cost savings, and a smaller physical footprint. However, the choice between the two options requires a careful consideration of factors such as upfront costs, installation requirements, maintenance needs, and the specific hot water demands of your household.

By thoroughly understanding the technical details, energy efficiency comparisons, and cost implications, you can make an informed decision that aligns with your home’s needs and your long-term financial and environmental goals.


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