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Many homeowners are interested in boosting the energy efficiency of their homes and one factor that is important is it’s hot water usage. Currently, the most popular energy-efficient option for water heating is a tankless water heater, also known as an on-demand system. Unlike a traditional tank that heats a reservoir of water 24 hours a day, a tankless unit only activates when needed. When there is a demand for hot water, cold water travels through the tankless unit, where a gas burner quickly heats it to a preset temperature.

While that sounds great, there are a few reasons it may not work for you. First the pros of a tankless water heater:

*It saves energy. It can reduce your energy cost by about 25 percent annually. A big plus.

*Its highly efficient. Its energy factor can be as high as .95

*It has a compact size. Its only about the size of a small suitcase.

*It has a life -expectancy of 20 years or more.

*The unit is easy to zone and can go almost anywhere in the house. It also can be installed outside on a wall.

But there are some tankless cons:

*Tankless units cost about twice as much as a traditional tank. A typical unit costs about $700 and may top $1500.

*Installation is expensive.

*Retrofit is pricey and complicated. The cost can be as high as $3,000.

What are the pros for conventional tanks?

*It’s a proven technology that home owners know and trust.

*Replacement is relatively inexpensive with replacement cost from $500 to $800.

* Energy star tanks are now available. These units must have an energy factor of .62.

And the cons?

*The tank is always on.

*Its big and bulky.

*Its less durable lasting only 12 to 15 years.