Tankless Water Heaters

Propane Tankless Water Heaters: Your Complete Guide

Last Modified on: 4/18/2022

Not all water heaters need to store hot water! Some water heaters simply heat water on-demand, accessing it directly from a water pipe in your home. These types of units are called tankless water heaters.

Generally fueled by propane, a tankless water heater is a great way to lower your energy bills while making the process of heating water much more efficient. After all, don’t you deserve a hot shower anytime you like?

Tankless water heaters take up such a small space that you can actually reclaim all the square footage your old electric or propane water heater was taking up. Most tankless units hang on a wall and are about the size of a small suitcase. They will last about twice as long as a standard storage-tank water heater.

Let’s take a deeper dive into the ins and outs of a propane tankless water heater. Here is what you’ll find in this comprehensive guide to propane tankless water heaters:

tankless water heater guide

Tankless Water Heater Benefits

Tankless water heaters are an affordable option for energy savings. It’s a great alternative to a traditional storage tank water heater, which constantly uses energy to heat and reheat water. But standby heat loss wastes a lot of energy. Since going green is very important to many homeowners, a tankless heater is a fantastic investment. Tankless units allow you to easily reduce waste and make your home more energy-efficient while adding to its value as well.

Heat as much water as you need without paying to keep it stored. With a tankless model, you benefit from a constant supply. Simply turn on the hot water faucet!

  • Tankless water heaters deliver a virtually endless supply of water.
  • Their compact size saves roughly 12 square feet of floor space.
  • These systems are on-demand, so they heat water only when it’s needed. That feature eliminates standby losses that occur in systems with hot water storage tanks like the typical electric storage tank water heater.
  • On average, they save about $150 per year in energy costs compared with typical electric storage water heaters.
  • They generate 50-60% lower CO2 emissions compared with electric water storage tank systems.
  • Propane tankless systems also qualify for rebates, which can make them even more cost-effective.
  • Unlike with storage tank water heaters, you won’t have to worry about gallons of water spilling into your home if a leak occurs.
  • Because the air supply and exhaust vents of a tankless water heater are sealed, carbon monoxide gas can’t leak into your home because of a back-drafting issue.

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How Tankless Water Heaters Work

tankless water heaterSource Navien
  1. When you open a hot water tap, the unit detects the flow.
  2. The flow sensor activates to determine the amount of hot water needed.
  3. The igniter activates.
  4. The gas control valve opens to supply the correct amount of gas.
  5. The fan and venturi activate to provide the correct amount of gas and fuel.
  6. The premix burner ignites, providing a flame to heat the water.
  7. Cold water is preheated in the secondary heat exchanger.
  8. Preheated water passes from the secondary to the primary heat exchanger.
  9. The unit determines outgoing set temperatures and adjusts the flame to heat the water.
  10. Heated water moves to the buffer tank.
  11. The desired hot water amount is delivered to the faucet.

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How to Choose the Right Size Tankless Water Heater

To make sure a tankless water heater will be able to meet your household’s needs, your contractor will need to calculate three factors:

  1. The temperature of the water coming into the heater. Your contactor will then determine how many BTUs per gallon the tankless heater needs to raise the incoming water to 120 degrees. In North Carolina, the average ground water temperature coming into your home is 62 degrees. The BTUs needed per-gallon to raise that temperature to 120 degrees is 483.
  2. Peak demand. This is the total of the flow rates for every appliance and fixture that could be using hot water at the same time. (See chart) You can reduce peak demand by upgrading to low-flow fixtures and water-saving appliances or by holding off on clothes washing when someone is in the shower.
  3. The total BTU output can now be reached by inputting the BTUs-per-gallon and peak demand numbers into a formula. If that output falls between two models, it’s advisable to get the one with the higher BTU rating to be on the safe side. The maximum output for a residential propane gas tankless heater is 198,000 BTUs. If you need an output higher than that, your contractor will recommend two smaller-sized units that will work in tandem to fulfill all of your hot water needs.
FixtureAverage Flow Rate/
Gallons Per Minute (GPM)
tub icon Tub4.0
icon shower Shower2.5-3.0
washing machine icon Washing Machine2.0
dishwasher icon Dishwasher1.5
kitchen sink icon Kitchen sink1.5

Learn more about flow rate here.

tankless water heater

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How Much Do Tankless Water Heaters Cost?

Prices range from about $170 for small gas-fired units to more than $2,000 for high-output heaters, which can supply two showers at the same time. On average, the cost is about $1,000 per unit.

But keep in mind that propane gas-burning tankless water heaters should operate for 20 years or more. That’s two or three times longer than most storage tank water heaters as well as electric tankless water heaters.

If you experience the average energy savings of $150 per year, these savings should pay for your investment in a tankless water heater in about six or seven years. After that, you can pocket all of the savings on heating the water in your home.

tankless costs
tankless maintenance

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Tankless Water Heater Maintenance

It’s recommended that you get annual maintenance done on your tankless water heater. One of the most important tasks is getting your tankless unit flushed to remove mineral deposits that have collected during the year. Left unchecked, a build-up of minerals can damage the heat exchanger in the unit, shortening its life span.

Your tankless water heater also contains both an air filter and water filter that should be checked and cleaned regularly.

Read more about recommended tankless water heater maintenance here.

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Compare Your Propane Water Heating Options

Type of water heaterEF (Energy Factor)Annual Operating Costs*
Propane Tank0.58$682
Propane Tankless0.82$482
Propane Condensing Tankless0.96$412

Two great options for propane tankless water heaters

Noncondensing Tankless System

Condensing Tankless System

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Watch a Propane Tankless Water Heater Installation

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Find a Propane Company near you