How Does A Tankless Water Heater Work – Easy to Understand Guide is reader-supported. As an Amazon affiliate, we earn from qualifying purchases.Learn more

Tankless water heaters are water heaters that, as the name suggests, heat water without the use of storage tanks, as opposed to the conventional reservoir-type water heaters.

A tankless water heater directly heats the water that flows through it, resulting in rapid conversion of cold water into hot water.

It is for this reason, such water heaters are also called on-demand, flash, inline, constant flow, and instantaneous water heaters.

The standby energy losses that occur in storage-type water heaters are eliminated in tankless water heaters.

In a tankless water heater, the water (cold) that flows into the unit, is heated in a copper heat exchanger that is usually warmed using a propane or natural gas fuelled burner.

Electrically powered instantaneous water heaters are also available in the market, however, their output flow rates are less compared to that of the burner types.

Although they work on the same principle, the build of the heaters is slightly different for electric type and gas type heaters.

Working of a Tankless Water Heater

Whenever a hot water faucet connected to the heater system is turned on, cold water starts flowing into the heater unit through the inlet water pipe. A flow sensor is attached to the inlet pipe that detects the water flow and signals the heater to be turned on.

A thermistor or a thermostat placed near the flow sensor detects the temperature of the inlet water and sends the information to the control module.

The working principle so far is similar for electric type and gas type instantaneous water heaters. However, the method of heating differs slightly in the two types.

Electric Tankless Water Heater


The electric tankless water heater consists of a multiple-chamber heating system (usually 3 to 5 chambers), in which the water is heated.

The heating elements are present at one end of every chamber, on the same side. Copper coils are usually used as the heating elements.

Cold water entering the first chamber is heated to a temperature slightly above the inlet temperature and is passed on to the adjacent chamber. The water temperature increases as it passes through each chamber, and finally flows out through the outlet pipe.

At the beginning of the outlet pipe, another thermistor is attached, which detects the temperature of the outlet water and sends this value to the control module.

The control module is a circuit system that is responsible for regulating the temperature of the water. The preset value for the outlet water temperature is set initially.

If the outlet thermistor records a value significantly different from that of the preset value, the current to the heating elements are regulated until the outlet thermistor shows value with no more offset than 1ºF from the preset temperature value.

Propane or Natural Gas Tankless Water Heater

In a gas tankless water heating system, an additional combustion unit is present within the unit, instead of heating chambers.

The combustion unit consists of a fuel control valve, a burner, and air inlet and outlet pipes.

The water in the chamber flows through copper pipes that are heated using the fire in the burner.

The inlet thermistor detects the temperature of the cold water and this is recorded by the control module, similar to the electric type heater.

The control module in this type of tankless heater works in the same way as that of the electric type, except here, fuel is regulated instead of current.

When the input flow sensor detects water flow, the control module signals the fuel control valve to open. The degree of valve opening depends on the difference in temperature between the inlet thermistor value, and the preset value.

The fuel is ignited, and the fire from the burner heats the water in the pipe above it.

The outlet temperature is recorded with the help of a thermistor, and the fuel is regulated until the outlet temperature is within 1ºF of the preset value.

For ignition and burning of the fuel, continuous flow of oxygen is necessary. This calls for an external unit that ensures the continuous flow of air.

For this purpose, two additional pipes are attached to the unit.

Fresh air comes in through the air inlet pipe, and after combustion, it is released out of the system through an outlet pipe.

A suction fan is used to draw air from the outside surroundings into the burning chamber. This fan is attached at the beginning end of the inlet air pipe.

Check out this video on the working of an electric tankless water heater –

Regardless of the heating method, in order to avoid wastage of water while waiting for the water to reach the preset temperature, the unit can be fitted with a recirculation technology.

This method involves flushing the pipelines with hot water from the heater.

The pipelines connected to hot water taps are connected to a thermal bypass valve, that retains the water in these pipes until the temperature comes down to a significant level.

Once the temperature lowers, the water is fed back along with the inlet water to the heater.



What is the difference between a tank type and tankless water heater?

In a storage tank type water heater, the water energy conversion takes place in a reservoir. Water fills up in the reservoir, and this cold water is heated using heating coils until it reaches a preset temperature value, regardless of whether a hot water tap is being used or not.

However, in a tankless water heater, the water is heated directly as it flows through the pipes in the heater. This heating process only takes place when a hot water tap is turned on, which is why it is called an on-demand water heater.

Does the heater require vents?

The necessity for venting depends on the type of heater. For a gas type water heater, venting is essential, otherwise, after combustion, the exhaust air will be trapped indoors. However, venting is not necessary for electric type tankless water heaters.

Can the temperature be adjusted?

All tankless water heaters are provided with a thermostat in which the temperature can be set. This is referred to as the ‘preset temperature’.

What kinds of fuels can be used to run a tankless water heater?

Units that work on electricity, propane, and natural gas are available. However, the same tankless water heater cannot work on all three sources.

Will hard water affect the working of the heater?

When hard water is heated continuously, there are chances of deposition of calcium salts at the bends and valves of the pipes. If left ignored, these compounds can lead to corrosion of the pipes. It is essential that, if the heater is used to heat hard water, the pipes have to be flushed at least once every two years.


The absence of a storage tank and the expenditure of energy based on demand makes the tankless water heater a compact and energy efficient alternative to conventional storage type water heaters.

A typical tankless water heater has an output flow rate of 2 to 5 gallons per minute.

The output flow rate of a gas type tankless heater is more compared to its electric counterpart.

However, a pilot flame is present in the gas type heater, making it less energy efficient. Before installing a tankless water heater, one must understand how it works in order to understand which type might suit one’s energy needs most.

Learning how the heater works will also help one understand maintenance issues that might occur after continuous usage.

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