How a tankless water heater heats water on demand
Flow sensors, modulation, minimum activation flow, temperature rise, and the cold-water sandwich, without the error-code chart.
A tankless water heater, which the Department of Energy also calls a demand or instantaneous heater, heats water only while it is moving. There is no reservoir sitting at temperature overnight, so there is no standby loss from a tank of unused water. There is also no reserve. The moment the flow through the heat exchanger exceeds what the burner or the elements can heat through the required temperature rise, the outlet temperature falls.
The Department of Energy’s consumer comparison puts a typical life near 20 years, credits tankless units with roughly 8 to 34 percent better efficiency than storage heaters, and warns that output is limited to about 2 to 5 gallons per minute unless you install more than one. Those three facts are the whole purchase decision, once the vent and the gas line are priced.
What happens when you open a tap
Cold water passes a flow sensor. Below a minimum flow the heater does nothing, which is why a trickle from a bathroom faucet can feel forever cold. Many residential gas models need on the order of 0.4 to 0.6 gallons per minute before they fire.
The exact minimum is in that model’s manual, not in a universal rule. Above the minimum, the control opens the gas valve or powers the elements, proves ignition, and modulates input to hold the set point you chose on the controller.
The heat exchanger is a compact coil or a set of finned passages, not a barrel of water. Gas units have a fan. Non-condensing models vent hot flue gas through stainless steel and leave a lot of heat in that gas.
Condensing models add a second exchanger, cool the flue gas enough to condense water out of it, and vent through listed plastic. The vent difference is the subject of condensing gas heaters.
Electric tankless units have no flue and a very large amp draw. A whole-house electric model can need more electrical service than a gas model needs gas pipe. Gas or electric is the comparison. This page stays with the hydraulic behavior they share.
Temperature rise sets the flow you actually get
The relationship is straightforward. Gallons per minute equals input Btu per hour, times thermal efficiency, divided by about 500 times the temperature rise. The 500 is 8.33 pounds per gallon times 60 minutes, rounded. It is the same physics as tank recovery, expressed per minute instead of per hour.
Use a 199,000 Btu/h condensing unit and a round efficiency of 0.84, again as an illustration, not as the uniform energy factor of a model you can buy. At a 70°F rise, 199,000 times 0.84 is about 167,000, and 500 times 70 is 35,000. The result is about 4.8 gallons per minute.
Drop the incoming water from a mild 50°F to a winter 40°F while holding a 120°F set point, and the rise is 80°F rather than 70. The same unit falls to about 4.2 gallons per minute. That is the “it was fine in September and lukewarm in January” complaint, and it is a sizing fact, not a failed part.
The Department of Energy’s sizing guide tells you to assume 50°F incoming water if you do not know better, and it notes that a 70°F rise has historically been associated with about 5 gallons per minute on gas demand heaters and about 2 gallons per minute on electric ones.
Modern high-input gas units move those numbers. The method does not move. Work it for your groundwater in how to size a tankless heater.
The cold sandwich and recirculation
Between draws, the water sitting in the heat exchanger and in the hot pipe cools. The next time you open the tap you get a short slug of hot water that was still in the near pipe, then a slug of cooler water, then hot water again once the burner has caught up.
People call that the cold-water sandwich. It is worse on fixtures far from the heater and on units without a recirculation strategy. It is not, by itself, a sign that the heat exchanger is failing.
Recirculation keeps a loop warm so the wait shrinks. A dedicated return line is the clean version. A crossover valve under the farthest sink, which lets the pump push hot water across to the cold line until the loop is warm, is the retrofit.
Both use energy, because you have recreated a small version of standby loss in the pipes. A timer, an occupancy sensor, or a button that runs the pump for a few minutes wastes less than a loop that runs all night.
The pump and the crossover are plumbing decisions with a comfort benefit and a bill.
They do not increase the gallons per minute the exchanger can heat while two showers are actually running.
Crossover failures also imitate a heater fault. A failed single-handle cartridge or a recirculation valve stuck open can send cold water into the hot line continuously.
The heater then chases a mix it cannot win. If only one fixture misbehaves, suspect the fixture before the heat exchanger. That isolation step is in tankless symptoms.
Scale, minimum flow, and the controller
Groundwater carrying calcium and magnesium drops that scale inside the hot passages, especially if the set point is high. The passages are narrow, so the effect shows up as noise, rising outlet restriction, and finally an overheat lockout.
The remedy is a pump and food-grade vinegar or the descaler the manual names, through isolation valves. The procedure is descaling. If the heater was installed without those valves, the first service call is often to add them. Hardness and whether a softener belongs ahead of the unit are discussed in hard water and scale.
The controller is a thermostat with a display, sometimes in the kitchen, sometimes on the cabinet. A set point of 120°F at the heater can still arrive cooler at a distant shower, and it can arrive hotter than you expect at a near lavatory if there is no mixing valve. Measure at the tap.
Error codes on the display are not interchangeable across brands or even across generations of one brand. Write down the code and open the manual for that serial number. This site groups the failures by symptom on purpose, in the troubleshooting guide, rather than reprinting a chart that would be wrong for the unit on your wall.
Electric tankless heaters skip the fan and the flue and still have a flow sensor, a minimum flow, and a rise limit. Their failure mode when undersized is the same lukewarm stream. Their failure mode when the house wiring is undersized is a hot breaker or a unit that derates.
Do not put a whole-house electric tankless heater on a circuit that was sized for a 4,500-watt tank element. The nameplate current, the wire, and the panel are an electrician’s job, outlined in electrical safety.
What is normal and what is not
A fan that starts when a tap opens, runs, and stops shortly after the tap closes is normal on a gas unit. A fan that runs and never produces hot water is not. A brief noise as the burner ignites is normal.
A whistle that grows over months is a reason to descale, and a loud bang is a reason to shut the unit off. A trickle of condensate from the drain on a condensing model is normal.
A drip from a heat-exchanger fitting is not. Outdoor units must keep their intake and exhaust clear of snow, leaves, and stored items. You can look at a termination you can reach without a ladder.
You should not lean out of a window to clear a vent, and you should not extend the vent with unlisted pipe because the termination is inconvenient. Vent changes belong to someone who will pull the permit.
Gas tankless heaters need an adequate gas line under full fire, not merely a line that can light a cooktop. Inlet pressure that sags when the unit is at high fire is a classic cause of lukewarm water and ignition faults.
Measuring it is a manometer job for a technician. The rating plate states the pressure the valve expects. A remembered number from a different appliance is how gas valves get adjusted into a hazard. Do not turn the internal gas adjustments.
If the house also has a storage heater you are about to retire, compare the first-hour behavior you have with the flow limit you are buying. A tankless unit does not “run out” in the tank sense, and it also does not cover a third shower the chart says it cannot heat. Size it, then price the vent and the gas line, which is where the cost guide says the installed price separates from the equipment price.
Sources
U.S. Department of Energy, Energy Saver, “Which Water Heater Is Right for You?” (energy.gov), for the 20-year life, the 8 to 34 percent efficiency range, the savings note, and the 2-to-5 gallon-per-minute output limit. U.S. Department of Energy, Energy Saver, “Sizing a New Water Heater,” for the flow-rate example, the 50°F incoming-water assumption, and the historical 5 gpm / 2 gpm rise note. Manufacturer installation manuals for minimum activation flow, service valves, and vent tables: Rinnai (rinnai.us), Navien (navieninc.com), Rheem (rheem.com).