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Tankless water heater installation involves more than simply swapping out a tank unit. Creative layout solutions and proper installation are critical to minimize initial costs, improve payback time, and realize the system’s predicted life. Plumbers and remodelers need to take several factors into consideration — and get the right education and training — for a perfect tankless installation.


Tankless water heaters should be located in a place that minimizes installation cost and maximizes performance. Tankless units must vent to the outside (see 8 Facts to Know About Venting Tankless Water Heaters). And because they are small and need no indoor air for combustion, they can be located in more places than a traditional water heater. Plumbers should evaluate the venting, gas, and water lines to help the homeowner minimize installation costs. One option unique to tankless systems is the ability to install a unit outside.

“In warmer climates, consider an exterior unit for greater installation savings,” encourages Trey Hoffman, global product manager at Rinnai. “For interior and exterior units, carefully think through the layout and find the location that minimizes the length of water and gas lines to save money.” Be aware that tankless fans can make noise, so locate the unit where the sound won’t be a factor. To further reduce noise, install a unit with a low decibel rating or use an isolation kit to absorb the sound.


On tank heaters, the water connections come in at the top, but they need to go in at the bottom of tankless units, possibly requiring a reroute of lines. If the tank was in the center of a room, the waterlines will likely also need to be moved to an exterior wall, where the new tankless unit can more easily vent outside. The type of pipe used for the water will also affect cost. Copper pipes are already present in many retrofit scenarios, but PEX or PVC plumbing is less expensive, can be installed more quickly, and is easier to work with.


If the tankless replacement is a condensing unit, running a condensate line is vital. The condensate should also be neutralized, as highly acidic condensate can stain concrete or corrode metal pipe. Use a condensate neutralizer — which contains a base media, such as limestone or marble chips — in a section of pipe. Or drain the condensate into a plastic or vinyl washing machine drain, as soap will neutralize the condensate. Although condensing tankless units require this additional step and are a bit more expensive than non-condensing models, their cooler exhaust gas temperatures allow for the use of less-expensive plastic venting pipe, whereas the high-temperature flue gases of non-condensing tankless water heaters require more-costly stainless steel vents.

Although condensate is primarily an issue with condensing units, it is also important to properly drain condensate in noncondensing units, especially when there are long vertical vent runs. “When plumbers neglect to hook up a condensate line, the condensate can run down into the heat exchanger and burner assembly areas, which may reduce the life of the heater from 20-plus years down to four to five,” cautions Ed Clark, master plumber and owner/operator of Tankless Concepts in Falls Church, Virginia.


“Some tankless water heaters have eliminated cold-water shock caused by the water cooling in the pipe through a buffer tank and recirculating pump.”

When at full power, tankless units require between 120,000 and 199,000 British thermal units (Btu) — three to five times the heating capacity of a tank type water heater. In many tank water heater replacement scenarios, the gas line size must be increased from the typical 1/2-inch size to a 3/4-inch line. But the higher pressure of propane means that sometimes the existing 1/2-inch line can be re-used for the tankless unit. Depending on the length of gas line needed, propane systems may not require a larger-diameter gas line, offering installation savings up to $1,000.

5. Technology

Some new tankless water heaters are even more adept at using a half-inch gas line for either natural gas or propane by using a negative pressure gas valve and the exhaust-system fan to pull gas in and stabilize it at 190,000 Btu. “Some units also heat from the top down to eliminate superheating the water, so you have less mineral separation and don’t incur scale buildup,” explains Marc Heffner, marketing manager at Navien. “In addition, some units have eliminated cold-water shock caused by the water cooling in the pipe through a buffer tank and recirculating pump.”

Finding the least-restrictive way to install a tankless system and reducing the length of water or gas lines helps lower installation costs. Take the time to learn the correct way to install tankless systems to offer customers a better return on investment and long-term satisfaction.

To learn more about energy-efficient water heating with propane, visit our propane tankless water heater page.

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KJ Fields