Quote:
Originally Posted by TheProfessor
If so, is the neighbor saving any money?
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By what measurement? If he replaced a perfectly good gas water heater with a tankless one, he probably spent $1500+ on parts and install, and he may not ever save enough to break even on that.
If he replaced a dead electric water heater with an LP or NG tankless model, he spent more than just getting a new electric unit, but his operating costs will be much lower, so savings over time is likely.
One issue with tank-based heaters, particularly in cold climates, is that they can lose a lot of heat to the ambient environment over time. This is particularly bad when you have periods of time with no hot water usage (eg: overnight), where the unit may be re-heating the same static water multiple times over.
There are closed-loop recirc systems, and also options where you have a small (10 gal) tank-based heater close to the point of use for your instant or short-burst hot water usage, and then a tankless model for extended use needs (showers, laundry, etc.).
Many energy-saving/cost reduction things like solar, tankless heaters, etc. are more like "one big upfront payment". You pay up front, but then have reduced operating costs over time. If your net goal is the absolute lowest total cost of ownership over time, then these systems rarely pay back, particularly if you consider earning potential of the money used for their up-front purchases.