I'm not a tankless water heater user, but if your main purpose is to reduce energy costs, you might want to look at hybrid (heat pump technology) heaters. The prices have been dropping since we bought one for the cabin a year ago. There have also been some rebates available in the past--don't know now. Even at $1,400 (no price difference for standard installation), it was expected to pay for itself in about 4 years. We bought ours--a Rheem--as a special order item at Home Depot with a 10% off coupon from Lowe's. The projected energy cost of ours is $221 per year, which is about a third less than the natural gas cost posted on our water heater at home. (Natural gas is cheaper than electricity here). Pros: lower energy cost, plus there is a tank of water available for emergency use. Cons: it's noisy if installed in living quarters (it's in a closet in our bathroom) and harder to install in tight spaces, due to its size.
I love it, except I don't think it saves us much money. We did see a drop in the electric bill of maybe $15, but we use propane now, and that is expensive, so I think we use about the same amount of money. However...we do take much longer showers now, so we are using more hot water. We have no problem with having enough hot water for 3 people to shower in a row before school in our single shower home. They have a schedule which works remarkable well.
On the very positive side...I do think it lowers our carbon footprint quite a bit. Most of the time the water isn't being heated. We ended up not needing to replace the hot water heater in Maryland right away. the cost of installing there was incredibly high, so when the time comes we will probably not replace it with a tankless, although it is ideal for a place like that.
I live my life in celebration that I've got a life to live.
and you might wanna check the archives here- because here is probably where I gleaned this from- is that they work well for very small families (one little kid?)/couples and singles but when you get to the stage of your kids being older and are taking showers daily or so, running more wash/dishwasher, then they can't keep up. I have been debating this myself. I need to replace my hot water heater. When I had the home inspection done this spring before buying this place, the inspector told me the unit here was 14 years old, has a slow leak and is for sure, on it's last leg and to replace it soon.... so I am trying to avert any emergencies and do something soon but first I have to decide.... also the kind Max mentioned is probably not something I can use- it has to go ina tight utilty room, so I don't think it would get enough "air" if I read that part right....
but it is my dream! I want that! I have some childhood trauma around lack of running water and I react a little (as my children will tell you...) at the thought of not having running water- especially HOT running water- especially ALL the hot water I could ever possibly want!
Because our house is heated by hot water radiant heat, we have a large boiler system that runs on natural gas. We do not run out of hot water...ever. You can have the washer going, the dishwasher going, and multiple showers without the slightest dip in hot water. It is incredible and such a luxury. One of the perks of building your own home I guess.
Growing up, if someone turned on a hot water spigot somewhere else in the house while you were in the shower....ACK! Instant cold water. The idea of running the dishwasher or washer at the same time was ludicrous. So Kim, I have to confirm that the dream of hot water is a dream worth having! LOL!
My dream is to put solar panels on the house and replace the gas boiler with an electric boiler. We have so much southern exposure on our roof with 300 days of sunshine a year that I can't imagine we'd ever have to pay an electric bill again. Some day!