How Does An Electric Tankless Water Heater Work?

Those of you who’ve heard about tankless water heaters will know just how amazing these water heating devices are. So, how does an electric tankless water heater work? And why is it a sustainable replacement for storage water heaters?

Before we explore how an electric tankless water heater works, here’s a brief overview of the system:

A tankless water heater (ETWH) heats cold water on demand, meaning no storage tank is required. Instead, the device heats the water instantaneously by passing cold water through an electric or gas-burner heat supply, significantly reducing energy loss.

In fact, according to, a tankless water heater can save you between 8% – 35% on electricity, depending on your water usage. That’s an estimated $55 a month. We’ll take a closer look at these figures in the section below.

Now that you know what a tankless water heater is, let’s look at how an electric tankless water heater works.

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Electric Tankless Water Heater Components

All systems are comprised of components that work together in harmony. Therefore, to understand how a tankless water heater works, you need to know how these parts fit together.

A tankless water heater in a garage.
Tankless Water Heaters can be installed just about anywhere, including your garage.
Source: imperial energy

To simplify, we’ve split the components into two categories:

  • System Components
  • Heating Elements

System Components

System components include elements used to measure flow, power the heater, or control water flow. These include:

  • Flow Meter
  • Power Terminal Block
  • Solid State Switching Triac
  • Digital Display
  • Drain Port

Flow Meter

Flow meters are installed just above inlet valves. These meters control the amount of water that flows into the water heater. The water flowing into the heater is restricted so that the heating elements can reach accurate temperatures.

Power Terminal Block

Since the heater is electric, it needs to connect to the power grid. The power terminal block acts as this connection, regulating electrical flow. In gas water heaters, this is replaced with a gas regulator.

Solid State Switching Triac

Triacs are high-speed devices that control AC currents and switch the flow in both directions. The triac in a tankless water heater works to ensure the heating elements maintain the set temperature.

Digital Display

A tankless water heater allows you to control your water temperature easily via a digital display.

Drain Port

While this isn’t an electrical component, it’s an essential element of the system. Without a drain port, emptying the heater would be very difficult.

What’s more, should it malfunction, it won’t cause the ETWH to burst like in the case of a traditional geyser. Instead, the water would simply spill out of the drain port.

Heating Components

Without its heating components, a tankless water heater wouldn’t be what it is. These include the thermostats, copper coils, and elements.

Inlet Thermostat

As the name suggests, this component measures the cold water temperature. The thermostat tells the heater how much heat is needed to reach the correct temperature.

Heating Elements

These are similar to the heating elements in your kettle. They convert electricity into heat and are connected to the copper coils.

Copper Coils

The copper coils run from the heating elements into the heater’s pipes. Heat transfer occurs when water flows against the coils, heating the water.

Outlet Thermostat

Finally, the outlet thermostat ensures that the water is sufficiently heated. The outlet and inlet thermostat work together to keep your hot water at the set temperature.

How Does An Electric Tankless Water Heater Work?

The components of a tankless water heater.
How does an electric tankless water heater work? This diagram showing its internal components gives you a good idea.

Water is heated through a heat transfer method called convection. In this instance, an electric tankless water heater transforms electricity into heat, which is then transferred by convection into the water.

Cold water flows into the heat exchange, absorbs heat, and comes out hot enough for household use.

Important note: tankless water heaters do not run continuously. That’s why they’re also known as demand-type heaters. Instead, when you open the hot tap, the ETWH turns on and allows water to pass through it. When you close the tap, the tankless heater switches off. This process is what makes them so energy efficient.

What Is A Heat Exchanger?

A heat exchanger is a device used to transfer kinetic energy – in the form of heat – from one substance to another.

Many sustainable heating devices use heat exchangers, like air pumps, geothermal pumps, and solar geysers.

How A Tankless Water Heater Works (Step-By-Step)

Step 1 – Cold Water Inlet

First, the water flows into the ETWH through plumbing connections. It passed through the flow meter and into the internal pipes.

As the water flows through the ETWH, it passes an inlet thermostat. The thermostat measures the temperature of the cold water.

Step 2 – Heating

Then, the water moves from the inlet pipes into the heating chambers. Essentially, this is just another section of wider pipes with copper coils. The coils are heated by electric elements that convert the electricity into heat. The heated coils then transfer the heat to the water.

There are roughly 4 heating chambers, but this will depend on your ETWH’s size.

Step 3 – Outlet

Lastly, the water, which is now hot, exits the chambers and into the outlet pipe. Here, another thermostat measures the water to ensure the correct temperatures are reached.

The water flows out of the ETWH, into your plumbing, and through the tap you’re using.

How Much Electricity Does An Electric Tankless Water heater Use?

Now that you understand how a tankless water heater works let’s pretend you’ve just purchased one. This section will use a case study to demonstrate how much electricity an electric tankless water heater uses.

Congratulations! You’ve just bought your first 30kW tankless water heater for your family of 4. Now, let’s see how much it would cost for a month of water usage.

According to a study conducted by the Florida Energy Center, the average North American home uses 63 gallons (286.4 liters) of hot water daily.

The US Department of Energy states that a 30kW ETWH heats 5 gallons (22.73 liters) per minute.

We can calculate how long your ETWH runs daily using the above information:

63 gallons / 5 = 12.6 minutes

12.6 minutes is the same as 0.21 hours.

In this example, you have a 30kW ETWH, meaning your heater will use 30 kWh of electricity per hour. Now you can calculate how many kWh your ETWH would use.

0.21 x 30 = 6.3 kWh

Finally, you multiply kWh by the cost of electricity. In the USA, that’s around $0.13 per kWh.

6.3 kWh x 0.13 = $0.82

Great, $0.82 per day doesn’t sound bad at all. Let’s summarise our findings:

The average household of 4 will use around 63 gallons of hot water daily. So with a 30kW ETWH, you’re looking at a daily water bill of $0.82. So that’s $25.42 per month or $305 a year.

Things to Keep in Mind

The above calculations are part of a case study. Even though the average household uses 63 gallons, your home may use more, especially if you enjoy long showers or baths.

Additionally, colder climates use more hot water than warmer climates, meaning that your electricity consumption will change seasonally.

Finally, water flow is restricted because of how an electric tankless water heater works. This may mean that filling your bath or sink with hot water may take a little longer than usual.

You also might not be able to have more than one hot water tap running unless you install an additional ETWH or purchase a whole-house unit.

Final Thoughts

Electric tankless water heaters are an excellent option for smaller households looking to save money. While there are gas tankless water heaters, this article focuses on electric heaters and how much electricity they use.

We broke down how an electric tankless water heater works into a couple of easy steps. We also looked at what components make up the electric heater and how they fit together in a system.

Lastly, we looked at a case study to get a rough idea of how much an ETWH would cost. We’ve included the equations used so that you can apply them to your own home.

We encourage you to think about installing your own tankless water heater (should you have the means to do so). This is especially true if you’re looking to establish a greener home.

Lastly, if you have already installed a tankless water heater and are looking for the best ways to clean it, we recommend clicking the link to the left, we wrote an entire article covering the topic.

If you have any further questions, feel free to join our Climatebiz community!

Dylan Crosbie
Dylan Crosbie

Dylan is a qualified Architectural Technician who's combined his passion for sustainable architecture with journalism. He believes that it's possible for everyone to work towards a sustainable future, even if it’s one small step at a time. This interest has led him to the Climatebiz team where he continues to strive for a greener future for all.