Proper Sizing
The number one reason for dissatisfaction with a tankless water heater is improper sizing. On demand water heaters can
supply a continuous stream of hot water but they can only supply so much. Make sure you have a reasonable understanding of
your hot water demand and then find a heater that can accommodate that.
Peak Demand
Sizing a tankless water heater is different than sizing a storage tank. Sizing a storage tank requires estimating the volume of hot water you will need within a couple hour time frame. Sizing a tankless water heater requires that you estimate your peak demand in terms of momentary usage; in other words, what is the most you will be running at the same time? For those with low demand, this could be a single shower. For others, this could be multiple showers plus dishwasher.
Practical Flow Rate
The performance of tankless water heaters are rated in terms of the flow rate (in gallons per minute GPM) they
can output while raising the water temperature by some margin (this is called temperature rise). In other words, how many GPM
can be output while raising the water temperature by 35°F, 45°F, 60°F, 70°F, etc. The larger the temperature rise, the less
the unit can output. To make things easier on our customer, we have created a performance measure called "Practical Flow
Rate." This is the flow rate each heater can output while raising the water temperature by 60°F. This will give you a better
idea about what each heater can actually do. Keep in mind that if you live in a cold climate, your actual performance could be
less. 
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Gas or Electric
Many customers shopping our store have either gas or electricity available to them, but not both. In this case you would just pick the one that works with your existing setup unless you wanted to make a change. Others have the option to choose which they prefer, so it’s a question of determining which better fits their home and intended usage.
Electric: Electric tankless water heaters are generally hard to work with because they have a lower output and require a lot of
electricity.
Each electric heater has different electrical requirements and it is very important that you consult with an
electrician prior to making a purchase. In terms of flow rate, most of the electric heaters we carry can only run one major
application (shower, dishwasher, washing machine) at a time.
Gas: Gas tankless water heaters can supply more hot water and are a better choice for those with mid-high
demand. Gas powered heaters can be installed indoor or out; though indoor is best in very cold climates to avoid a freezing
risk. Outdoor installations can be less expensive since you eliminate the need for vent pipe.
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High Flow Applications
Some customers will find that their peak demand is greater than any single unit can accommodate. In these situations, a multi-unit (manifold) configuration should be considered. Rheem came out with their "next generation" series of tankless water heaters in late 2006 that allow you to link two like units together using only a communications cable that costs about $25. Linking two units together will effectively double the output capacity of a single unit. A single thermostat controls the temperature of both and sophisticated load balancing will ensure both units wear at the same rate. Unit 1 kicks on and runs up to 80% capacity before unit 2 kicks on to load balance. The next time the system turns on, unit 2 kicks on first and reaches 80% capacity before unit 1 kicks on; in this way there is no slave unit. Takagi's T-K3 model can be linked up to four units in a manifold. The required cable is included with each unit though a thermostat would need to be purchased separately.
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