How Does an Electric Water Heater Work?(2024)

Updated on:
January 6, 2024

Almost everyone has experienced the terror that sets in when their shower or kitchen faucet’s water abruptly turns cold. A couple of questions usually run through your mind in such situations. How recently was the water heater replaced? How much will it cost? How long will it take for a new one to be installed? 

Worse still, this usually happens on a weekend when you’re probably expecting visitors! 

If you are currently going through this harrowing situation (or want to avoid it), then it may be time to consider switching to an electric tankless water heater. 

But how exactly do electric tankless water heaters work?

This article explains the anatomy of an electric tankless water heater, how it works, and how it differs from gas tankless water heaters and storage tank models. 

The Fundamentals of an Electric Tankless Water Heater

Electric tankless water heaters are among the most efficient options for residential and commercial applications. They are 90% smaller than storage tank heaters, enabling them to be installed at the point of use (POU) rather than in a utility closet, garage, or basement, hence providing a variety of advantages that are not available with gas tankless water heaters.

In order to understand how an electric tankless water heater works, we need to take a closer look at the components it is made up of. To make things easier, I’ve divided the components into two categories:

  • System components
  • Heating components

System components

System components are used to control water flow, measure flow rate, or power the heater. They include the following parts:

Water heater terminal block

Also called a power terminal block, this is a modular block with an insulated frame that secures two or more wires together. It consists of a clamping component and a conducting strip. The power terminal block regulates the flow of electricity into the tankless water heater.

Solid state switching Triac

A Triac is a high-speed solid-state device that can switch and regulate sinusoidal AC electricity currents in both directions. The Triac in a tankless water heater maintains the preset temperature of the heating elements.

Digital display

Modern tankless water heaters have a built-in LCD panel that allows the user to regulate the heater’s temperature and record error messages. This screen is highly beneficial during maintenance or repairs. A technician can easily identify and fix an issue depending on the error message recorded on the screen.

Flow switch

The flow switch detects the incoming cold water flow and activates the tankless water heater system. This signal is transferred to a microprocessor controller, which determines the exact amount of power to send to the heating elements in order to heat the water to the preset temperature.

Purge valve

The purge valve is used to discharge harmful calcium sediment from the tankless water heater. Over time, minerals build up and erode the surface of the heating exchanger. If your water heater is not routinely serviced, sediment accumulation may lower its efficiency and limit its lifetime.

Heating components

These make up the core system of an electric tankless water heater. The heating components include the following parts:

Heating elements

Electric water heater elements are the source of heat for electric water heaters. Electric tankless heaters with lower watt densities mean the element stays cooler and lasts longer. Heating elements are usually made of copper and can be coated with tin, nickel, or any other protective finish. However, heating elements with a stainless steel coating are more durable.

Inlet and outlet thermostats

A thermostat is a mechanical component that regulates the passage of electrical current to the water heater’s numerous components. When the thermostat first detects the presence of heat, it is able to regulate the flow of electricity to another thermostat or heating element. An electric tankless water heater may have either one or two thermostats, which are referred to as the inlet and outlet thermostats. Each thermostat in this arrangement controls an individual heating element.

Copper coils

The heating elements are connected to the water heater’s pipes by copper coils. These electrical resistance heating coils reduce the amount of heating caused by resistance from the high alternating current, and the coils are cooled with water to keep them from melting from the high power input.

How Do Tankless Electric Water Heaters Work?

To understand how an electric tankless water heater works, you need to understand how a conventional water heater works. In traditional hot water heaters, water is heated and stored in a large tank. So that you always have hot water, the tank continuously heats the water to keep the temperature constant. The energy used to keep the water hot even when no one is using it is known as standby heat loss, and it’s what makes traditional water heaters less energy efficient than most tankless water heaters.

In contrast, electric tankless water heaters work more efficiently to ensure there is no stand-by heat loss and that you’ll only get hot water when you need it. 

When a hot water faucet is turned on, cold water is drawn into the electric tankless water heater. The inlet thermostat is activated by a flow sensor, which in turn warms the heat exchanger to the preset temperature. The incoming cold water then surrounds the heat exchanger and leaves the heater at the specified temperature.

In the case of a gas tankless water heater, combustion gases safely exit through a dedicated, sealed-vent system. But the beauty of an electric water heater is that you don’t need any complicated venting system, which makes installation, usage, and maintenance much more manageable compared to a tankless gas water heater.

The water flow rate of an electric tankless heater is often measured in “gallons per minute” (GPM). It is crucial to remember that as the demand for hot water grows, the capacity of the electric tankless water heater to raise the temperature of the water diminishes (and vice versa). For example, if a specific electric tankless heater has a hot water flow rate demand of 4 GPM, it may be able to raise the temperature of incoming water by 50°F.

However, if the required flow rate from the same tankless unit is 1 GPM, it may be able to raise the incoming water temperature by 90°F. When assessing the capacity of an electric tankless water heater, take note of both the highest flow rate and the corresponding increase in water temperature.

Typically, home hot water demands, such as showers and laundry, require hot water at a temperature of 120°F. If the temperature of the incoming water is 50°F, the electric tankless water heater will need to heat the water by 70°F.

In this instance, the maximum capacity of the electric tankless heater is the flow rate at which the tankless water heater can increase the water temperature by 70°F. The tankless unit is appropriately sized if this flow rate is enough to supply the entire household’s hot water demand at any time. The demand can be estimated by adding up all the hot water uses that occur simultaneously.

If the overall demand for hot water exceeds the maximum flow rate capability of the electric tankless water heater, it will not be able to heat the water to the appropriate temperature. The output water temperature depends on the size of the unit’s heating elements, the water flow rate, and the incoming water temperature.

How Much Electricity Do Electric Tankless Water Heaters Consume?

To find out how much power an electric tankless water heater consumes, let’s consider a family of four with a 30-kW unit.

According to research from the Florida Energy Center, the typical North American household consumes 63 gallons (286.4 liters) of hot water each day. The United States Department of Energy estimates that a 30-kW electric tankless water heater can heat 5 gallons (22.73 liters) every minute.

Using this information, we can calculate how long the heater runs:

63 ÷ 5 = 12.6 mins (0.21 hours)

Since our tankless hot water heater uses 30 kW of electricity per hour, we can calculate the heater’s power consumption as follows:

0.21 x 30 = 6.3 kWh (kilowatt per hour)

To estimate energy costs, we multiply the kWh by the cost of electricity in the US, that’s around $0.15 per kWh:

6.3 kWh x 0.15 = $0.95

We’ve determined that a household of four in the US consumes around 63 gallons of hot water each day. Therefore, with a 30-kW electric tankless water heater, their daily energy costs will be $0.95. That adds up to $29.45 every month or $353 annually.

Your home might need more than the average of 63 gallons per day if you have a larger family or if you take lengthy showers or baths. Furthermore, your power usage will fluctuate seasonally because of the increased need for hot water in the winter compared to warmer weather.

Lastly, an electric heater’s flow rate can be restricted by its mode of operation. For instance, some electric tankless water heaters are fitted with smart thermostats that allow you to remotely monitor and control their functions using your smartphone or home automation system.

This complex yet intuitive innovation turns your water heater into a smart device with numerous operational modes, such as a vacation mode, which enables you to operate your heater at a lower temperature than usual, thereby conserving electricity. However, the various operational modes could make the heater take a little longer than usual to fill your tub or sink with hot water. 

Also, if you have a larger household with a higher hot water demand, you might not be able to run more than three hot water taps at the same time unless you install an extra tankless water heater.

If you’d like to learn more on how long it takes for a water heater to heat up, click on this link.

Appropriate Applications of Electric Tankless Water Heaters

Electric tankless water heaters are used in both residential and commercial settings. In residential applications, two basic installation options are available to customers. Both are addressed in detail below:

Whole-house installation

A whole-house installation is when a single tankless water heater supplies hot water for the whole house. This installation is similar to a centrally located storage tank water heater. In fact, in retrofit circumstances, it is normal practice to remove the current storage tank water heater and install the tankless water heater in the same physical space.

Most US households have an electric service that ranges between 100 and 150 amps. Older houses often have 100 amps or less. Given this circumstance, installing electric tankless water heaters in retrofit circumstances sometimes necessitates upgrading the home’s electrical infrastructure to 200 amps or more, considering the capacity of the unit to be installed.

Despite the upgrade, most homes are still limited to an electric tankless water heater with a maximum flow rate of 3 GPM due to the unit’s high power draw. That’s hardly enough to serve two showers at the same time. As a result, since gas tankless units can provide up to 7 GPM in residential applications, they are more suitable for whole-house installations than electric tankless heaters.

To find out more about the differences between gas and electric tankless water heaters, follow this link

Point-of-use installation

Point-of-use tankless water heater systems are frequently referred to as “instantaneous” or “on-demand,” since the user receives hot water nearly instantly after turning on the hot water faucet. The tankless water heater is positioned at the point of use, such as beneath the bathroom or in the kitchen. The unit’s proximity almost minimizes any waiting time for hot water to reach the fixture, as well as any heat loss that may occur if the hot water pipes are uninsulated.

Electric tankless water heaters are more widespread in point-of-use applications than gas tankless water heaters because their compact size allows them to fit into tight places, such as cupboards, closets, and beneath sinks. 

Furthermore, since electric tankless units do not need combustion air or an exhaust vent, they may be installed almost anywhere in the house. A homeowner who chooses to install electric tankless water heaters at the point of use may have multiple units distributed around the home. However, the total number of units that may be placed is limited by the capacity of the home’s electrical system.

Why Aren’t Electric Tankless Water Heaters Energy Star Qualified?

Even though tankless electric water heaters are very energy efficient and may lower both electricity costs and carbon footprints, the US Environmental Protection Agency has not yet granted them Energy Star qualification. There are a few factors that contribute to this.

The first has to do with the efficiency of the electric tankless heaters. Since they are installed at the point of use, they are not confined to being kept in a utility closet or basement, unlike other conventional water heaters on the market. While this delivers the aforementioned advantages, tankless electric water heaters are unlike many other Energy Star-qualified water heaters.

A consortium of industry manufacturers joined together to form a coalition in order to obtain Energy Star qualification. Unfortunately, despite recognizing the efficiency benefits of the tankless water heater solution, the EPA did not grant approval because it was unable to quantify the efficiency benefits of electric tankless heaters.

Unfortunately, the EPA analyzes water heater efficiency at the water heater rather than at the point of use, thus it was unable to utilize the data acquired from the electric tankless heaters to compare it to other available water heating systems.

Final Thoughts

Besides not being approved by the EPA, electric tankless heaters offer impressive energy and cost savings compared to gas tankless heaters and storage tank models.

These savings are remarkable, but tankless electric water heaters are also a good option since they are better suited to adapting to the current green trend in the US. Renewable energy sources, such as solar and wind, are gaining popularity, particularly as state governments establish renewable energy mandates.

A majority of storage tanks, as well as other tankless systems, need natural gas, which means that, despite their efficiency, they continue to consume fossil fuels. Due to the fact that tankless electric water heaters use electricity, they are ideally suited to meet the growth in renewable capacity.

If you’ve made up your mind to go the electric way, I’ve compiled a list of the seven best electric tankless water heaters on the market to help you make the right choice.

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