The biggest reason that tankless water heaters really haven’t caught on is that the energy savings usually does not justify the initial cost of installing a tankless unit. The current efficiency requirements for water heaters have been raised twice in the last ten years. As of 2015 the requirements for tanks 55 gallons or less will be increased to .62.
Our increased cost for the water heaters we install will add about $400 more to each water heater we replace. The energy efficiency of a tankless water heater is going to be set to a minimum of .82. With this new energy requirement it is beginning to make more sense to go tankless.