"Tankless hot water heaters", or "demand water heaters" have been popular in Europe for years, and in recent years have begun to appear in more new homes in the United States.  In a tankless HWH, instead of storing a large quantity of water in the HWH and keeping it warm, the HWH heats the water very rapidly as it runs through the heater.  Click here for more on how these systems work.

There are many benefits to a tankless HWH, including:

• continuous hot water - never run out!
  
• high energy efficiency - don't waste money heating an entire tank of water between uses
  
• space saving design - tankless HWHs are very small and can be mounted to the wall
  
• low operating costs - only use energy when you require hot water
• energy tax credit
  

Some drawbacks of tankless HWHs are:

• it is still somewhat harder to get parts and service on tankless HWHs
• the initial costs are somewhat higher ($300-$1500 instead of $200-$900)
• hard water more quickly affects tankless HWHs

Two popular brands of tankless hot water heaters are Rheem and Nortiz, and May Supply is one local vendor of these systems.