In recent years, about half of my remodeling customers have chosen to replace their conventional water heaters with on-demand — or "tankless" — models. Long popular in Europe and Japan, on-demand water heaters first showed up here during the 1970s energy crisis. Their use never became widespread, however, because energy prices fell and early models had reliability problems that made plumbers suspicious of this technology. Today's fully electronic models are very reliable, and with energy prices on the rise, they are generating renewed interest.

The main reason my customers choose to go tankless is because it's a great way to pick up floor space in a remodel. They also want to reduce their energy consumption and are willing to spend more up-front to do so. Other reasons for installing on-demand heaters include the promise of never again running out of hot water and the security of...

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