Anatomy of Tankless Gas Water Heaters and Venting Options

Explore tankless gas water heaters to see what makes them unique. Check out how they work, what to expect, and how you can benefit from on-demand heating. See what features to look for and recommended models.

Rinnai tankless gas water heaterRinnai tankless gas water heater

What is a tankless gas water heater? Is it worth buying it?

Tankless water heaters are highly efficient heating devices that do not heat and store hot as tank-type versions. They heat water on demand using natural or propane gas and electricity. Cold water is heated while passing through a heat exchanger.

This article is about gas-powered tankless heaters for point-of-use and whole-house applications.

If you have a large home and family, and tired of running out of hot water, on-demand technology is an option for you.

Heating water on demand with endless supply is a great benefit, but they also have advantages such as small and compact design, powerful and super-efficient operation.

Tankless are reliable, providing long-lasting service, and saving you water, energy, time, and money.

According to the manufacturers and experts, homeowners can save between 30 and 50 percent of fuel costs over its big brother – tank type. They last longer than a tank type, have a better warranty, and every component can be replaced if broken.

If you want to see the differences, pros, and cons, use the article where we compare tankless vs. tank.

Main components of tankless gas water heaters

Heat exchanger

As mentioned in the above text, tank-type heaters are made to store hot water. Tankless are tank-less and are not equipped with a storage tank. They heat water when a tap is open - on demand.

Cold water is heated inside a heat exchanger, usually made of copper, where water, while passing through gets the heat from the gas burner, usually located under.

A heat exchanger is one of the main components found in tankless gas water heaters. It usually comes with a 12-year warranty and has to be protected from freezing during wintertime and maintain regularly to prevent limescale build-up.

Tankless water heaters with one heat exchanger are non-condensing, while those with two heat exchangers (primary and secondary) are condensing. The secondary heat exchanger, usually made of stainless steel, pre-heats incoming cold water using latent heat from flue gases. Preheated water then goes into a primary exchanger, increasing the temperature to the set one.

Do tankless gas water heaters need venting?

All indoor tankless gas water heaters need venting while it is not required for the outdoor models.

They are designed to use horizontal or vertical venting to remove flue gases from the outside atmosphere and provide fresh air for gas combustion. Non-condensing models must use a dedicated Category III (IV) approved stainless steel vent.

Condensing tankless type heaters provide more flexibility for installation, as they use plastic vents such as PVC. This is possible because the exiting temperature of flue gases is much lower. Most of today's manufacturer offers direct venting system, with dual (twin) or concentric (coaxial) configuration. This applies to indoor models only because outdoor models do not require venting pipes; they are ventless.

Almost all manufacturers provide three venting configurations: direct, non-direct, and common vent.

Both ends are protruding through a wall or roof in a direct venting set up with concentric pipes. Hot exhaust exits through an interior pipe while air for combustion enters through an outer pipe.

In a direct venting set up with two separate pipes (twin-pipe configuration), both ends also terminate outside, where one pipe is for exhaust and the other for air intake.

In a non-direct venting setup, room air is used for combustion while exhaust vents to the outside. With outdoor models, combustion air gets inside a gas burner from underneath while exhaust vents through openings located at the front of a unit.

Tankless gas water heaters can also share a common vent for both exhaust and air intake or just to remove products of combustion.

Gas burner

A gas burner is a device located inside a combustion chamber designed to produce the flame by burning the mixture of natural or propane gas and air. The flame is then used for heating water passing through a heat exchanger. The burner flame must cover the whole surface of a burner and should have proper color and shape to provide clean combustion.

Gas valve

Every tankless gas water heater is equipped with a gas valve and manifold to control the gas flow to the burner. Most models will adjust flame output as needed, modulating power from its minimum to the maximum. This ensures the correct amount of energy/heat for the best performance and least wasted energy.

Ignition system

Tankless models do not use pilot but direct electronic ignition that automatically lights a burner. Usually, there are one or two ignition electrodes and a flame sensing rod.

Electronic or PC board

An electronic board is the brain of a water heater. It controls and monitors water heating operation inside a tankless unit. It modulates the power, controls the water flow, monitors operating parameters, runs diagnostics, and shows error codes if there is a problem.

Electric blower

An electric blower or a fan provides adequate combustion air and removes products of combustion to the outside atmosphere.

Control panel and electronics

A controller panel, which is built into some models, allows users to adjust the water temperature, check the status and view diagnostic information, such as an error code when a problem occurs.

Some control panels are made simple with only a few buttons available, while others, more advanced, include an LCD with icons, Wi-Fi, various functional buttons, dials, mode selection, clock setting, time schedule with and without backlight.


Some advanced models are equipped with recirculation technology, allowing homeowners to set recirculation patterns to match their usage habits. With a recirculation system, hot water is ready when needed and delivered instantaneously. Check out Rinnai if looking for a tankless model with a built-in recirculation system.

Safety elements

Every gas-fired tankless water heater is protected by several safety elements such as a flame rod for flame failure, fan sensor, a sensor for overheating protection, thermal fuse, freeze protection, air-fuel ratio sensor, pressure relief valve, and others.

emergency plumber

How do tankless gas water heaters work?

Heaters with tank-less technology, also called on-demand, do not require storage tanks, and they provide hot water on demand. Since there is no storage tank, there will be no tank corrosion and rusty water, no need for anode rod maintenance or replacement, and no rotten egg odor issues.

The lifespan of a tankless is two times the lifespan of a tank-type (12 vs. 6 years). Other advantages are shown in this article.

Propane or natural gas tankless heaters will start heating only when there is hot water demand when a hot water tap is open. To activate a unit, the minimum flow rate must be met. If the flow is below the set value, a burner will not run. This is also a safety feature, so if the minimum flow is not met, a heater will run continuously, and a heat exchanger will overheat.

Tankless units are equipped with powerful burners which heat water running through a heat exchanger instantly - this is why they are also known instantaneous.

As the water flows, a flow switch senses water movement and sends the signal to an electric control board where other information (i.e., incoming, desired temperature, fan speed...) is also collected.

If all safety factors and required parameters are met, a tankless gas hot water heater will run a fan first and purge a combustion chamber, and an electrode will ignite a burner.

A gas valve is usually designed with modulation, so based on the temperature of the incoming and exiting water, demand, and set parameters, it increases or lowers the flame or heating power while working between a designed minimum and maximum BTU input ratings. This is how one tankless gas water heater keeps the temperature even while it uses the exact amount of fuel needed for heating.

This is especially important when someone starts using hot water while you are showering. As the pressure changes in your home plumbing system and the unit, modulation prevents temperature fluctuation, also known as "cold water sandwich."

When you turn a hot water tap OFF, a tankless unit senses no flow, so it shuts it down.

Keep in mind that tankless gas water heaters heat water very fast but will not deliver it instantly. You will have constant hot water flow at the desired temperature, but it still takes some time to get it (cold water inside pipes has to be pushed out before you get any hot). The only way to get it instant is to install a recirculation pump or buy a model with a built-in recirculation system. A good example is Rinnai RUR199.

Sizing a gas tankless is important

Several factors have to be considered when sizing a tankless water heater:

  • The water flow rate in GPM
  • Groundwater temperature
  • Temperature rise (difference between the exiting and incoming water temperature)
  • Home size (maximum number of fixtures you want to run simultaneously)

What are the best tankless gas water heaters?

While there are many high-efficiency and Energy Star approved tankless water heaters out there, here we will present you three models with the highest UEF and state-of-the-art features:


The best gas tankless water heaters can be found from manufacturers shown below in a "related" section. They are the best because of the quality of the products, a variety of available models, the most innovative features, advanced technology, and high efficient heating. Top units also include the most advanced condensing models with ultra-low NOx emission and Energy Star compliance.


Are tankless gas water heaters more efficient?

As we compare tankless vs. tank-type water heaters, you can see that most on-demand models come with an efficiency of over 82%, while advanced condensing heaters with over 90% efficiency. Tankless and condensing technology are what make them 24-34% more efficient than the conventional type.

Are tankless gas water heaters safe?

Gas-powered tankless water heaters are safer than the traditional type because the risk of burns and exposure to unhealthy conditions is lower. Due to the absence of high pressures and temperatures, any chance of potential explosion is eliminated. Also, hot water is safer to use because cold water was heated while it was running through the heat exchanger (it was not stored in a tank).

Do tankless gas water heaters need electricity?

Tankless gas water heaters need electricity to run. Without the electrical supply, your unit won't work because it utilizes many electrical components, such as fans, sensors, control panels, a PC board, and others. It cannot even light the burner because it uses an electric electrode to generate a small spark. That means it won't run during a power outage.