Tankless Water Heaters in Ontario: Costs, Savings and Winter Performance

A tankless water heater in Ontario heats water only when a tap opens, so it avoids the standby heat loss of a storage tank and never runs out of hot water as long as demand stays within its capacity. A whole-home condensing gas tankless unit typically costs about $4,000 to $7,500 installed (estimate), and compared with a standard gas tank it usually saves a modest amount each year, so it makes the most sense when you value endless hot water and space savings, or when your tank needs replacing anyway.

Tankless units are often marketed as large energy savers. The reality in Ontario is more nuanced. This guide covers how they work, what flow you can expect in winter, what they cost to install and run, and how they compare with tanks and heat pump water heaters.

How does a tankless water heater work?

When you open a hot tap, a flow sensor turns on a burner (gas) or heating elements (electric). Water passes through a heat exchanger and leaves at the set temperature. When the tap closes, the unit shuts off.

Type	How it heats	Typical efficiency (UEF)	Notes
Non-condensing gas tankless	Gas burner, single heat exchanger	About 0.80 to 0.85	Needs stainless steel venting; less common now
Condensing gas tankless	Gas burner plus secondary heat exchanger	About 0.92 to 0.97	Vents with PVC; needs a condensate drain
Combination (combi) boiler	Condensing gas unit for both space and water heating	Varies	Common in homes with radiators or in-floor heat
Electric tankless	Resistance elements	About 0.98 to 0.99	Needs very high electrical capacity for whole-house use

How much hot water can a tankless unit supply in winter?

This is the most important question in Ontario. A tankless unit's output depends on how much it has to raise the water temperature. Incoming water in an Ontario winter is often about 5 to 10 °C, compared with 15 °C or more in late summer.

To deliver showers at about 45 °C from 5 °C water, the unit must raise the temperature by about 40 °C. Here is what that means for typical units (estimates):

Unit	Winter flow at a 40 °C rise	Roughly supports
Gas, 199,000 BTU/h condensing	About 19 to 20 L/min (5 gpm)	Two to three showers at once
Gas, 150,000 BTU/h condensing	About 15 L/min (4 gpm)	Two showers, or one shower plus a sink
Electric, 27 kW (whole-house class)	About 9 to 10 L/min (2.5 gpm)	One shower
Electric, 11 kW (point-of-use class)	About 4 L/min (1 gpm)	One sink or a low-flow shower in summer

A modern low-flow showerhead uses roughly 6.6 to 9.5 L/min. If your household often runs two showers and a dishwasher at once in January, size for that.

Note: Very low flows, such as a slightly opened tap, may not trigger the unit. Most current models activate at about 1.5 to 2 L/min, which is rarely an issue with normal use.

How much does a tankless water heater cost in Ontario?

Item	Typical range (estimate)
Condensing gas tankless unit	$1,800 to $3,500
Installation, venting, condensate drain	$1,200 to $2,500
Gas line upsizing if needed	$300 to $1,500
Removing old tank and recycling	$100 to $300
Typical total	$4,000 to $7,500

The gas line is a frequent surprise. A 199,000 BTU/h unit may need a larger gas supply than your old 40,000 BTU/h tank, and your gas meter and regulator may need to be checked with Enbridge Gas or EPCOR. Installation must be done by a licensed gas technician (G2 or higher) following TSSA requirements; see tssa.org (opens in a new tab).

Does tankless save money compared with a tank?

Savings come mostly from avoiding standby heat loss and from higher efficiency. For a family of four using about 250 to 350 m³ of gas a year for hot water with a standard tank (estimate):

Option	Annual gas (estimate)	Annual cost at 45¢/m³
Standard gas tank (UEF about 0.65)	250 to 350 m³	$115 to $160
Condensing gas tank (UEF about 0.85)	190 to 270 m³	$85 to $120
Condensing gas tankless (UEF about 0.95)	170 to 240 m³	$75 to $110

Energy savings versus a standard tank are often about $35 to $60 a year at current gas prices. With an installed cost several thousand dollars higher than a new tank, the payback on energy alone is usually longer than the unit's lifespan. Since the federal carbon charge on natural gas was removed in April 2025, gas savings are worth less than before.

Tankless can still make sense if:

• You currently rent a tank and want to own your equipment (check the buyout terms first; see our water heater rentals guide)
• You need more hot water than a tank provides, such as a large soaker tub or many occupants
• You want to free floor space in a small mechanical room
• You are installing a combi boiler for both heating and hot water

Compare all the options with our water heater comparison calculator.

Electric tankless: a caution for Ontario homes

Whole-house electric tankless units draw a lot of power. A 27 kW unit needs roughly 110 to 115 A at 240 V, more than many older Ontario homes with 100 A service can spare. Even in a 200 A home, adding one alongside a heat pump, an EV charger and an electric range can require load calculations or an upgrade, which typically costs $2,500 to $6,000 or more including utility work (estimate).

For electric water heating, a heat pump water heater typically uses about a third of the electricity of a tank or tankless electric unit, and usually works on a 30 A circuit. Small point-of-use electric tankless heaters can still make sense for a distant sink or a cottage.

Maintenance and hard water

Much of Ontario has moderately hard to very hard water. Scale builds up inside the heat exchanger, reducing efficiency and flow and eventually triggering error codes.

• Descale every year (or as the manufacturer recommends) by circulating a vinegar or descaling solution through the service valves. Many installers include isolation valves for this.
• Consider a water softener or scale inhibitor if your water is hard; ask your installer what the warranty requires.
• Clean the inlet filter periodically.
• Keep vents clear of snow, especially low-mounted sidewall vents, which can be blocked in winter storms.

Frequently asked questions

Do tankless water heaters work during a power outage?

Gas tankless units need electricity for controls and fans, so they stop during an outage unless connected to a backup power source. Many standard gas tanks with standing pilots keep working.

Is there a delay before hot water arrives?

Yes, a few seconds longer than with a tank in many cases, and you may notice brief temperature changes when taps switch on and off. Recirculation features can reduce waits but use extra energy.

How long does a tankless water heater last?

With regular descaling, condensing gas units often last 15 to 20 years, longer than a typical tank. Heat exchanger warranties are often 10 to 15 years for residential use.

Can I get a rebate for a tankless water heater?

The editorial team is not aware of a current provincial rebate specifically for gas tankless water heaters. Check our rebate finder and saveonenergy.ca (opens in a new tab), since programs change.