Q I am hearing "buzz" about on-demand water heaters. What are the pros and cons of this system?

A The pros for gas on-demand (or tankless) water heaters:

• Generally, they can cut hot water energy use 20 to 30 percent.

• They are small, often mounted on a wall, freeing many square feet of space for other use.

• Most tankless water heaters are designed with a direct vent to the outdoors, eliminating the need for a chimney, increasing the health and safety of occupants.

• A household using natural gas can spend about $250 a year with a standard water heater. An instantaneous one may save $75 to $100 per year at current prices, as well as reduce CO2 emissions by 750 to 1,000 pounds a year.

The cons of gas water heaters:

• They have a large "instant" demand for gas that may exceed your home's gas supply capacity. Most homes have a gas supply -- the capacity of the line coming into the home -- of about 300,000 BTUs per hour. Demand for gas by an existing clothes dryer, furnace, gas grill and fireplace may limit the ability to install a gas on-demand water heater. However, investment in more energy-efficient appliances can make a home more compatible. An energy-efficient front-loading washer, for example, uses a lot less hot water. And it's so efficient at extracting water that operation of a gas dryer is reduced, thereby saving gas. An energy-efficient dishwasher also uses less hot water.

• A lot of units have variable firing rates, with the firing rate determined by incoming water temperature. In some parts of the state, the incoming water temperature can be 36 or 37 degrees. The colder the water, the more gas it will take to bring it up to temperature fast.

• These water heaters demand more gas per minute of firing than a standard water heater. If everyone on a block were to install this kind of water heater, the sudden increase in demand for gas may stress the existing local gas supply, dropping gas pressure in the immediate area. (Gas-consuming appliances in our homes are an active part of our local gas distribution system.)

• Instant gas-fired water heaters cost about twice that of a comparable standard storage-type water heater and cost more to install.

• Only a few are compatible with solar energy.

• Currently, the number of installing plumbing contractors is limited, but rising demand will bring a change over time.

Electric on-demand water heaters

The pros:

• When remodeling, it's easy to install a small unit for use in a half-bath or powder room addition, separate from the rest of the household plumbing system.

The cons:

• Electric instant water heaters are no more efficient than traditional electric storage-type water heaters.

• An electric instant water heater may necessitate an upgrade of electric service as some require 120 amp service.

Source: Minnesota State Energy Office, St. Paul

Send your questions to Fixit in care of the Star Tribune, 425 Portland Av. S., Minneapolis, MN 55488, or call 612-673-9033, or e-mail fixit@startribune.com. Past columns are available at www.startribune.com/fixit. Sorry, Fixit cannot supply individual replies.