On-demand, tankless, or instantaneous water heaters heat water instantaneously when it is asked for, and so there is no need for a storage tank. On-demand water heaters are triggered by the flow of water. When there is need for hot water, a fuel valve opens, stiring up the burner. Cold water enters one side of a coil of copper pipe, which then twists through a heat exchanger that is surrounded by flame, and hot water exits the opposite of the heat exchanger.
The effectiveness of an on-demand water heater is based upon the heat transfer effectiveness of the heat exchanger and is 75 to 90 percent effective. One possible problem is pressure drop across the heat exchanger which could produce lower flows when more then one source of hot water is used.
We offer the following information from the U.S. Department of Energy on tankless or demand type water heaters.