Modern, well insulated water heaters are so efficient that there is very little efficiency advantage to the on demand heaters. Tank type water heaters have energy factors (measure of efficiency) as high as 0.94 (94%). Energy Factor is an annual measure of the useful energy coming out of your water heater, divided by the amount of energy going in to the water heater to heat the water. http://www.aricoplumbing.com/waterheater/waterheater-energy-factor.aspx I looked at the on demand and the up front cost was much too high. I don't have access to gas so I would have been forced to use electric heating. The cost of the electrical wire rivaled the cost of the on demand heater itself.