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Best Tankless Water Heater Installation Location, indoor vs. outdoor


I get this question asked many times. Where is the best location to install a Tankless Water Heater? There are advantages and disadvantages to each installation location.


Tankless Water Heaters are used predominantly in Asia and Europe where space is much more valuable than here. It would be a total waste of space to install it inside in Japan for example. The vast majority of manufactures are Asian companies and have designed the tankless water heater for primarily outdoor installation.


Beside the space saving an outside installation also makes the venting simple. Tankless Water Heaters (TWH) require mostly special venting (stainless steel) that can be very pricey. Some very new models are so efficient that can use regular 4” PVC for venting since very little heat is exhausted.


The TWH enclosures are made of aluminum and are therefore rustproof. All the components are really made to withstand the outside environment, heat, rain, etc. They also incorporate a small electric heater to heat the unit’s heat exchanger in case of freezing temperature to protect it from cracking and damage.


Should there be a water leak for any reason then an outside installation causes very little damage if any.


The downside of an outside installation is really vandalism and theft as it can potentially be dismounted and disconnected from the water supply.

If installed properly the outside installation is the preferred location. Care should be taken to keep the water lines to and from the heater short and insulated for possible freezing and energy conservation.


Indoor Installation


The indoor installation can pose venting challenges additional to the added cost of it. As all Tankless Water Heaters condensate provisions must be taken to drain the condensate water and not let it drain back into the heater. This usually is done with a drain tee vent. It is a special vent piece that collects the condensate water and drains it through a small tube. That tube must be connected to a drain. An outdoor installation due to its very short exhaust venting does not condensate.


The heat exchanger in a TWH is the main component of it and the most sensitive. It is stressed the most by repeated heating and cooling and is made of copper or some stainless steel alloy. Its construction is very much like a very small radiator in a car. Water flows through its pipes and it is heated to deliver the hot water.


The condensate water is acidic and if not properly collected and drained will drain onto the heat exchanger and shorten its life significantly. Most manufactures will not warranty the heat exchanger in these kind of situations.


Another point to consider is the amount of oxygen the heater needs for combustion. Tankless Water Heaters unlike regular water heaters need a lot of oxygen when heating. This is because the heat is much more intense to heat the water at it flows through the heat exchanger. The water is heated “instantly”.


Some homes have the traditional water heater in a closet inside the home. For a standard water heater the air supply is sufficient but not for a Tankless Water Heater. In these situations there should be a direct venting type tankless water heater used. A direct vent type TWH draws its combustion air from the outside. It has a special double walled vent pipe that allows it to draw air from the outside and exhaust air through the same vent pipe. These units are more expensive than the regular TWH.


Another potential danger in an inside installation is a gas leak. `Any gas leak for any reason will be an added danger. TWHs need a much higher volume of gas and are plumed accordingly. A gas leak can pose a bigger danger.


And of course there is always the potential for a water leak that can be very damaging.


For all the above reasons it is really best to install the TWH outside. Most people are not used to the idea and tend to think the unit will break sooner or not last as long.



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