This topic has been covered A LOT on the Plumbing Forum. Do a search on that Forum for "gas tankless heater" and you will be reading threads for hours. But in the meanwhile, I'll give you a little summary: the top manufacturer is Rinnai, with pricing to match. There are other good tankless manufacturers also, you'll see them discussed on the Plumbing Forum. Here are pros and cons of tankless: Cons: - you will need to install a larger gas line - you will need to install special venting specific to a tankless - you will need to make sure that whoever installs it, REALLY knows what they are doing. A lot of people are saying they can install them, but don't really have the expertise. Rinnai requires its installers to go through a training program. - upfront costs to purchase and install a tankless are significantly higher than traditional tank. - it is important to know what climate you live in for this decision. If a cold climate, your incoming water temperature in winter (about 40 degrees for me) will require a significant amount of gas to heat the water "instantly". If you live in a mild climate, this is not an issue. Some argue that a tank heater, meanwhile, is heating the water 24/7 which is a waste. However, today the tanks are so well-insulated and efficient, this is not as much of an issue. Pros: - very small footprint. - Endless hot water. You will not run out of hot water the way you might with a tank heater. For many people, this pro outweighs ALL the above-listed cons. Here is a link that might be useful: Gardenweb's Plumbing Forum

That's exactly what I wanted done (install a small, no more than 5 gallon, hot water heater but for some reason due to space and other plumbing & wiring issues that seemed not to be such a great idea. Although at that price, I can't imagine why not. I did find information about something called a Hot Water Heater Scale Inhibitor System (sold at www.plumbingsupply.com along with the Chronomite Instant-Temp Tankless Electric Water Heaters, which is what we have). Anybody have any experience with that unit?

You want to do a few things with locating your heater: 1. locate it so that it can be vented in an approved way (you can't locate the vent too close to windows, doors, etc.) 2. Locate it so that the vent run is short as possible (a few feet is good) if that's not possible, consider a condensing unit that vents with PVC. Stainless Steel venting is VERY expensive. A condensing unit adds several hundred dollars but can be cheaper than a long run of SS vent 3. Locate the heater close to where the water is being used. I was able to locate my heater 20' closer to the bathroom than it was. You can't vent the tankless through an existing flue and you sure can't vent it into a shed. Why can't you vent it to the sidewall? How close is the neighbor's house? You want to mount the unit inside unless you have really mild winters. For mild winter areas they have external installed units. Both interior and exterior have freeze protection, but that should be a fallback protection system. Here is a link that might be useful: See Pg 12 for venting locations

If you go with any sort of solar system, make sure it has a gas backup and not electric. My energy costs went up $100/month when I added our solar system down here in San Diego. I am now getting it corrected with the installation of a small gas tankless unit, using the solar storage system as a pre-heater. If you're building the home then many of the traditional drawbacks of tankless don't apply to you. You can build in the correct gas line and venting from the start. If I were in your shoes I'd probably go tankless (30 percent tax credit this year -- see the stimulus law or visit www.energystar.gov). If a single unit won't handle your demand then get two. And plumb it with the small tank system (10 gallon) for recirculation and to overcome any sandwich problems. This approach has been detailed in this forum somewhere.