Guys if you read the post, the reason the tank water heater was so expensive was due to the construction required to get his house up to code. I personally like my tank heater. If your changing from a tank to tankless there is alot of work to do. Moving water lines, moving gas lines (possibly upgrading gas line size too) and running a new intake/exhaust if using gas, upgrading the main service amps if using electric. Some things to consider Tank Heater Pros Costs less to replace in the future Easier to maintain (Tank water heaters are easy to flush out every year) Easier to install (dont have to upgrade gas line or main service amps) Gas water heater will still operate in power outage (electric will still have some hot water to use for a while till power kicks back on). Cons Not as efficient as tankless No Tax Credits Hot water limited by FHR (first hour rating) Tankless Heater Pros Unlimited hot water More efficient Saves space Cons Will cost more in the future to replace (there is no guarantee the tankless will last longer than a tank version, the heat exchanger can go bad and that is the most expensive part of the tankless) , Harder to maintain (you need to try to clean those tankless heaters out every year with a descaler so they stay working efficiently) Harder to install (upgrade gas line or main service amps) Tankless heaters have a limited throughoutput. While it is unlimited hot water, it can only supply so many gallons of hot water at a time Will not operate in a power outage. A tankless water heater is controlled by electronics whether the heater is gas or electric does not matter. Requires minimum gallons per minute from city water supply, some people have not been able to install due to that problem. Consumer reports note that users complain of inconsistant water temperatures. http://www.consumerreports.org/cro/appliances/heating-cooling-and-air/water-heaters/tankless-water-heaters/overview/tankless-water-heaters-ov.htm Another good site to look at: http://www.waterheaterrescue.com/pages/WHRpages/English/Longevity/tankless-water-heaters.html

Wow, thanks for all the good input. I didn't intend it to become a debate about solar, but found that interesting as well. I'm not familiar with the lease program that is mentioned. I'm looking to have an array installed that will be owned completely by me. I can get a 20kw system installed for about $60,000. There is a new Duke Energy program offering $1 rebate for each kw installed, so subtract $20,000. Then there are 55% state and federal tax credits, reducing the investment further to $18,000. The system should generate about $2,500 in energy per year (assuming 9 cents per kwh), resulting in about a 7 year payback. There is also potentially a benefit I can derive from depreciating the asset, but am not sure that is allowed, so need to check with my tax expert. I think the main different between now and before is the $1 Duke rebate. Without that, I agree the payback period would be too long (about 11 years), but a 7 year payback seems reasonable to me. There is always the possibility of repair costs in the first 7 years which could lengthen the period a bit, but the warranties on the panels at least are much longer than that. In any case, I think it is a worth a try. With regard to the water heater question, I agree that two heat pump units might be too many, as the one in the basement might be idle for long times, so am not considering doing 1 heat pump (for the upstairs which will get used daily, but shouldn't use more than 80 gallons per hour as there is only 1 shower), and then a gas powered tankless for the basement. We have natural gas that will be already piped to the house for the stove/grille. Any other thoughts or suggestions are welcome, thanks for the lively debate!

Full disclosure - I own a Tankless gas water heater and love it. I had a 50gal tanked gas water heater before. Due to space constraints, it could not be replaced. It was in the doorway of the utility room. Here is what I learned when looking at Tankless water heaters. Just like when you want to go solar, you have to get more efficient with your appliances. The things I did to change my plumbing fixtures were intrinsic. All these things below were done as part of replacing aging fixtures and were not related to the tankless decision but made the decision and experience with tankless flawless. Replaced all but one bathroom shower valve with a Thermostatic valve. The last one will be replaced this winter. Replace all shower heads with units that used no more than 2.5gal/min Replaced all bathroom and kitchen faucets with units that used less than 2.5gal/min My dishwashers and washers already heated their own water and all but one of my Washers can use all cold water as input. The dishwasher and washers were energy efficient and used small amounts of water. There is a large bathtub in the house and the tankless water heater is wonderful for this. We take a bath maybe twice a week. I am getting a separate temperature controller for the tub bathroom so that the filling can happen without interfering with other activities. Currently, showers take priority. My house hold has 3 adults in it and we always seem to be in the shower at the same time (3 full bathrooms). With the tankless water heater, this is no longer an issue. I like in Maryland where we get really cold in the winter:-). I have a recirculator with my tankless water heater and that is on a timer. It runs for a few hours in the morning and a few hours in the evening. When the recirculator is not running, it takes about 1minute to get hot water to the farthest location in the house. I may add the point of use tankless heater to the bathroom faucets just because it wastes time to wait for hot water. This issue with hot water at the farthest location was always a problem. I purchased the largest residential tankless water heater which with a 30degree rise, will get you 9.6gpms. This would theoretically allow me to run 3 showers and a faucet at the same time. My unit is programmed to 110F degrees and the showers are set to about 105F degrees. The thermostat for the tankless is in an easy to reach location in the hallway and I can easily increase or decrease the water temperature. I originally started at 140F which is the max temp. I changed it the first day when I could barely wash my hands without burning them. My temperature rise in the summer is about 35F degrees and 50F degrees in the winter. When I went with tankless, I had heard all the horror stories of cold water sandwiches, huge volume drops due to cold incoming water and flow rate to get started at the sink. I have not experienced any of this. I think the thermostatic valves in the shower contribute to this quite a bit. I am able to get hot water at the sink in under 10 seconds except for the farthest unit. When the recirculator is running, the water is hot within 2 seconds. Just enough time to flush the water from the steel part of the faucet. Propane would be my choice in your situation. Electric tanked or tankless water heaters would leave you in a lurch when the power went out. Propane tankless water heaters don't perform as efficiently as the natural gas units but that is true of all propane appliances. I have my tankless water heater hooked up to an uninterruptable power supply in the event of a power failure which we have quite often. I also have a small gasoline back up generator and the tankless unit works fine when connected. I have a Rinnai RUR98i. This unit has a built in recirculator pump. You can also purchase a separate recirculator with the tankless or tanked unit of your choice. I purchased it from build.com and my plumber installed it. I also installed the scale water filter before the unit and this keeps the unit operational without a lot of build up. The unit is just over a year old and I performed a maintenance in the summer. There was very little build up. I am also installing a whole house filter for sediment and chlorine due to some work the water company is doing in my neighborhood for the next year. I have not selected a solution yet for the whole house filter. Good luck with your decision.

If you're really sure you want tankless (and you kinda seem to be), I'm not going to argue with you. I'll just say a couple of things and then I'll bow out. Disclaimer: I'm not an expert on these matters. They just interest me and I hope to be more energy independent in the future, so I read up on them. I always welcome corrections from knowledgeable folk. First point: IMO electric resistive heating of ANY kind basically just doesn't play nice with PV, off grid or on. The only time it really makes sense is when you're off grid and your system produces more energy during the day than you can store in your battery. This can also apply to some extent if you're intertied and your utility pays you wholesale or less when you sell your power, essentially penalizing you for conserving. Either way, dumping your excess PV energy into water heaters is one way to store it for later use. However, it should be obvious that to store that energy, you have to use traditional storage water heaters, not tankless. Second point: Peak demand matters. It matters to your electric utility, and it matters to your bill. You probably know more about CA rates than I do, but it appears to me that right now California is more into time of use (TOU) metering than peak demand metering. However, more and more utilities are adopting peak demand metering for residential customers (they've had it for business for ages). So even if you're not dealing with it now, it may well be in your future. Demand based metering watches your power (not just energy) usage. The higher it is, the more you pay for all your electricity. In one demand scheme, you pay a surcharge based on your peak power usage (in kilowatts), In another, the price they charge you for every kilowatt hour you use depends on your peak usage -- the higher your peak, even if it's only once in the month, the more you pay per kWh that month. Let me give you an example of the second scheme. Let's say your house's big energy hog right now is an electric range.. Most of the time, you just use one or two surface units at a time. So your peak demand is relatively low, and you pay (say) 14 cents per kWh most months. But when you cook Thanksgiving dinner, you have all the surface units going, plus the oven, and a microwave. On that one day, you have a much higher peak demand. Your utility takes note. And that month, you pay 20 cents per kWh for EVERY kWh you use all month. So even though that month's usage is only a little higher than usual, the final bill for the month is MUCH higher. Now imagine what could happen to your bill if you add an appliance that increases your peak demand every day of every month. Guess what: when it comes to peak demand, tankless electric water heaters are MONSTERS. Think about it. With its mild climate, California is a great place for heat pump storage water heaters. That's what I'd get if I were you. Not tankless, and definitely not electric tankless. And that's all I have to say about that.