We don't have much info to go on. We don't know what your needs are, what your wants are or what your budget is. All we really know is that you want gas in the event that the electricity is out. A tankless requires a small amount of electricity to operate - it would not operate if the power was out. A generator would solve that problem and provide power for other things as well. I don't completely agree with Dan, you can size a tankless to run more than one thing at a time. I sized mine so that in the coldest part of the year I could run the shower and the bathroom faucet - in the summer I can run about twice that amount. It works fine in my house, but if I had a larger family I'd go with a larger unit. There are also 50 gal Hybrid units - They store the water but have high BTU input and very high efficiency. They can produce a certain amount of continuous hot water as well. These meet the 30% tax credit requirements and vent with PVC pipe - making them cheap to install where long vent runs are needed. I have included an example - I'm not endorsing a particular brand. Note that these would not run without a small amount of electrical power. Here is a link that might be useful: State Hybrid

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

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.

I understand. People who have had this problem - esp when the heater is on the main floor (rather than the basement) -- are often very paranoid about a recurrence. I've installed Rheem tankless units in my last couple of homes and have been very happy with the brand. You should understand that a gas tankless heater will be expensive to retrofit. They may have to run larger gas line and will have to install a new flue (as well as an electrical outlet.) Again, keep in mind the Rheem Marathon fiberglass tank water heaters. They only come in standard electric - but could be an alternative to a gas tankless. To answer your question about the drain - a condensing gas tankless requires a drain. It is my understanding of code that a water heater T&P valve must be able to discharge without causing significant damage - and thus a drain is always required, regardless of the type of heater. I assume you are grandfathered or have some way around this provision - so I won't argue that point.