Tankless Water HeaterTankless water heaters heat the water as it passes through the unit's electric element or a gas burner. The hot water is supplied on demand and is not being stored. The benefits of tankless water heaters are that there are no losses of stand-by heat, they save space, and if properly calculated, you never run out of hot water. These heaters heat water directly without the use of storage tanks. Domestic tankless water heaters produce hot water at a rate of 2 to 5 gallons per minute. Where there is a larger demand for hot water at any given time, the tankless water heaters can be set up in a parallel configuration to increase the flow rate, increase the life of the units, increase heating capacity and also provide backup if one of the units needs to be serviced or replaced. Electric tankless water heaters have typically lower flow rates than gas-fired ones.