Among the many advantages of tankless water heaters is the fact that you never run out of hot water, because the water is heated on demand. In comparison, tank-type water heaters only hold a limited amount of water. When that water is gone it takes a long while for the unit to produce more hot water. In addition, older water heaters aren't well insulated, so there is what we call "stand-by" heat loss. The water in the tank cools down and needs to be reheated over and over, 24 hours a day/7 days a week/365 days per year regardless of whether you are using it or not, awake or asleep, at home or on vacation. That is a lot of energy being wasted just to make sure you have hot water when it's needed. In high efficiency tankless water heaters, the gas valve opens according to the amount of water you need. If you are only washing your hands, it will open a little, if you are taking a shower, it will work at full power. Tankless water heaters provide as much water as you need, whenever you're in need.