Tankless water heaters basically heat water directly without the use of a storage tank. That is how they avoid the standby heat losses which are associated with storage water heaters. What happens is that when a hot water tap is turned on, cold water travels through the pipe into the unit you had installed. You have two options, either gas or electric. In an electric tankless water heater an electric element heats the water, much like in a kettle. In a gas-fired tankless water heater a gas burner heats the water. The result is a constant supple of hot water, thanks to the tankless water heaters. You don’t need to wait for a storage tank to fill up with enough hot water before you can have a bath. The heating rate is also quite fast. Typically tankless water heaters provide hot water at a rate of 2 – 5 gallons, or 7.6 – 15.2 liters, per minute and gas-fired tankless water heaters produce a higher flow rate than electric tankless water heaters.