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| Installing tankless water heaters in Ontario typically costs $3,000 to $5,000. However, you may need to pay more if your living space needs retrofitting or if you opt for a high-GPM model that requires retrofitting. |
Is a tankless water heater really more expensive than a storage-tank unit? Yes, they cost more to install, but the benefits make them a practical choice. You’ll get access to on-demand hot water while lowering your energy bills and freeing up space in your house.
If you’re unsure about upgrading, this guide should help. We’ll break down the key cost factors for setting up tankless water heaters and share some tips for maximizing your long-term savings.
The total tankless water heater cost depends on your home, your hot water needs, and the complexity of the installation. Some projects are straightforward, while others require retrofits that can quickly raise the price. Here are the main factors that affect how much you’ll pay.
Tankless units are sized by flow rate, the amount of hot water the system can deliver per minute, measured in gallons per minute (GPM).
You can also choose between a standard or a condensing tankless water heater. Condensing units are more energy efficient because they reuse heat from the exhaust to warm the water. They can lower your gas bill, but come with a higher upfront cost. They also require a drain line for condensation, which adds to the installation cost.
Basic projects, such as replacing an existing tankless unit in the exact location, fall on the lower end of the cost range at around $1,000. However, if you’re upgrading from a traditional tank or installing in a bare living space, labour hours can rise above $2,000. Installers may need to reroute pipes or update hookups.
If this is your first tankless water heating system, expect additional costs for venting, gas line installation, and electrical modifications. Venting, gas-line upgrades, electrical breaker installations, or panel work can cost an extra $700 to $1,500.
Tankless models have specific requirements you’ll also have to factor in:
Several retrofits can add up to the total cost of your installation project. These often include:
The fees can quickly add up. Ontario’s high‑end gas condensing system might total $3,200 to $4,500, with $350 to $750 for gas‑line modification and $850 to $1,700 for electrical upgrades alone.
These changes aren’t always apparent initially, but they can push costs higher than expected.
Although a tankless water heater costs more than the average storage tank, its convenience and energy efficiency still make it a solid investment. On the other hand, not all households need endless hot water on demand.
To help you reach a decision, here’s a side-by-side comparison of the key differences between their cost and efficiency.
| Factor | Traditional Storage Tank | Tankless Heater |
| Upfront Cost | $1,000 to $2,000 | $3,000 to $5,000 |
| EF Rating | 60 to 68% | 90%+ |
| Hot Water Supply | Limited to tank size | Unlimited and on demand |
| Lifespan | 10 to 15 years | 20+ years |
| Space Requirements | 3 to 5 square feet of floor space | Wall-mounted, no floor space needed |
| Installation Complexity | Simple replacements | May need retrofitting |
| Maintenance | Low, periodic flushing | Needs descaling |
| Best For | Budget-conscious, average usage | High demand, long-term savings |
Tankless water heaters are worth the investment for many growing families. They provide hot water on demand, reduce energy consumption, and occupy less space than traditional tanks. While installation costs more upfront, their efficiency, reliability, and long lifespan can help you save money in the long run.
Here’s what to consider if you’re thinking of upgrading to a tankless system.
A tankless unit gives you endless hot water on demand, making it ideal for large households, growing families, or homes with multiple bathrooms. No matter how long you and everyone else stay in the shower, you’ll never run out of hot water.
Switching to tankless water heater units with an Energy Factor (EF) rating of 90% can reduce energy use by 30%. In contrast, storage tank units have an EF typically ranging from 0.60 to 0.68 (i.e., 60% to 68% efficiency).
Tankless units heat water only as needed. They use less energy and eliminate standby inefficiency, the most common inefficiency in traditional hot water tanks.
The average electric tankless water heater often has a higher EF rating than most gas tankless water heater models (around 98%) because they don’t lose heat through exhaust.
With their space-saving design, wall-mounted tankless units free up floor space, perfect for compact rooms (e.g., laundry rooms or utility closets) and living spaces. On the other hand, a standard hot water tank can take up three to five square feet of floor space. That’s roughly the size of a small fridge.
Get double the lifespan of traditional water heaters. Research shows that tankless models last more than 20 years, while storage tank water heaters only last around 10 to 15 years. With the right tankless water heater, you’ll get a continuous flow of on-demand hot water for several decades.
Image source: Canva
Ontario residents can apply for the Energy Savings Rebate Program through the Environment and Climate Change Canada.
Up to 25% off (up to $1,000) on an Energy Star-certified condensing tankless water heater unit. This point-of-sale rebate is applied at checkout when buying from participating Ontario retailers.(now closed; tankless rebates ended Dec 31, 2025)
Here are the primary considerations to remember:
Note: Availability can change depending on budget and retailer policies
There’s no reason to guess the cost of installing a tankless water heater. For fair, accurate cost estimates, turn to LG Home Comfort.
Our HVAC specialists have provided Southern Ontario homeowners with reliable, energy-efficient hot water systems for years. Whether you’re replacing an old tank or installing a new tankless water heater, we’ll make sure you get the right system for your needs and budget.
Contact us today! Tell us what you’re looking for, and we’ll discuss your best options.
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