A typical storage water heater will fit in a 24 inch by 24 inch by 6 foot high area. This may be a closet, basement, garage or anywhere with venting and piping accessibility. The exact space requirements depend upon the tank size, normally in gallons, and footprint of the unit.
For tankless heaters, the absence of the storage tank minimizes the physical space required. A tankless unit is typically 13 inches by 24 inches by 9 inches and hangs on a wall. The physical requirement is certainly minimal compared to tank type units, but most owner’s manuals for tankless water heaters suggest the installation of a drip pan on the floor beneath the heater, which limits the use of this space. Even though the tankless lacks a storage tank, there is still risk of water leaks via tubing and joints.
Another space saving consideration is that many tankless units can be installed outdoors. This can be a real advantage but it should be noted that in cooler climates additional energy will be used to prevent freezing.
For those applications where hot water demand is limited and space is minimal, tankless is a viable alternative to regular tank water heaters. Small apartments for singles or couples, vacation homes where demand is periodic or occasional, and apartments or homes with limited hot water appliances are scenarios that support the consideration of a tankless water heater.
Keep in mind that even though the unit is relatively small, there are still clearance recommendations for both indoor and outdoor mounting.