Is a tankless water heater cost-effective? "If your current water heater is electric, then yes. However your savings will vary depending on your local cost per KW hour. If you're using propane, it might save you money. Again, it depends on your local propane cost. If you're using natural gas, then probably not at this time (although natural gas prices have and are going up radically in some areas of the U.S.). You will save natural gas, but the extra money spent on a natural gas tankless water heater might not justify the savings at this time." 5-05