Tankless is an expensive way to heat water because of the high initial cost. In Fl, I expect that heat pump water heater would be a much better bet. They seem to now be called "hybrid" if stand-alone. If integrated with your home AC, your HVAC contractor would install it. Second or equal might be solar depending on tax credits or refunds available there.

Tankless is pricey, but it pays off over the years.

How many years? Do you have the projected numbers for your installation? Does that calculation include opportunity costs?

First you must understand how a tankless heater can save money: by only heating water when you need it, and where you need it. The most energy saving setup for a sprawling house, is to have small tankless heaters for each bathroom. The kitchen, in my opinion, should not be on a tankless heater. The kitchen sink gets turned on and off so frequently, the tankless heater will waste more gas just firing up than heating the water. I would put a 10 gallon tank heater for the kitchen/Dishwasher. I would put a 2 gallon electric heater for the powder room sink, if the powder room is far from the kitchen and other baths.

Determine the initial cost for installation vs. operating cost per month. Say the tankless setup will cost $2,000 more than tank heaters. If the energy savings is $15 per month, you will break even in 11 years. Not considering maintenance cost of one or the other. Tank heaters must be replaced. Tankless don't need replacement, but they do require maintenance. Check into who can provide the maintenance in your area. Not all plumbers or HVAC contractors are qualified and experienced with tankless heaters.

Because of the nature of water usage and human behavior, it is very difficult to project out numbers with any degree of accuracy. Things like how often people use hot water, the usage patterns throughout the day, and unexpected fluctuations in usage make all the difference between tank or tankless. Tankless is better for applications where there are long periods of time between hot water usage, and when households would use a large volume of water over a short period of time. Ideal installs for tankless heaters are vacation homes, or for a single working person who only uses hot water once per day.

http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=13010

OP, check this calculation aid out. It may open your eyes. Aiden makes some very good points. We need to take the basic information and apply our own fudge factors for personal lifestyle differences.

It takes a lot of personal fudge factors to make up the large initial cost difference between tankless (EF 0.82) and conventional tank (EF 0.67) when the operating fuel cost difference between them is, for a typical family of 3, is $25/year.

That is why it might pay to just buy the most efficient tank, or check into solar rebates and heat pump water heaters.

Thanks everyone - all the info is most helpful and now added to my research!

I just went through the decision process of whether to replace my hot water heater with a tankless water heater. For a variety of reasons, I chose to replace with a Navien. I did this a month ago and, so far, I'm pleased with the results. Since the swap-out, I've entertained a lot, have had house guests consisting of a family of 4 (2 teenaged girls), have done loads of wash and dishwasher runnings, and everything has worked well. I've noticed that hot water reaches my end faucet more quickly with the tankless than the traditional hot water heater and attribute that to the recirculating pump my model of Navien has, that eliminates the cold water "sandwich", and gets the hot water to the destination more quickly. I also seem to have hot water at the kitchen sink more readily now, than I did with the traditional tank.

After installing the Navien, I discovered this blog. I found it interesting and helpful, so am offering it here for your continued collection of information and research.

I've concluded this is such a personal decision, based upon how one uses water, how frequently during the day, etc., that it's difficult for most people to give others a generic recommendation. Good luck with your research and your decision.

Here is a link that might be useful: Blog of a Navien Tankless Owner living in Canada