We’ve all been there: a busy morning rush, the dishwasher is running non-stop, and suddenly, the hot water tap runs cold. In a home, it’s an annoyance. In a business—whether it’s a bustling restaurant kitchen, a hotel with fully booked rooms, or a salon with clients in the chair—running out of hot water is a disaster.
For years, the solution was simple: get a bigger tank. But as technology evolves, we’re seeing a shift. Residential homeowners have been singing the praises of tankless units for a while now, loving the endless hot water and space savings. But what about the big leagues? Can you use a tankless water heater for commercial use?
The short answer is yes, absolutely. But like any major plumbing decision, it’s not a one-size-fits-all solution. Let’s dive into what makes these units tick and whether they’re the right fit for your commercial projects.
Understanding the Tankless Revolution
Before we decide if they belong in a commercial setting, let’s refresh on how these units actually work. Unlike traditional storage tank water heaters that heat a large volume of water and keep it hot 24/7 (regardless of whether you’re using it), tankless models work on demand.
When a hot water tap is turned on, cold water travels through a pipe into the unit. Either a gas burner or an electric element heats the water instantly. As a result, tankless water heaters deliver a constant supply of hot water. You don’t need to wait for a storage tank to fill up with enough hot water.
The Core Benefits
- Energy Efficiency: Because they aren’t keeping 50 to 100 gallons of water hot standby all night long, they are generally more energy-efficient.
- Space Savings: They are significantly smaller than tanks. In a commercial lease where every square foot costs money, reclaiming a utility closet is a big deal.
- On-Demand Hot Water: Theoretically, as long as you have fuel and water, you have hot water. No more “recovery time” while the tank heats back up.
The Limitations
- Initial Cost: The units themselves usually cost more than traditional tanks, and the installation can be more complex.
- Power Requirements: They require a significant surge of power (gas or electric) to heat water instantly, which might mean upgrading gas lines or electrical panels.
Assessing Commercial Hot Water Needs
When a homeowner asks about tankless, you look at how many showers they take in the morning. When a business owner asks, the math gets a lot more complicated. Not all commercial needs are created equal.
High-Demand Businesses
Think about restaurants, hotels, laundromats, and commercial kitchens. These businesses have what we call “peak usage” times that are incredibly intense. A dishwasher in a restaurant needs 180°F water to sanitize, and it needs it now, while the prep cook is rinsing vegetables and the bar is washing glasses.
- Challenge: Can a single tankless unit keep up with five faucets running at once? (Spoiler: Probably not alone, but we’ll get to that).
Low-Demand Businesses
Now consider small offices, retail stores, or warehouses. Here, hot water is mostly used for hand washing in the restrooms and maybe a small break room sink.
- Opportunity: These are often slam-dunk candidates for tankless. Why pay to keep 50 gallons of water hot over the weekend when no one is in the office?
Factors to Consider for Commercial Use
So, can you use a tankless water heater for commercial use in your specific project? You need to weigh five critical factors before signing off on the install.
1. Hot Water Demand (Flow Rate)
This is the big one. You need to calculate the flow rate (measured in Gallons Per Minute, or GPM) required during peak operations.
- Example: If a salon has 4 shampoo bowls that might run simultaneously, and each faucet flows at 2.5 GPM, you need a system that can handle 10 GPM. A standard residential tankless unit might top out at 5-7 GPM depending on the temperature rise.
2. Fuel Source: Gas vs. Electric
In the commercial world, gas usually wins. Commercial electric tankless heaters require massive amounts of amperage. You might need to install three or four 40-amp breakers just for the water heater. Unless the building has heavy-duty electrical infrastructure, the upgrade costs can be prohibitive.
Gas units (natural gas or propane) generally provide a higher temperature rise and better flow rates, making them more suitable for heavy commercial loads.
3. Number of Fixtures
Take a literal headcount of every device that uses hot water.
- Sinks
- Dishwashers
- Showers
- Washing machines
This headcount helps you determine the “simultaneous use” factor. Just because a hotel has 100 showers doesn’t mean all 100 run at once… usually. But at 7:00 AM, 60 of them might.
4. Building Size and Layout
Tankless units are great, but they still have to push water through pipes. If the heater is on the north side of a warehouse and the restroom is on the south side, you’re going to have a long wait for hot water (and a lot of wasted water down the drain).
- Pro Tip: Commercial applications often benefit from “point-of-use” tankless heaters installed right near the fixtures, or a recirculation pump system designed for tankless units.
5. Local Codes and Regulations
Never skip the paperwork. Commercial plumbing codes in states like Texas, Nevada, and Arizona can vary city by city. Some health codes for commercial kitchens have specific requirements regarding water capacity and recovery rates that a single tankless unit might struggle to meet without a specific setup. Always check the local code regarding venting requirements, too—commercial tankless units need to breathe!
Sizing and Installation: Getting It Right
If you screw up the sizing on a residential job, the homeowner calls you complaining about a cold shower. If you screw up the sizing on a commercial job, a restaurant gets shut down by the health inspector because the water isn’t hot enough to sanitize dishes.
Proper Sizing: The Math
You aren’t just looking at GPM; you’re looking at Temperature Rise.
- Temperature Rise = Desired Output Temp – Incoming Ground Water Temp.
In Arizona summers, the ground water is warm. In Nevada winters, it’s freezing. A heater that delivers 8 GPM in the summer might only deliver 4 GPM in the winter because it has to work twice as hard to heat the water. You must size the unit based on the worst-case scenario (coldest ground water, highest demand).
Professional Installation is Non-Negotiable
We can’t stress this enough—this is not a handyman job. Commercial tankless installation involves complex venting, precise gas line sizing, and often linking multiple units together.
If you’re a business owner reading this, hire a licensed professional. If you’re a plumber, make sure you or your techs are specifically trained on the brand you are installing.
The Power of Multi-Unit Systems (Cascading)
Remember when we asked if a tankless unit can handle a restaurant? The answer is “Yes, if you use more than one.”
Many commercial tankless systems allow you to link (or “cascade”) up to 20 units together. They talk to each other electronically.
- Low demand: Only one unit turns on.
- High demand: All units fire up to produce massive amounts of hot water (e.g., 40+ GPM).
This provides redundancy, too. If one unit needs maintenance, the others keep working, meaning the business never has downtime.
Pros and Cons of Tankless Water Heaters in Commercial Applications
Let’s break it down simply so you can explain it to your clients or your boss.
The Pros
- Energy Savings: For businesses that aren’t open 24/7, the savings are real. Why heat water at 3 AM on a Tuesday if the shop is closed? You can see significant drops in utility bills.
- Space Savings: We’ve seen restaurants reclaim entire storage rooms by switching from massive 100-gallon tanks to wall-mounted tankless units.
- Endless Hot Water: As long as the unit is sized correctly for the flow rate, you never “run out.” No more waiting 30 minutes for the tank to recover.
- Longer Lifespan: Traditional commercial tanks take a beating and often last 8-10 years. Tankless units, with proper maintenance, can last 20+ years. Parts are also replaceable—if a component fails, you replace the part, not the whole heater.
The Cons
- High Initial Cost: The sticker price is higher. The venting is specialized (usually PVC or stainless steel, not standard B-vent). The gas line often needs upsizing to 3/4″ or 1″. It adds up.
- Maintenance: You cannot install it and forget it. Commercial tankless units need to be flushed (descaled) regularly, especially in areas with hard water like we see across the Southwest.
- Flow Rate Limitations: If you try to save money by undersizing the system, you will fail. You hit a “flow wall” where the water simply slows down or goes cold.
- Cold Water Sandwich: In some older models or poor installs, you might get a burst of cold water when turning the tap off and on quickly. (Though, newer recirculation technology has mostly fixed this).
Real-World Examples
Let’s look at two scenarios to see how this plays out in the real world.
Success Story: The Boutique Hotel
A small, boutique hotel with 20 rooms switched to a bank of 4 cascaded tankless units.
- Result: They saved 30% on their gas bill because they weren’t heating a massive boiler 24/7. When occupancy was low (mid-week), only one heater ran. When they were fully booked for a wedding, all four ran. Plus, if one unit needed service, the guests in the other rooms never knew the difference.
Cautionary Tale: The Busy Car Wash
A car wash tried to replace a massive boiler with two tankless units.
- Result: They underestimated the GPM needed when all sprayers were active. The flow rate dropped, pressure suffered, and the water wasn’t hot enough to activate the soap properly. They eventually had to add a storage tank with the tankless units (a hybrid setup) to handle the instant demand spikes.
Maintenance and Longevity
In the Southwest—Arizona, Nevada, Texas—we have hard water. It’s just a fact of life. Hard water is the kryptonite of tankless water heaters.
Scale (calcium and magnesium) builds up on the heat exchanger. If you coat the heating element in rock, it can’t heat the water effectively. It works harder, overheats, and eventually fails.
The Maintenance Plan:
- Descaling: Commercial units should be flushed with a vinegar solution or a specific descaling agent at least once a year (or more for heavy use).
- Isolation Valves: Every commercial install must include isolation valves (service valves). This allows you to shut off water to the heater and flush it without turning off water to the whole building.
- Inlet Filters: Clean the inlet screen regularly to remove debris.
If maintained, these units are workhorses. If ignored, they become expensive paperweights very quickly.
Cost Analysis: Is It Worth It?
When a customer asks, “Is it worth the extra money?” you have to look at the Total Cost of Ownership (TCO).
Traditional Tank:
- Upfront: Low.
- Operating Cost: High (standby heat loss).
- Lifespan: Short (8-12 years).
- Failure: Catastrophic (often involves a leak/flood).
Tankless:
- Upfront: High.
- Operating Cost: Low.
- Lifespan: Long (20+ years).
- Failure: Usually a component error code; rarely floods.
Over a 20-year period, a business might buy two or three traditional tanks. In that same time, they would likely buy one tankless system and pay for some maintenance. When you factor in the energy savings, the tankless option often comes out cheaper in the long run, despite the scary initial quote.
So, Can You Use a Tankless Water Heater for Commercial Use?
Yes. In fact, for many businesses, it’s the smarter, more modern choice. It saves space, saves energy, and offers redundancy that a single giant tank cannot.
However, it is not a magic wand. It requires:
- Professional sizing to handle peak flow rates.
- Correct infrastructure (gas/electric) to power it.
- Diligent maintenance to fight hard water scale.
If you’re ready to explore tankless options for your next commercial project, or if you just need to grab some parts for a repair, Van Marcke Plumbing Supply has your back. With over 6,000 products from top brands and locations across Arizona, Nevada, and Texas, we’re here to help you get the job done right.