Savings of 20% on tankless versus up to 85% savings on a solar water heating, is the reality behind your electric bill savings, however the convenience factor of instant hot water is the overriding benefit of a tankless water heating system. Here is why:
The water you use still has to be heated: The amount of energy required to heat a gallon of water to a specific temperature does not change just because it is being heated at a faster rate.
A tankless water heater only eliminates energy costs for maintaining the temperature of water that has already been heated and is sitting in the storage tank awaiting use. Standby losses of (approx 5 minutes out of an hour)
So a tankless water heater is saving about 15 to 20% percent of water heating costs compared with solar at 85% savings over a conventional tank type electric or gas water heater.
And tankless water heaters do have drawbacks. According to the U.S. Department of Energy, “Sometimes … even the largest, gas-fired model cannot supply enough hot water for simultaneous, multiple uses … taking a shower and running the dishwasher at the same time can stretch a (tankless) water heater to its limit.”
Naturally, you can overcome this problem by installing multiple tankless water heaters. On the other hand, the total installation cost for more than one tankless water heater easily approaches the cost of a single solar water heating system. Additionally, Solar water heating systems useful life is over 30 years.