Water heaters are known to be one of the highest electricity consumption gadgets available for use on the domestic front and it is no surprise that more and more manufacturers have come up with innovative ideas that reduce the electricity consumption; depending on the usage only, rather than the working of the heater. This is where on-demand water heaters come into use. These are also known as instant water heaters in many parts of the world.
Water heaters which use tanks to store heated water are actually a waste of energy and hot water, if you are not too sure about the actual consumption that you would utilize. These heaters come in capacities of 10 liters or 20 liters and have at any point of time, that much amount of water stored in the tank. When you switch the heater on, the entire volume of water is heated, and if you end up using only half of the water, the remaining quantity stays in the tank, but cannot remain hot as ever. As you use up some quantity, that much of cold water flows into the tank from the main pipe line and ends up diluting the temperature. Hence, the energy that you spent to heat the entire amount is not fully utilized, as to get more hot water as hot as before, you shall need to turn on the heater again or keep it switched on for the entire duration.
As far as on-demand heaters are concerned, these have no tanks to store water. The process is such that the water is heated as it flows down the line and you get moderately heated water only. If you think that you need good temperatures for use, this is not a great idea as you end up having only warm water; especially if you are using the water at a higher speed. The temperature depends on the speed at which the water is dispensed and hence to get really good temperatures, you need to keep the flow at a minimum. These types of heaters use much less electricity than the conventional tank heaters, but as mentioned above the temperatures can be much milder than the tank heaters.
Hence, while deciding on the choice of a heater, it is best to analyze the exact usage of water in you home. This will give you a specific idea as to what type of heaters you need to choose from. Also, the timings of use of hot water are also important. If hot water is used simultaneously in two or more locations, the best idea would be to go for a tank heater, as the temperatures can be good and you shall get genuine hot water at all points. In such cases, on-demand heaters shall end up dispensing only warm water, as outward flow shall be high and the heating system shall not be equipped to heat a large flowing quantity in such a short span of time.