Hot Water Without The Hot Water Tank

Sept. 21 (KGO) -- Buying a new water heater is not a fun way to spend money, but imagine getting a water heater and a new closet at the same time?

The cost of natural gas is expected to go up by 50 percent this winter. Imagine what your heating bill will be and now imagine new technology that could cut that total bill by a third.

In South San Francisco, it may look like Steve Renz is just turning on a faucet, but he's made a radical move.

Christa Benduski: "When I turn on the hot water you will here the sound."

In San Francisco, Christa Benduski is on the cutting edge too. Both are getting hot water in a very nontraditional way. There's no hot water tank, just a unit hanging on the wall at their homes.

Christa Benduski, San Francisco: "This hot water is better than the water from the boiler."

Michael Finney: "Really?"

Christa Benduski: "Yes, it's warmer and it's endless and as much as you want."

Michael Finney: "Have you ever run out?"

Christa Benduski: "No. Never."

Ed Leverett works for Takagi, the company which makes the heaters. He shows Michael Finney how it works.

Ed Leverett, Takagi: "Water comes into the machine. It sees demand, the fan kicks up, opens the gas valves. The electronic ignition lights the gas and then heats that water as it passes through the copper coil. You see the blue flame in there. And when we turn the water off, it stops. If we turn it back on again, right back on to heat the water."

Energy efficient and the hot water never runs out.

Steve owns S&S Plumbing. He installed one of the tankless water heaters at his home to make sure the thing actually works.

Steve Renz, S&S Plumbing: "It's endless. All the hot water you want. I have teens. If they want to they can stand in there all day long & not a problem."

Michael Finney: "It is supposed to save you money on your bill. Have you seen that?"

Steve Renz, S&S Plumbing: "Yes, 30%, at least 30%."

These types of units have been used in Europe and Japan for decades where size matters.

Ed Leverett, Takagi: "You put it outside, hang it just like a breaker box and you've added closet space inside the house."

The downside is that they are not cheap. You're looking at more than $1,000, but with the savings you receive on natural gas over the life of the unit, you will end up saving a bundle.

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