Tankless, on-demand water heating systems heat the water only when needed, saving both energy to heat the water and space to store it.
Storing hot water is a strange thing to do, when you think about it. In our homes, many of us keep 40, 60, or even 80 gallons of water heated to 130°F or more, 24 hours a day, 7 days a week. When you're away at work, the water's heated. While you're sleeping, the water's heated. Even a well-insulated unit has to heat the water when it's not being used. Yet despite all the energy being used, you can easily end up with a cold shower if you don't have a large enough tank for your needs-but a bigger tank means more water to keep hot all day.
More and more homeowners are asking the question, "wouldn't it make more sense to heat the water only when you need it?"