Hi Bert,
My condo has a hot water on demand system, which I believe is the same as a tankless hot water heater. Its kind of a misnomer, as there IS a tank, but only of a few gallons.
Recently, on an Ask This Old House episode, they installed a larger one with a faster capacity for a busy household, allowing them more flexibility to have laundry and showers going at the same time.
First, my Caveats - I do live alone, but bought the place from someone I knew, and there were two living here at the time she was here. She said it IS possible to run out of hot water, but it was very rare. I have occasionally had the diswasher running at the same time as I took a shower, but that scenario is infrequent. I had no difficulties when I did though.
If anyone can answer the following, please do:
1. Have heard they don't provide hot enough water for things like automatic dishwashers? True or false.
I've never had an issue with this. Mine has a tiny (two or three gallons?) reservoir, and on a few occasions, I've taken a shower while running the diswasher (didn't mean to, these are DOH moments) without running "out" of hot water. I HAVE run out of hot water once when I had a sinus infection, and took an incredibly long (45+ minutes), much hotter than usual shower to get some breathing relief.
2. With my hard water, will I just be clogging up the 'out' line by deposition of scale deposits after the water is heated? In tank, it precipitates out and deposits on the bottom, so at least not too much gets into lines.
I'm not able to give any input on this, as our water is a bit hard, but not extraordinarily hard.
3. Have heard they're not as reliable over time as tanks - true/false?
Gosh, mine came with the Condo, and the previous owner has had it for years. I've had more trouble with the furnace (oil heat) than any issue with the hot water on demand system. Mine is all tied in together - the furnace heats both the water that travels through the hot water baseboard radiant path, as well as is used for the shower, dishwasher, washing machine, etc. depending on the "demand". The Reservoir is tiny, but no issues with the hot water side of things, just some electrical glitches w/ the furnace itself.
I remember as a kid, we had both softened water and traditional water tanks, and like clockwork, every 4.5 years, the water tank would "go" because of the softening system - it just ate through water tanks (the salts) until my father finally decided to get rid of the water softening system entirely.
4. Are they worth the price differential?
Again, I'm unable to answer this as mine was already in place. I've been pleased with this, and I think the fuel savings is worth it. I had an apartment which had a too-big hot water tank, and I was responsible for both heat and hot water. It was a 2 br + alcove apt, an entire floor of a New England "triple decker". My heating bills were larger with that apt and the oversized hot water tank than here in a 2 floor, 2 BR townhouse condo w/attic & bsmt. Granted, there were a lot of other variables, but I often wondered how much that big 'ol hot water tank was costing to keep hot. I got insulation, etc. and the pipe insulation, but I'm spending less for heat/hot water in the condo than I did in that apt.
Personally, If I had to, I'd replace my current hot water on demand system with another (rather than a hot water tank) again. I wouldn't "blink" unless there was a price difference greater than 20% higher. Then I'd do the research, etc.
5. Any other comments, feel free to add.
Well, like I mentioned, I recall LOTs of hot water heater tanks breaking when I was a kid. What a mess! Granted, it was directly correlated with the water softening system. My hot water tank in R.I. wasn't a problem for the 2 years I lived there, but a neighbor's was.
My overall impression is that nowadays, with better technology, possibly installing a larger reservoir, etc., running out of hot water with a tankless system shouldn't be an issue.
Hope this helps!
-Jane