On-demand, tankless, or instantaneous water heaters heat water immediately when it is asked for, therefore there is no requirement for a tank. On-demand water heaters are triggered by the flow of water. When there is need for hot water, a fuel valve opens, firing up the burner. Cold water enters one side of a coil of copper pipe, which then twists with a heat exchanger that is surrounded by flame, and hot water exits the other individual side of the heat exchanger.
The efficiency of an on-demand water heater is based on the heat transfer efficiency of the heat exchanger and is 75 to 90 percent effective. One possible problem is pressure drop across the heat exchanger which could produce lower flows when more then one source of hot water is made use of.
Tankless Water Heater Repair Chattanooga offers the following information from the U.S. Department of Energy on tankless or demand type water heaters.