On-demand, tankless, or instant water heaters heat water instantly when it is asked for, and so there is no need for a storage tank. On-demand water heaters are triggered by the flow of water. When there is demand for hot water, a fuel valve opens, sparking the burner. Cold water enters one side of a coil of copper pipe, which then turns through a heat exchanger that is surrounded by flame, and hot water exits the other side of the heat exchanger.
The efficiency of an on-demand water heater is based on the heat transfer effectiveness of the heat exchanger and is 75 to 90 percent effective. One potential problem is pressure drop throughout the heat exchanger which can produce lower flows when more then one source of hot water is utilized.
Tankless Water Heater Repair Los Angeles offers the following information from the U.S. Department of Energy on tankless or demand type water heaters.