Electric tankless water heaters are not as popular as the gas powered ones. This is simply because if you are going for one you are doing so because you want to replace your existing storage water heater and are looking for a more efficient piece. Why then would you look at a heater that would probably give you a 15 to 20% reduction on your power bills when you can get something that can give you up to a 50% reduction.
Electric tankeless water heaters work in exactly the same way as a normal water heater with just one difference. They have a water flow monitor that monitors the water flow through the heater. When this flow is very low or nil this monitor will shut off the heating element saving electricity. When the flow is resumed the heating element is switched on once again and because they do not have a large storage tank but only a small one, the water gets hot in a matter of seconds.
There is of course a slight delay because the water in the pipe will not be hot. Once this runs through though you will get hot water from the word go. They give you a saving in electricity because when not in use their heating element is shut off saving power. However because they use power when they are on, they will not give you as much saving as using gas which is not as expensive as electricity.
This does not mean that electric tankeless water heaters are totally useless. Far from it, in certain places only they can be used. A gas heater by virtue of the fact that they burn gas means that they should have an outlet for their exhaust gases. This means that they should either be installed outside or in your basement with a vent taking the gases outside. This means that if all you want is to heat the water for your shower, there is no need to get another one and install it in the basement with a separate piping.
STRONG>>RECOUP YOUR COSTS
The money that you spend on the total installation will take you years to recoup from any savings in power bills. A simple small electric heater is the best one here. The water is already heated to a comfortable temperature and all you need is to heat it that 10 or 15 °F more so that you will get water hot enough to shower. These heaters will cost only around $250 to $350 which is much less than a gas powered one.
The same way if you are looking for something to heat the water in your sink to make it warm enough to drink installing a small one right underneath is more than enough. These ones cost even less at around $150. Some of them even come out with a de-ionizing facility that kills bacteria in the water. Although these models will be more expensive, you at least have this option in electric heaters. Gas powered ones do not have this option.
The only time that an electric powered one is not good is if you want one to heat water for your entire household. In such a case you will anyway have a large storage heater in your basement, so why not go for a gas powered one that will work just as effectively but give you more savings on power. It is also not as polluting, and what with global warming and everything, all of us need to do out bit to help save the environment by reducing our carbon footprint.