On-demand, tankless, or instant water heaters heat water instantaneously when it is required, and so there is no need for a 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 gets in one side of a coil of copper pipe, which then turns with a heat exchanger that is surrounded by flame, and hot water exits the opposite 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 efficient. One potential trouble is pressure drop throughout the heat exchanger which might produce lower flows when more then one source of hot water is used.
Tankless Water Heater Repair Salt Lake City offers the following information from the U.S. Department of Energy on tankless or demand type water heaters.