I'm seriously considering replacing my conventional hot water tank with an on-demand (tankless) system for my house. However, we have natural gas supply in the house and I would run the system off of the gas. If the only power option was electric, I would have to think long and hard about it. As you said, it could be a wash depending on your hot water usage.

I'm thinking about this for a few different reasons. First of all, using less gas has some cost and environmental benefits. Secondly, I've had a hot water tank blow in the past, which is a messy affair. I'd rather not have to worry about that, and just shut off the valve to the heater if I leave the house on vacation. Tanks can also become bacteria traps if the water temperature falls below 140 F. The plastic inside the tanks can splinter off, either reducing the flow or causing blockages in your faucets. I'm also thinking of the additional floor space I'll recover in my work room, with the hot water system mounted on the wall. And finally, it is a rented unit, which is fairly standard for around here. I'm paying $10 a month for the thing, and I'd just as soon own the equipment instead of lining Direct Energy PLC's pockets, although the $10 a month does include full service if there is ever a problem.