Given our family's hot water usage, I figured we don't need the hot water tank heating all of the time. So we looked into hot water on-demand, that is tankless water heaters.

The Navien CR210, which has a 98% efficiency rate, can support two showers at once or it can fill a jacuzzi -- which we don't have, but that gives you an idea of capacity. The suppliers would charge us about $2,800 including installation.

An alternative is the HVAC Mechanical Systems Rinnai LSI 75 which is 26" x 14" x 10" and costs $2,650 installed . It has 82% efficiency rate.

At this point in time, with the available government incentives, we could get two rebates, that is, $300 off our gas bill and $500 from the government as part of  its home energy rebates. However, it turns out even though we would stand to save about 30 to 50 per cent on our domestic hot water bill annually, this amounts to a savings of about $100 to $150/year on gas -- but then the tankless water heater uses more electricity.

Even with the rebate it would take about 13 years before you would see a payback on your investment. So if you're not ready to junk your existing hotwater tank, our heating guy recommends waiting until the existing hotwater tank need to be replaced. Why create the extra trash for minor savings.

On the other hand, if you are ready to make the change even though your water heater is working fine, consider retaining the old water heater to use with a solar pre-heating system.