Tankless water heaters are a type of water heating system that heats water on demand, rather than storing it in a large tank. This means they provide a continuous supply of hot water, making them ideal for households with high hot water needs. They are typically more energy-efficient than traditional water heaters because they only heat water when it is needed. These systems can be powered by electricity, natural gas, or propane. Tankless water heaters are compact and can be installed in smaller spaces, which is a significant advantage for homes with limited room. However, they may require a higher initial investment compared to conventional water heaters.