When you turn on a hot water faucet or have a hot shower in the home, cold water travels through a pipe into the tankless hot water unit, where a gas burner heats the water. The faucet acts as a key for turning on the gas to heat the hot water you need and the water is heated as it flows through the heat exchanger. As the water pressure fluctuates, the heating is adjusted to maintain a constant temperature and maximum energy efficiency. Once you turn the faucet off, the tankless hot water heating system also turns off. Venting for the Tankless Hot should be installed vertically through the roof as studies have shown gas venting out of side walls can have long term damaging effects to neighbouring homes exteriors. Because hot water is not actually created until it is demanded, a recirculating pump is often installed to maintain enough hotwater in the line until the tank starts to produce. Alternatively, a small conventional hot water tank can be installed near the location instant hot water is required, ie the kitchen. Very little energy is used to maintain high temps for the nearby hot water source.