The single biggest decision in spec'ing a Rheem tankless: do you spend more on a condensing RTGH for higher efficiency and PVC venting, or save money up front on a non-condensing RTG and absorb higher fuel costs over time? The honest answer depends on three things — your climate, your vent run, and how long you'll own the home.
Below, we walk through the actual cost math, not the marketing bullets.
Choose condensing (RTGH) if you live in a cold climate, plan to stay 7+ years, have a long vent run, or qualify for a federal/state efficiency rebate. Choose non-condensing (RTG) if you live in a warm climate, plan to move within 5 years, have a short straight vent run, or are working a tight budget. The price gap is roughly $300–$500; the install savings on PVC vs. metal vent often closes most of that.
Both styles burn natural gas or propane to heat water on demand. Both deliver endless hot water. The mechanical difference comes down to what they do with the exhaust.
A single heat exchanger transfers heat from the burner flame to incoming water. Combustion exhaust exits at 300–400°F — still hot — through a metal Category 3 stainless steel vent. Simpler, fewer parts, lower price. Maximum efficiency around 0.81–0.82 UEF.
Two heat exchangers work in series. The primary heat exchanger does the same job as the non-condensing model. Then exhaust passes through a secondary stainless steel heat exchanger that pulls additional heat out of the combustion gases — cooling them enough that water vapor in the exhaust condenses back to liquid (hence the name). That recovered heat goes into the incoming water. Exhaust exits at around 110°F, cool enough to vent through standard PVC pipe. Maximum efficiency reaches 0.93–0.96 UEF.
The condensing process produces a small amount of mildly acidic condensate (similar to weak vinegar) that has to be drained — usually with a short PVC line to a floor drain or a small condensate neutralizer.
Both styles in the Rheem lineup, head to head.
Super High-Efficiency · 0.93+ UEF
High-Efficiency · 0.81–0.82 UEF
The unit price difference between condensing and non-condensing is real but small. The bigger swing happens at install, because the vent material requirements are completely different.
Non-condensing units exhaust hot enough that they need Category 3 stainless steel double-wall vent pipe — typically $15 to $30 per foot, plus elbows ($25–$60 each) and the termination kit ($40–$100). Condensing units vent through standard Schedule 40 PVC — $2 to $4 per foot, with elbows around $2–$5 each.
| Vent Run Scenario | Non-Condensing (Metal) | Condensing (PVC) | Savings |
|---|---|---|---|
| Short, straight (5 ft, 1 elbow) | $140 | $25 | $115 |
| Standard (15 ft, 3 elbows) | $425 | $80 | $345 |
| Long run (30 ft, 5 elbows) | $800 | $160 | $640 |
| Plus contractor labor difference | +$100–$300 | baseline | +$100–$300 |
For most installs above 10 feet of vent run, the venting savings on PVC essentially close the price gap on the unit itself. That's the part most online price comparisons miss.
Set aside the install cost differential for a moment. Just on operating cost, how long does the efficiency gap take to pay back the unit price difference?
A typical American household uses about 64 therms of natural gas per year for water heating. At 0.81 UEF (non-condensing), that means consuming about 79 therms of gas. At 0.93 UEF (condensing), the same hot water needs about 69 therms — a savings of 10 therms per year. At a national average gas price of $1.50 per therm, that's about $15 per year. At California or Northeast prices ($2.50+ per therm), it's closer to $25.
That doesn't sound like much, and it isn't — for an average household. But the gap widens fast for larger families and colder climates. A family of five in Wisconsin might use 100+ therms a year for hot water, where the same percentage savings is $30–$50 annually. Over 20 years, that's $600–$1,000.
If the only difference were the unit cost ($400 more), payback on energy alone would take 16+ years for an average household — longer than most people will own the home. But that's not the only difference.
Once you factor in the federal 25C tax credit ($600), utility rebates ($100–$500 depending on your state), and the install savings on PVC venting ($150–$650), the net cost of going condensing in many installs is actually lower than non-condensing. At that point you're getting the efficiency improvement essentially for free.
Tax credits and rebates have eligibility rules and can change year to year. The 25C credit currently requires UEF ≥ 0.95 for the maximum amount — most RTGH models qualify, but check the spec sheet for your specific model and the current IRS guidance before counting on the credit. Utility rebates vary wildly by region; check your local utility's website or call them directly.
Six common situations, with our honest take on which way to lean.
Higher temperature rise means the unit runs harder; the efficiency gap matters more in absolute dollars. Combined with longer winters, payback shortens significantly.
If your install needs more than 10 feet of vent or has to terminate through a wall instead of a roof, the PVC savings are large enough that condensing usually wins on total install cost.
Plan to stay 7+ years and your utility offers efficiency rebates? Condensing pays back through fuel savings and the 15-year heat exchanger warranty outlasts the typical non-condensing equivalent.
Florida, Texas, Arizona — high inlet water temp means the efficiency gap matters less in absolute dollars. With a short, simple vent run, the upfront savings of the RTG series will likely never be recovered by the RTGH.
Need it installed this week? Non-condensing units have wider stocking by local supply houses, simpler install requirements, and any plumber can handle them without specialized training. Less wait, less risk of install delays.
If you'll own the property less than 5 years, you'll never recover the condensing premium through fuel savings, and the buyer probably won't pay you extra for it at resale. Get the cheapest reliable unit that does the job.
Talk to us. Five minutes on the phone — we'll go through your climate, your install location, your vent run, and your fuel cost — and tell you straight whether condensing is worth it for your specific situation. Call 877-881-2742. RheemTanklessOnline.com is operated by LCP Supply alongside our flagship plumbing wholesaler PlumbersCrib.com — every order is fulfilled by an authorized Rheem dealer with full manufacturer warranty support.