This paper describes field and laboratory monitoring of residential scale tankless gas water heaters. The new breed of tankless gas water heaters that have entered the market in the past ten years offer the potential to reduce residential domestic hot water energy use by replacing the conventional center flue storage water heater design. The center flue design has shown small incremental efficiency improvements over the past twenty years, but efficiency improvements are limited by a design that results in significant standby losses during periods when the unit is not firing. Tankless water heaters largely eliminate standby losses by heating water only during draw events. Although tankless units offer efficiency benefits and good outlet temperature control, the installed cost for these units is considerably higher than storage water heaters. In addition, tankless units experience some performance degradation due to heat exchanger thermal cycling. This performance degradation is not adequately captured in the current Energy Factor test procedures resulting in over rating of unit performance. The goal of this study was to evaluate field and laboratory performance of two tankless units to develop a better understanding of real world performance.Units: Dual