Because tankless water heaters are sophisticated appliances the more critical is their correct installation. They should be installed by licensed, factory certified and experienced professionals. By far the most installed type of tankless water heater is the one powered by natural gas. Electric models are not very economical because of mostly higher electric rates and potentially higher installation cost. Electric tankless water heaters usually have a high electric power demand and may need supply circuits of 100 A or more amperes. This would require an upgrade to the existing electric system of the house that can be costly. Smaller electric tankless water heaters can be easily used in point of use locations, for example for the kitchen sink. They require much less power and are very useful.
The most important factor is the location where the tankless water heater is going to be installed. It is crucial to be close to the gas meter and the gas line to be properly sized so it is able to supply the volume of gas needed. Utility gas meters can also be restrictive and not able to supply enough gas. This is usually not a problem, most utility companies can exchange the meter to a larger unit free of charge. Since the tankless water heater modulates its burners it adjusts the gas flow to the burner for desired temperature.
Problems usually occur when the unit needs to supply greater amount of hot water and is not able to receive enough gas volume for the burners. The gas supply and volume is very important to have a trouble free operation. It is not that tankless water heaters use more gas; they use more of it when heating the water instantaneously versus the tank water heater that slowly heats the water. The energy it takes to heat water to a certain temperature is the same. It is important how efficiently that energy is used. A professional installation also tries to minimize the pipe length from the tankless water heater to the next bathroom. This reduces the amount of cold water that is flushed before the hot water reaches the faucet.

There are some pump products on the market that continuously circulate hot water in the pipes so that hot water is immediately available when you open the hot water faucet. These pumps are very wasteful of energy because in most homes the hot water pipes are not insulated and made of copper. Copper is a very good heat conductor so all the hot water in the pipes are constantly radiating heat to the surrounding and cooling off quickly. It works sort of like the radiator or the heater in a car. Hot water is pumped through it to cool. These pumps and the associated valves use the cold water pipes for the circulation of water, so the cold water in the pipes become warm as well.
This company http://www.chilipepperapp.com/ has come up with an innovative solution. A tankless water heater pump or better a recirculating pump that is electronically controlled and turned on when needed. Tankless pumps like these add additional Convenience and prevent waste of water. The cooled off water in the hot water pipe is returned to the cold water pipes instead of being drained.