How big are the current hot water heaters? Does one hot water feed the other, or does each hot water heater service different parts of the house?

Tankless heaters are a costly investment that does not usually pay. If it is hot and humid where you live, a heat pump water heater is a better investment. If not, stick with conventional tanks.

You might get more response in the plumbing forum.

You can get various sizes (BTU/hr) of water heaters. Just be aware that they need a gas flow rate maybe 1.5x - 2x of your furnace, or about 4x-6x that of a tank water heater. So someone should check the size/length of your gas pipe to make sure you are okay for capacity.

Also, check out the specs for temperature rise vs. gallons per minute. If your water source is pretty cold in the winter, you can not get as much hot water at a time. For instance, one spec I just checked has 11.1gpm with a 30 degree (F) temperature rise, but only 6 gpm with a 60 degree rise. The model I looked at also has a pretty big pressure loss at higher flow rates.

Thanks for the feedback. I'll definitely pay attention for gpm with temperature rise.

We have 2 water heaters, one is 80 gal and another 95 gal. They are tandem connected. One dumps to another. I don't understand why they are set up this way btw. so the water distribution is not zoned.

175 gallons is a bit crazy. Our builder usually builds large homes - 5000 sqft. His routine is to do 2 50 gallon in tandem. So 175 gallons for 3000 sqft seems a bit ridiculous. The other issue for tankless is that you might need to replace your meter. That can be costly but probably not prohibitive - just needs to be figured in.

You don't actually use the electric much so the utility might not give you the rebate for what you want to do. Just something to check into. Tankless can meet your needs but may not be the best option. A new 80 gallon tank has a standby loss on the order of $5 a month.

A 175 gallons of hot water! Are you running a bed and breakfast during the holidays? Seriously, this is a lot of hot water.
I agree with the other posters, a tankless system is a big upfront investment. In my opinion you are better off with a conventional gas hot water heater. Look a the Rheem Fury series. A 60 or 75 gallon size with a fast recovery will keep you in hot water (no pun intended). I would think you could take 4 consecutive showers with this set up.

Here is a link that might be useful: Rheem Gas Water Heaters

You area switching from electric to gas. Right now, you have two water heaters next to each other and long runs to some parts of the house? Your gas water heater(s) will need flues or exhaust of some sort.The sort depends on what type you get, natural draft or induced draft. You will also have to pay attention to the combustion air source. That might or might not be built into the water heater, again, depending on what type you get.

Since you need draft and new flues where none exist, that might dictate where you put these water heaters. What is the deal with having larger numbers of people at certain times, lots of family visiting? If you have variable loads, your best bet might be to get two water heaters. Buy an efficient one and use it all the time. Buy a less expensive one and turn it off when you don't need it. Try to put the efficient one near the taps you use the most. Some careful planning might save you a lot of money over a decade or two.

What kind of heat do you have? What is the climate like where you live?

The two big water heaters were there when we bought the house. As said I don't really know why the previous owner(s) need that set up. We never ran out of hw. I think for us, only during holidays we can have family visitors, say 4-5 total?
Ionized, we currently have a gas heater, do we still need to have new "flues and exhaust"? What exactly does "combustion air source" mean? We have gas furnace for heating. Northwest climate so 30-40's during cold season and 50- 60 during summer.
I wondered, is non-tankless Energy Star gas water heater available in the market? As the program only applies to Energy Star product. Mike is "Rheem Fury series" you recommended an energy start product?
Thanks all for your input.

For some reason I thought you had electric water heaters, sorry. The combustion air source is to replace the air going up the flue. If you have a well-sealed house, the combustion appliances might be starved for air. Even if they are not, you are better-off controlling where the air comes in (close to the furnace an water heaters). Some furnaces, boilers and water heaters have sealed combustion chambers and have fresh air inlets bringing in outside air.

Do not assume that because a water heater is Energy Star and you get a rebate, you will save money. You have to do some calculations. Tankless are expensive by themselves and sometimes require expensive upgrades to your gas supply. Another approach is a condensing, tank water heater. They may be just as expensive. I have not looked into them. You can find info about water heaters and worksheets for calculations:

http://www.energystar.gov

http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=12780

I found the link which has the list of current Energy Star qualified hot water heaters. Unfortunatley the largest seems to be 50 gallons, and these have a powered flue dampers. I assume the damper is needed to make the Energy Star rating. The extra cost of the damper probably negates any rebate from the utility company. The Rheem Professional Heavy Duty series has the 60 and 75 gallon size, but they are not Energy Star rated.

Here is a link that might be useful: Energy Star Water Heaters

If you're in the NW, what are your electric rates and your gas rates?

Thanks Mike and Ionized. Mike, what does the damper do? I just have a quote including Rheem 50 gal Energy Star + installation for ~$2200. He mentioned a pan to hold leaks + earthquake strap. They need to put in a elec. outlet to do the ignition. Does the price sound about right?

I think the damper prevents cold air to enter the water heater through the exhaust flue.

The price is very high. You should be able to get a hot water heater with a power damper for half the price. If you go to Amazon you will find 50 gallon Rheem hot water heaters selling for less than $500.

You can probably go without the power vent and put in a heater that's the same as the original gas, basically a "b-vent." They are less efficient, BUT they will operate during a blackout, a power vent model won't unless you have a backup generator or large UPS to run it.

You might want to get a "blower door test" done or try this experiment: turn on all the bathroom fans, kitchen exhaust fan if it vents outside etc, then turn up the hw heater and put a candle right next to the flue hat (the upside down funnel that runs into the b-vent) and make sure the candle flame is drawn towards the vent, so you know the flue is venting correctly - you don't want to draw combustion products back into the house.

With two gas HW heaters you might run a bigger risk, so you might consider running a "make-up air vent" in, it's a pipe that runs to the outside and down to the floor of the mechanical room. The furnace and HW heaters draw in the cold air for their combustion.

Having said all that, you may really only need one hw tank perhaps? That'd be a saving. If any hot pipes are exposed, insulate them, but the pipes (both hot and cold) right at the heater need insulating too, but a non-combustible insulation like fibreglass where it runs close (As for the price, when I replaced my hw heater, added expansion tank and re-worked some of my plumbing, I spent almost CDN$700 with a $400-odd hw tank, but I had to change a few things and add an expansion tank.

Meantime I guess you could switch off the electric tank, and put a hw heater blanket on it to minimise loss.

Mike you are exactly right. Amazon only sells the same model for $480. but my problem is I don't know how to install it. The quote estimate for a expansion tank, a drip pan and earthquake strap. I think they are going to use the same gas/vent pipe. But he needs to have the electrician do the elec. outlet converted from 220 to 110. Though I still don't see how that inflate the price from $500 to >$2000! I asked for another quote, this company quoted for Bradford White. for ES .62 they quote for $1200. But for .67 they want about the same price as the other.

pjb999,thanks for your suggestion. And it makes very good sense to do a "b-vent" knowing that it survives power outage. But then we wouldn't be qualify for the rebate. Though... the rebate seems to only cover for the difference between two installation, .62 and .67. I think it's cynical.

Forgot to say, Rheem, Bradford White or GE, which gas water heater is better?

It seems you are spending a lot of extra money to get the Energy Star rebate. This only makes sense if the rebate covers the additional cost of getting the Energy Star rated water heater.

I think Bradford White makes the Sears Kenmore water heaters. My 40 gallon Kenmore has lasted 17 years and it gets a lot of use. I only heard good things about the Rheem product. I don't know who makes GE water heaters and have no experience with them.

Mike, I read your post again and could you educate me on "Rheem Fury series... fast recovery will keep you in hot water"

Does fast recovery mean high BTU input? Should I look at this or first hour hw supply to judge how much hw can it provide in short period of time e.g. a peak need of hot water?

Hot water heaters have ratings of how much they will produce during the first hour. The higher the rating, the faster the recovery. I believe it is done by a higher BTU input.