Are they reliable?
Tankless water heaters have many parts and intricate controls. The more complicated the device, the more to go wrong. In colder climates, care has to be taken to completely drain them if they’ll be out of use or they will get damaged by freezing. In hard water areas, they are prone to lime up and that seriously lowers their efficiency. With tank heaters, the minerals in hard water settle in the bottom, where they can be more easily flushed or vacuumed out.
Energy Savings
Unless the pilot light in the tankless heater is kept off when the heater is not in use, it does not perform much better than a well-insulated tank-type heater. The real place you’ll lose heat with both types of heaters is from the pipes. Every time you use hot water, it heats all the metal plumbing between the heater and the faucet and then all that heat radiates away.
Additionally, sediment at the bottom of a tank type heater has been shown to have little effect on performance. Even with heavy sediment buildup, efficiency is seldom reduced more than five percent because most of the heat exchange happens in the flue, not in the tank bottom.
Sources: waterheaterrescue.com, thestar.com