The decision has been made to go with the standard tank ...
I found this interesting on an info site about tankless systems - not that this made up my mind - it was more the add'l cost ...

"Advantages to tankless water heaters include greater energy efficiency of 10 to 20 percent over tank water heaters. Because they do not store a reservoir of hot water, there are no standby losses. Tankless water heaters can supply limitless amounts of hot water. Their housing is more compact, with a longer life expectancy of about 20 years. Downsides include the high cost -- twice or more of what you'd pay for a traditional tank-style water heater.
Editors at Consumer Reports say you're unlikely to make up the extra expense in energy savings. Installation can be tricky, and gas units may require wider-than-usual vents and larger gas pipes running to the meter, adding another $500 to $1,000 to the initial installation cost. Pipe and vent issues also make installing a tankless water heater in an older home more difficult, and hot water may take longer to reach remote rooms."

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