A few weeks ago, a company called Pulsar Advanced Technologies announced that they had developed a microwave-powered tankless hot water heater. The idea is an intriguing one: rather than maintaining and heating a 50-gallon tank of water 24/7, simply replace the tank and heater with a microwave-powered unit. When the unit detects a pressure drop, it powers up the magnetron and rapidly pumps microwaves into the passing water. The virtue of the tankless water heater is that it doesn't require constant thermal regulation of a large tank—the microwaves simply heat the water when needed. And the assumption, at least, is that microwave heating of water is relatively efficient and fast enough to fully heat the water as it flows through the unit.
Is it such a far-fetched idea? One reader at Slashdot named Lawrence Wade (a.k.a. "BigBlockMopar") opines:
"Consider, for a second, that most microwave ovens put out something on the order of 700W of RF power... and that most of their nameplates indicate they consume 1200W-1500W to do it.
So, watt for watt, will it elevate the temperature of the water more than a conventional resistance element?"
Wade is right, magnetrons are not 100% efficient (tempting as it is to believe otherwise). Unfortunately, this troll goes on to blow his own credibility:
"I can't see how, and I have more than a few University-level engineering courses in thermodynamics, chemistry and electrical engineering under my belt."
Anyhow, water does have a high absorption coefficient in the microwave range (ε ≈ 1 cm-1 [ref]), which makes for good energy transfer between the microwave radiation and the water. But Wade is right, converting the AC power arriving from the utility company into DC voltage, then using that DC power to run the magnetron is going to cost something. According to Wikipedia and this guy's blog, the transfer efficiency of magnetrons are on the order of 0.65 to 0.70, which means that at least 30-35% of the energy used to power the hot water heater will be lost as dissipated heat before ever reaching the water.
Neverthless, a back-of-the-envelope calculation should give us some idea about the total cost of ownership of one of these water heaters. The heat capacity of liquid water at STP (25 °C and 1 atm) is ~4 J/(g K). Since a gram of H2O corresponds to 1 mL, and because we're concerned with only relative temperature change, we can say that
Cp ≈ 4 kJ/(°C L)
The heat capacity Cp says that for each degree Celsius we raise one liter of water, we'll need to supply 4 kilojoules of energy. Now, I know that water's heat capacity is going to change with temperature, and that piped-in water is at a higher pressure, but for this first approximation, I'll assume that these higher-order corrections are relatively minor.
Now my (low-flow) shower head says that it uses 9.5 L/min, and I usually take showers that last about 15 minutes, so I would need at least 140 L of hot water each day. Furthermore, water this time of year is about 55 °F coming in, and I like my water to be somewhere in the ballpark of 115 °F, which means I need to heat the water 60 °F (16 oops(†), actually 33 °C). With that in mind, we have all we need to estimate our daily hot water energy demand:
4 kJ/(L °C) × 140 L/(person day) × 33 °C = 1.8 × 107 J/(person day)
It just so happens that this value corresponds to 5 kWh/(person day). Next, let's normalize this by our magnetron efficiency of 0.65, and finally assume that the design of the microwave heater is such that 90% of the microwaves generated actually get absorbed by the passing water. This gives us our overall energy usage for this simplified microwave heater model.
5 kWh/(person day) / (0.90 × 0.65) = 8.6 kWh/(person day)
And since the national average retail cost of electricity is about 9 cents per kWh, this means the cost would be on the order of $24/month for each person taking a daily shower. Not too shabby. Actually, after correcting my original mistake with the temperature conversion, this figure strikes me as fairly expensive. This is also, to be fair, a low figure (because I'm ignoring loss of heat through pipes and other unavoidable dissipation), however it shouldn't be too far off the mark. This is no quantum advance for water heating, but it might make a difference depending on your usage. (Especially if you use hot water very infrequently).

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Oddly enough, depending on your usage, it might actually make more sense to stick with a conventional heater. If you have a large household that goes through a lot of hot water, a conventional heater might actually be more energy efficient. The tradeoff comes about because the immersed resistive coils of the conventional electric heater have virtually lossless transfer efficiency while the tank requires constant heating; on the other hand, microwave heating is relatively lossy but requires no temperature maintenance. Therefore, the energy benefit to using the tankless heater goes up when one uses hot water less frequently. For myself and other apartment-dwellers, a unit like this may make sense, but it is probably not be such a good idea for multi-person households.
Of course this simplistic model says nothing about how quickly the microwave hot water heater can heat up this water (or even if the unit really can heat such a large flux of water so quickly). If the company, Pulsar Advanced Technologies, would release some specs, we could start to get an idea of how useful a product this thing actually is! In the mean time, it should be possible to calculate a theoretical "temporal energy transfer function" of the unit if someone has the relevant physical constants for water in front of them. The last URL below links to an engineer's blog where he may have done just that. Unfortunately, his model is either too sophisticated or too unclear for me to follow.
If anyone has any practical experience with one of these units, I'd love to hear your thoughts about it!
Some relevant URLs:
(†) Thanks to commenter Ron, below, for pointing out a mistake I made in the conversion from °F to °C. I have corrected the values above to account for the difference.
UPDATE: This site has a lot of excellent posts regarding water heaters in general, but has some particularly nice posts on tankless models. Some of the links to left sell tankless water heaters and are useful as pricing guides.
EXECUTIVE SUMMARY: If you don't want to do the math, this simple model predicts energy usage of about 0.24 kWh per gallon of hot water.