Hot water circulating systems were designed to work with storage type
water heaters. Without the tank full of water the burners would be cycling on and off constantly trying to maintain the temperature in the piping. Since the piping is continuously losing heat the heat must be replenished continuously.
Tankless water heaters are much more complex than a traditional storage heater. The tankless heater has to put much more heat into the water much more quickly than a storage unit in order to get the water up to the desired temperature before it leaves the heater.
It sounds simple but it is not. Putting all that heat energy into the heat exchanger means that if the water stops flowing or even if the flow just drops significantly the heat exchanger can be quickly destroyed. That is why tankless heaters need so many sensors. Tankless water heaters monitor the gas supply, the exhaust, and the inlet and outlet temperatures.
The minimum flow that tankless water heaters require is typically ½ to ¾ gallon per minute. Most hot water circulating pumps will not produce enough flow through tankless heater to turn on the heater.
Let’s suppose that we get a good big pump and pump enough water to turn on the heater. With a traditional tank type storage water heater the outcome would be easy to predict. When the hot water in the tank falls below the burner set point the burners will come on and heat the water until it hits the upper set point, and then the burners will shut off. The cycle will repeat over and over.
What happens with the tankless water heater is a lot more difficult to predict. The tankless heater is trying to maintain a constant outlet temperature. It doesn’t just turn the burners on and off, it regulates or modulates the gas flames (or electric current) to try and maintain a very accurate outlet temperature. Some heaters even modulate the flow of water through the unit.
Remember, the tankless heater is measuring things like inlet water inlet temperature and exhaust temperature and taking appropriate actions to keep the heater running correctly and keeping the outlet temperature at the set point.
Tankless heaters weren’t designed to raise the water temperature only a few degrees. When the inlet water gets up near the set point, which it will rather quickly, then the heater won’t know quite what to do. The Exhaust temperature might not ever stabilize, and thus could cause headaches for the tankless electronics. Tankless heaters for the most part just weren’t designed to work with circulating pumps. All sorts of strange malfunctions could pop up with such an arrangement.
Demand hot water systems are compatible with tankless heaters
A demand system is a system that acts like a circulating pump, circulating water through the hot water piping and then through the cold pipe back to the water heater. But a demand system shuts the pump off when hot water reaches the last fixture. Therefore no hot water ever gets sent to the water heater inlet.
As far as the water heater is concerned it just thinks someone turned on a faucet. As long as your demand system pump is capable of creating enough flow to turn on the water heater it will work fine with a tankless water heater.
More about hot water recirculation. Hot Water Recirculation – What Are the Benefits and Pitfalls?