A Tankless water heater located outside or in the attic, has the capacity to provide hot water for an entire house or small building.  This does not mean instant hot water at the faucet, as the water must travel from the heater to where it is needed.  These tankless models sense water flow and turn up the heat in stages.  The typical tank model continuously beats a stored volume of water, which requires a continuous draw of energy and adds to the A/C load.