Electric tankless water heaters are extremely small units, generally hung on the side of a house, which are preset to a particular temperature. When you switch on your hot faucet, a machine in this unit is activated by the movement of water, triggering it to be heated instantly. Therefore, your own water is just heated while you are utilizing it. You never have to pay for "standby" water similar to traditional water heaters which have to store the water constantly. Saving water is expensive because the tank has to regularly heat and then reheat the water in the tank, even when you are not using it. 

Since best electric tankless water heaters do not have to consistently reheat the water, your own electric bills will in reality be reduced. Traditional water tanks cycle on or off, even when you are gone from the house, or keeping this water hot uses up a whole lot of energy. But tankless heaters just work when you want them to.