I was looking at this question, which is somewhat related to mine but didn't give me a good answer: How to evaluate the suitability of an electric tankless water-heater
Basically, my mom's water heater tank broke this morning. It was a 40 gal oil-furnace driven tank, and the plumber says to replace it will be $2500 or something (they want to replace it with a 40gal stainless steel tank, as they say there is nothing smaller than that available). My mom lives alone (it was lucky I just happened to be here this weekend) and generally doesn't use that much water.
However, I don't really know much about these sorts of things. The house has two bathroom sinks, two showers, and one kitchen sink, although one of the showers is never used. There is also a dishwasher and a washing machine, although I don't believe she does much warm or hot washing. Generally only one source will ever be used at once. (The max would probably be a shower and the dishwasher running at the same time.)
I was sort of thinking it would be possible to put a 6gal heater at every sink/shower (5 total for $1k) and then a 20 gal in the basement hooked to the main line as a "reserve" or something. Does this make any sense? It would leave the house with 50gal of hot water (up from a 40gal tank) and cost $1000 less than a new tank. However, I don't even know if this is possible to do. Additionally, I kind of guess that it might cost more to operate than the old system. Can anyone tell me if this is a good idea (or even possible) in my situation?