We replaced the hot water heater with a tankless version. We now only get warm water from the faucets and showers even though the temperature is set at 140 0F on the heater and the outlet pipe from the heater is very hot. Also when the cold water supply to the heater is turned off, we still get cold water flowing when we turn the hot water faucet on. So two questions 1. Why cant we get hot water from the faucets and showers 2. Something is causing cold water to be introduced on the hot water line
It could be a thermostatic shower faucet, where the backflow preventer is defect. Or a backflow preventer is defect/removed at any other place. That way the cold water is getting into the warm pipes/hoses, sometimes even if the shower faucet is closed. Normally the warm side has lower (dynamic) pressure, sometimes tankless heaters have a throughput reduction. Backflow preventers can be easily missed since they are available as small coin sized inlets for water valves.
What type of faucets do you have ? I like tankless but with thermostatic faucets it may be better to turn The temp down. Flow will increase on the hot side and will reduce the cold mix I think you are seeing. This as a problem , I found 120 a good temp and since tankless the only issue was to make sure the dish washer did heat the water to sterilize the dishes.