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I am having my retirement house built. The house includes two RHEEM RTG-84DVLN-1 tankless water heaters that are plumbed in parallel. The instructions

state do not hook up tankless to a GFI outlet due to the sensitivity of the systems to any type of power surge

The tankless systems are installed in the garage and are plugged into the second power outlet of five along that wall, of which all are GFI outlets. I would like to know if I can replace that one outlet with a standard outlet and leave the remaining four as GFI. However: the state of Texas building code does require all outlets in the garage to be GFI’s. The tankless system pull very little amperage, but they are supposedly very sensitive to any type of surge.

I do understand the risks, when dealing with possible insurance issues or fire hazard, but according to RHEEM Customer Service, the chances of any real damage (fire, etc.) is slim due to the amount of amperage that is pulled from the units

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Maybe others will chime in, but I don't understand why the instructions would recommend against using a GFCI outlet other than for reducing the possibility of nuisance trips. Perhaps they are attempting to reduce visits by techs when the unit is still under warranty.

Contrary to many opinions, GFCI outlets do NOT provide over current protection nor arc fault protection. Their main job in life is to measure the amount of power going out to the load and the amount coming back. If it's not exactly (well almost exactly) equal they think: "this ain't good so I'm gonna trip" (OK colloquially expressed but you get the idea. Still, others with more experience than me may have a different opinion.

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TL;DR Safe answer = Hardwire

There are a few different pieces here:

GFCI affects stuff

That is, IMHO, almost entirely mythical. GFCI is, as I understand it, a basically passive system unless/until it trips. AFCI too. If any modern equipment is affected by simply being GFCI protected, there are major problems. And any older equipment - well, that is unlikely to be affected even by bigger things (think EMP effects - far worse the more modern the equipment).

GFCI is affected by stuff (i.e., False Positive)

That has some truth to it. Much more so for AFCI, as AFCI is a far more complex system. But even GFCI can be affected by legitimate minor current leakage. So there is some risk of False Positives with certain types of equipment. However, unless there is a chronic (e.g., every few days) problem, the only real issue is if there is a significant life safety concern. That concern is why in some places a dedicated refrigerator receptacle is exempt from GFCI, and why smoke alarms, fire control panels, etc. are normally not protected by GFCI or AFCI. The small risk of a serious fault being protected is outweighed by the risk of inoperable key equipment (safe food, fire alarms, etc.) not working.

What is most vulnerable to a ground fault?

Water. Guess what? A water heater has water. And it has electricity. That being said, a typical hardwired water heater doesn't need GFCI (at least as far as I know in most locations), so arguably even a plug-in water heater isn't really all that much of a concern. And actually, it isn't. In fact, I would argue that a gas water heater where the electricity is not used for a big heating element inside the water tank but rather for controls & ignition outside the water tank, the risk is really quite low. But the rules are the rules. In particular, if you make an exception for a plug in water heater, and then someone unplugs it and plugs in a tool that then has a ground fault, you've now killed somebody. Really. So the rules are set up to avoid the danger, even if it is relatively low.

Options

Updated based on details in the installation manual, page 55. (Thank you NoSparksPlease for the link.)

I see only two practical options here. I really, really, really don't recommend cheating by swapping GFCI for a regular receptacle. That would violate code, though you might be able to get an exception from your AHJ, and there is always the concern that someone could reuse the non-GFCI receptacle for something else (I need to plug in my tools, I'll just unplug the water heater for an hour...) and have problems.

  • Use GFCI

Just use it. If you get frequent (weekly or more frequent) nuisance False Positive trips then revisit the problem. If everything is installed properly, you shouldn't have any problems at all.

The manual does say "DO NOT connect to a GFCI or AFCI circuit." It gives no explanation. So doing this may be against manufacturer instructions, which by extension is contrary to normal code of "follow manufacturer instructions". I say "may", because I am not actually so sure about this. The instruction seems a bit strange. On the other hand, it is followed by the standard "don't use 3-prong to 2-prong adapters" and "don't use power strips".

  • Hardwired

Many appliances can be hardwired. There really is no reason (except if the manufacturer doesn't allow it) to not hardwire a water heater. After all, the gas line will be quite permanent, so why not have the electricity permanent too? Then, at least in most areas, you legitimately bypass the GFCI requirement.

In fact, according to the installation manual, the outdoor models are normally hardwired and the indoor models can be hardwired. Key point from the manual:

An ON/OFF switch must be provided and installed for the incoming 120 VAC power supply.

This can be a simple toggle switch (a.k.a. light switch). Since the units can share a circuit and use only 2 Amps each, you can wire up one switch to the panel (i.e., bypassing the GFCI receptacle, but could be daisy-chained from the LINE side of a GFCI/receptacle) and split the switched hot from the switch to go to both units.

Another key point:

A dedicated circuit is recommended for the water heater.

Note that this says "recommended", not "required". There is no real issue of overload - 4 Amps (2 units running at the same time) is much less than 1/2 of a 15 Amp circuit, so sharing the circuit with receptacles or lights is not a problem. Similar to sharing the ignition circuit for a gas cooktop with receptacles.

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    At least one page says this is direct-vent, the instructions say "All direct-vent gas models come with a three prong power cord. Only use this power cord and a matching grounded electrical outlet". Nov 30 '21 at 5:23
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    Refrigerator can be non-GFCI because the refrigerator outlet and all of the electrical bits of the refrigerator are usually in the back such that it takes significant effort to get to it. You're not going to accidentally electrocute yourself by accidentally dropping your plugged-in refrigerator into the sink. Nov 30 '21 at 22:31
  • @NoSparksPlease Which says nothing, for or against, connecting it to a GFCI. I had trouble finding the manual online. The big question is whether the manual actually says to "not use GFCI" or if that is anecdotal information from Rheem staff. Nov 30 '21 at 22:35
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    I found product installation instruction at ferguson.com/product/… Electrical information on page 55. This pages describes as DV tanklessking.com/… Dec 1 '21 at 1:27
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    @NoSparksPlease Thank you! Dec 1 '21 at 1:28
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the state of Texas building code does require all outlets in the garage to be GFI’s

Which you're reading as "every outlet must be the $15 socket with the buttons". Which would be a pointless government mandate (not very 'Texas'). Actually, it's saying every outlet must be GFCI protected. That can happen with a GFCI breaker, switch or deadfront at the start of the circuit. Or GFCI receptacle at the first receptacle position, with proper use of the Load terminals to protect the rest of the circuit, which then has plain receptacles and stickers stating "GFCI Protected". (You can use any marking method not hand-written, so while you have the label maker out, feel free to add "reset near east door" or whatnot.)

I'm telling you that as general advice; in this particular case that wouldn't work, since you aim to leave the second-to-last outlet unprotected.

The instructions “state do not hook up tankless to a GFI outlet due to the sensitivity of the systems to any type of power surge”.

That's a catch-22. NEC 110.3(B) requires you follow the instructions which were approved by UL as part of the device's UL listing. (and not any contrary instructions or advice). You can spot the UL approved instructions because they are obtuse and hard to read.

However, NEC (which is where Texas code comes from) also requires what it requires, e.g. GFCI protection in garages.

These are in conflict.

The good news is your local AHJ (Authority Having Jurisdiction), the people who issue permits and do inspections, are the final arbiters of interpreting NEC and can modify it to suit local conditions. So they can make a ruling on that point.

The usual ruling is to allow a simplex receptacle for the special appliance.

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I'm not sure what they'll want with two such appliances. I could see an AHJ making you use two simplex outlets, because it strongly connotes that "these are special". It's ultimately their call.

(By the way... while you're there, ask for one of these for your freezer. GFCI does almost nothing to make them safer in new construction where they're grounded anyway, just make sure your ground pins stay intact. And even brand-new fridges and freezers are prone to nuisance GFCI trips.)

While you're doing that, we here at StackExchange are also huge fans of dedicated circuits for refrigerators and freezers. Again, no AFCI or GFCI protection whatsoever - and if the AHJ wants you to use metal-jacketed cable to sidestep AFCI protection, that's fine. A refrigerator is a safety system and should not be subject to "dueling safety systems" - a safety system failing because an unrelated safety system shut it off. E.G. AFCI killing the radon system.

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The NEC says in Chapter 1:

110.3(B) Installation and Use. Equipment that is Listed, labeled, or both shall be installed and used in accordance with any instructions included in the listing or labeling.

This supersedes chapters 2 through 9, so you can install a non-gfci receptacle to serve your water heaters if the instructions instruct to. I seem to recall there was some issue with how some ignitors worked, but I'm not going to second guess Rheem as to why the instructions were submitted to and approved by a Listing company stating to not connect to gfci circuits, the NEC requires installing per instructions.

If your existing gfci receptacles are correctly wired with pigtails or multiple wires connected to only the "Line" terminals then replacing one receptacle with a non-gfci should not cause a problem with the remaining receptacles.

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