A propane tankless water heater is a device that produces hot water on demand, meaning it does not hold any hot water inside of the machine itself. Instead, propane tankless water heaters use propane to produce instantaneous hot water when you need it without wasting any excess energy or heating up an extra storage system. ​There are two main types of propane tankless systems: point-of-use (POU) and central (CNP). A POU propane tankless system heats only one tap at a time while CNP units supply multiple taps in your home with propane heated separately from house piping.