Energy issues with instant water heaters

A number of 'instant' water heaters are in the market and are usually picked up by those who are space constrained or budget constrained. The problems with this technology are complex. The key is that it is probably more energy efficient than storage water heaters as there is no storage thermal leakage (even thought the tanks are insulated). The instant heaters however load the grid during a very specific time frame and add to the total peak grid power that is to be generated. From the indian perspective one can say that the peak water heating load is between 7 AM to about 9 AM. As the penetration of electric heating of water is rather low compared to other industralized nations this is OK. With increasing adoption of storage heating technology, this problem will result in the all so familiar 'load shedding'. As ever energy costs are the only way to tackle this problem. The way i see it, preheating of water using solar thermal storage technology augmented with instant electrical heating is probably a great way of addressing this as the preheating will reduce the overall load on the grid.