Key Takeaways
- Consider total running costs by combining energy bills, maintenance, installation, and fuel to determine which heater is less expensive for you. Use a lifetime cost estimate to inform decisions.
- Consider local energy costs and availability. Locations with low electricity prices or renewable grids can tip the scales toward electric heaters being more affordable to operate. Regions with inexpensive natural gas might find gas units more economical.
- Select heater type according to household demand and performance preferences since gas units tend to have quicker recovery and higher flow rates. Electric units typically exhibit greater energy conversion efficiency and require less maintenance.
- Consider initial costs and other infrastructure upgrades as gas may require venting and gas lines. Tankless units are typically more expensive to install, but they can lower long-term operating costs.
- Factor in environmental and future-proofing priorities including grid carbon intensity, available rebates, electrification trends, and potentially impending regulatory changes when choosing between electric and gas.
- For safety and home preparedness, prioritize checking ventilation and electrical capacity, installing detectors or breakers, and scheduling regular maintenance to keep operating costs down and your heater’s lifespan long.
Electric water heaters are cheaper to install and tend to operate more efficiently than gas units. Operating cost varies based on local energy prices and household consumption. Standard electric models tend to have higher energy-factor ratings and require less maintenance.
On the other hand, gas heaters heat your water faster and fare better in power outages. By comparing kilowatt-hour and therm rates, tank size, and insulation, you get a clear cost picture.
The paragraphs below decompose considerations and illustrations.
Cost Breakdown
To compare running costs, you need to look beyond the monthly bill to fuel prices, efficiency, installation, maintenance, and lifespan.
Below is a sample table of average monthly utility bills for a mid-size household utilizing 3,000 to 4,000 litres of hot water per month. All figures are in metric units and one uniform currency.
| Heater type | Average monthly energy cost |
|---|---|
| Electric storage tank | $60–$110 |
| Gas (natural) storage tank | $40–$85 |
| Electric tankless | $35–$80 |
| Gas tankless | $30–$65 |
1. Fuel Prices
Average electricity rates and natural gas prices vary widely by region, roughly $0.10 to $0.35 per kilowatt-hour and $6 to $20 per gigajoule respectively. Small shifts matter: a 10% rise in electricity rates raises annual electric heater costs noticeably, while volatile gas markets can swing gas-run costs the other way.
Propane prices are frequently higher than natural gas and fluctuate with supply and season, therefore propane-based units can be higher in cost per litre or gigajoule. In a few regions, gas and electric are similarly priced; when that occurs, fuel choice carries less influence in the decision.
2. Unit Efficiency
Electric heaters may be higher on the nominal conversion efficiency scale, with electric resistance units nearing 100% conversion of energy to heat. Efficient electric heat-pump water heaters can provide 200% to 300% effective efficiency, which is a coefficient of performance of 2 to 3.
Gas units have a lower energy factor because venting and standby losses reduce usable heat, while high-efficiency gas condensing models are closing the gap. A quick list helps: electric resistance storage has an energy factor of 0.9 to 1.0, electric heat pump has an energy factor of 2.0 to 3.0, gas storage has an energy factor of 0.6 to 0.7, and gas condensing has an energy factor of 0.8 to 0.95.
Pick models by energy factor in operating costs.
3. Upfront Investment
Purchase and installation usually run between $550 and $1,500 for both fuels. Tankless models have higher initial costs. Converting from gas to electric costs about $1,500 on average for electrical upgrades and permits.
Converting from electric to gas is around $2,000 and up if a new gas line is required. Gas units frequently add venting fees, increasing upfront costs. Swapping out for a same-type but higher-capacity unit usually runs $500 to $600.
4. Maintenance Needs
Electric units have fewer moving parts and typically less maintenance expenditures. Tank flushing and element inspections are the most frequent. Gas systems require burner checks, vent inspections, and leak checks, which push up the yearly servicing costs.
Plan for annual maintenance or else efficiency will decrease and your wallet will get burned by repairs. Gas maintenance usually costs more but keeps your fuel spend lower.
5. Lifespan Value
Electric tank-style units typically outlast gas tanks. Tankless models of either fuel generally exceed storage tanks in longevity. Include repair frequency and service accessibility in your lifecycle cost estimate.
The cost of ownership over the likely lifespan provides a much clearer decision than just looking at monthly bills.
Performance Metrics
Performance metrics indicate how a water heater performs under actual usage, including electric water heaters and gas models. Other key indicators such as recovery rate, flow rate, replenishment speed, and UEF (Efficiency) assist in measuring various performance metrics, making it possible to compare electric tankless water heaters, gas water heaters, and traditional tank options against household needs and peak demand.
Recovery Rate
Gas water heaters are often a faster recovery choice than electric water heaters since gas burners produce higher BTU input and reheat tank water rapidly. For instance, a 40-gallon gas water heater may rebound to usable temperature within 20 to 30 minutes, whereas an equivalent electric model may take 40 to 60 minutes. Electric tankless water heaters provide instant hot water, but their output is limited by electrical capacity and won’t support high temperature rises on aging or low-amperage electrical service. Recovery times vary by size and type, making it essential for homeowners to consider their hot water demands.
Small 30–40 gallon tanks recover slower than larger 80-gallon tanks, while tankless systems effectively have no recovery time but are limited by flow capacity. When selecting the right water heater, it’s crucial to consider your family’s habits. Several showers and consecutive loads of laundry may demand quicker recovery or greater continuous capacity, making an informed decision vital for efficiency.
Ultimately, understanding the differences between gas and electric water heaters can help homeowners make informed choices. While gas models may offer faster recovery times, electric tankless options provide convenience with instant hot water. Assessing your specific needs will ensure you choose the best water heater type for your household, balancing efficiency and performance.
Flow Rate
Flow rate is the liters or gallons per minute of hot water a unit can deliver and is relevant for concurrent usage. Tankless heaters provide flow rates, such as 10 to 30 liters per minute, which decline as the necessary temperature rise increases.
Storage tanks provide a number of fixtures until the tank cools. Typical household tanks contain as much as approximately 300 liters, or around 80 gallons, while the big commercial-type tanks can store 950 liters, or over 250 gallons, with heavy-duty parts for that heavy demand.
Gas tankless units maintain higher flow rates than electric tankless units due to their greater heat input. A gas unit might handle two showers and a dishwasher while an electric unit handles one shower and a sink. Match the flow rate to peak needs by counting showers, dishwashers, and washing machines running at once. Aim for a combined flow slightly above that peak.
Sizing Options
- Storage tanks come in standard sizes such as 40, 60, and 80 gallons. Select by daily gallon-per-day demand and family size, with larger units (250+) available for extremely high demand and using heavy-duty components.
- Tankless units are sized by peak flow rate and required temperature rise. Figure peak simultaneous flow in liters per minute and choose one that provides that at the inlet temperature typical in your region.
- Heat pump water heaters: consider UEF and lifespan, which typically ranges from 10 to 15 years. They work well where electricity is efficient and ambient heat is available.
- Electric tankless can last up to 20 years and save on monthly bills because they operate only when needed. Ensure electrical service can supply the needed power.
Use our water heater selector tool to calculate gallons per day or peak flow, considering daily consumption patterns, occupancy, and hot water demands, while factoring in the suggested safe temperature of 120°F or less.
Geographic Factors
Geography determines which water heater options, such as electric water heaters and gas water heaters, will be less expensive and more feasible in the long run. Factors like gas lines, grid capacity, local rules, and climate all influence the operating costs and suitability of the right water heater.
Utility Rates
When comparing electricity and natural gas prices per kWh and per megajoule, it’s essential to approximate running costs for your electric water heater. High electricity prices typically favor gas water heaters, while low electricity prices or incentives can shift that balance. Utilizing time-of-use plans allows homeowners to heat water at night, which can save money for electric and heat pump units.
If you’re considering an upgrade, check if your utility offers night rates or controlled-load tariffs. In rural areas, higher costs for delivered propane and weaker grid service can make gas water heaters more appealing despite their higher fuel costs. This is especially true when evaluating the monthly utility bill.
Additionally, reach out to local utilities about special rates, rebates, or programs for efficient water heaters. Some utilities even provide discounted rates for customers using heat pump water heaters, which can significantly reduce monthly water heating costs.
Climate Impact
Things like geographic factors and colder climates increase hot water demand and raise energy use since incoming water is colder. This makes recovery rate and insulation become more important. Gas heaters generally heat quicker and recover earlier, potentially reducing standby losses and more easily satisfying peak demand in super-cold locations.
Electric resistance and certain heat pumps experience slower recovery when the ambient temperature is low. Heat pumps lose efficiency as surrounding air gets colder, so location matters. For warmer climates, tankless and heat pump systems often shine and reduce waste.
Tankless models tend to falter when hard, cold inlet water must be heated to meet high simultaneous draw. Tailor tank size, reserve capacity, and system type to local temperatures. For instance, opt for oversized tanks or hybrid systems in cold zones and smaller or tankless units in warm coastal enclaves.
Local Rebates
- Federal or national incentives for high-efficiency or heat pump water heaters.
- Utility incentives for ENERGY STAR units or high-efficiency gas models.
- Local government grants for electrification are usually for heat pump systems.
- Trade-in or recycle incentives when swapping out old inefficient tanks.
- Short term rebates to low income families or new construction programs such as Zero Energy Ready Homes.
A few areas offer bigger incentives specifically for electric heat pump water heaters to bolster electrification plans. Others maintain elevated cash rebates for efficient gas appliances.
Always verify eligibility and stackable offers prior to purchase to reduce upfront and lifetime costs.
Environmental Impact
The environmental impact of using an electric water heater or gas water heater varies based on how each system generates and uses energy, as well as local factors like grid mix, climate, and regulations. Here are some focused looks at emissions, energy sources, and policy trends to help balance long-term impacts against monthly water heating costs.
Carbon Emissions
For comparison, a typical gas-fired water heater in a mild climate household emits about 1.5 to 2.5 tonnes of CO2 annually.
Whereas a traditional electric resistance heater connected to an average fossil-heavy grid may emit a similar or slightly less amount depending on local grid intensity. Heat pump (hybrid) electric water heaters can reduce energy consumption by up to 60 percent, routinely reducing annual CO2 to far less than 1 tonne in much of the country.
Gas units emit CO2 and other combustion byproducts onsite, while electric units emit no combustion byproducts onsite, but simply transfer the burden to the power plant. Where the grid has high renewable penetration, electric models can be close to emission free at the site, and where coal or gas dominate, lifecycle emissions for electric units increase.
For eco-conscious homes, converting to a heat pump unit or combining electric heaters with green power buys can really change lifetime emissions.
Energy Source
Gas water heaters predominantly utilize natural gas or propane, which is supplied through a pipeline or cylinder. Electricity comes from the grid, whose mix varies.
Some regions rely mostly on fossil fuels, while others rely on renewables or nuclear. Grid dependence allows electric heaters the flexibility to synchronize with on-site PV and time-of-use charging.
Gas provides consistent output and a known supply chain, which can be valuable in areas with unreliable electricity or where building codes and infrastructure support gas. Availability matters.
In hot-humid regions, many homes are predominantly electric. In mixed-humid regions, some areas split evenly between electric and gas. Think local fuels, probable future grid decarbonization, and the ability to add solar, because these shift your environmental impact more than the heater type.
Future Regulations
Policy trends are heading in the direction of electrification and stricter efficiency standards. Future regulations could set emissions standards or transition away from inefficient gas appliances towards electric ones.
Meanwhile, low-energy or net-zero building codes, which vary in feasibility based on the net-zero definition and climate, typically support electric heat pump alternatives and hyper-efficient solutions.
As jurisdictions update residential codes for Mixed-Humid or other climate zones, provisions for low-energy designs might be mandated or incentivized, as in Maryland and other areas.
Planning for compliance today minimizes retrofit risk tomorrow by installing heat pumps or electric-ready infrastructure even if gas will continue to be in use.
Future Considerations
Future water heating decisions need to connect to larger home energy planning and probable code and market changes. Select a scheme that suits not just today’s tariffs but future twists in energy rates, construction codes, and incentives.
Think about the rapid pace of electrification, smart controls, and energy market swings when you’re estimating lifetime costs and practical needs.
Home Electrification
The push for all-electric homes connects to safety, emissions, and regulation. The selection of an electric water heater eliminates the requirement for gas piping and venting, which expedites retrofits and reduces the risk of combustion.
HPWHs make electrification alluring in that they can achieve 200 to 300 percent efficiency, reducing energy consumption relative to resistive electric units. For example, municipal building code updates more and more support efficient electric systems, so going electric can future-proof new builds or large renovations.
If you’re going to be replacing other gas appliances, get in and fit an electric heater now – save yourself later rewiring or repiping! In a number of climates, situating a heat pump unit in a basement provides more consistent year-round performance, while colder climates may require auxiliary heat or insulation upgrades.
Smart Technology
New water heaters have Wi-Fi controls, energy monitoring, smart scheduling, remote diagnostics, and programmable thermostats. Both gas and electric models now include timers and adaptive algorithms that learn household habits.
Intelligent functionality lets you reduce setpoints during periods of low demand, operate heating during cheaper tariff periods, and get leak or maintenance alerts. These features can shave wasted execution time and detect errors early, boosting practical efficiency.
Go for the models that integrate with home energy systems and solar setups if you’re planning renewables. For example, a heat pump with energy reporting and a time-of-use schedule can shift most heating to midday solar production, cutting grid draw and operating cost.
Energy Volatility
Energy prices swing and that impacts long-term operating costs more than initial purchase price. Electricity rates are projected to increase by 55 to 72 percent by 2029 in some forecasts, which increases the cost of electric heating unless counteracted by greater efficiency or more renewables on the grid.
Gas prices can be volatile and subject to geopolitical or supply shocks, leaving gas heaters vulnerable to unexpected cost hikes. As grids integrate more renewables, electricity will only get cleaner and, in some regions, cheaper during certain hours—good news for smart electric systems and HPWHs.
Factor these unknowns into TCO scenarios and do sensitivity analyses of different price paths. Professional installation is critical for HPWHs due to requirements for clearance, drainage, and dedicated electrical capacity. Rough installation or placement negates efficiency and longevity.
Safety & Installation
When considering electric vs. gas water heaters, the focus often lies on installation and safety for your home. Evaluating the differences in infrastructure, ventilation, and associated risks can help you determine the right water heater for your property and risk appetite. Emphasizing professional installation and maintenance is crucial, as these factors minimize risks and help avoid water damage from leaks or malfunctions.
Infrastructure
Gas water heaters require a demand-sized supply line, shutoff valves, pressure relief, and a path for the exhaust gases. They need clearances around the unit and a floor/drip pan if installed indoors.
Electric units need sufficient electrical service, usually a dedicated 240-volt circuit for storage tanks and more robust wiring and breakers for tankless models. Older homes may need upgrades. A gas line run or upsized electrical panel can be costly.
Tankless units can require additional plumbing work and, for electric tankless units, significant electrical upgrades. Consider your home’s existing gas and electrical panels, circuit capacity, and available space when selecting.
Professional installation ensures the unit is sized right for your household demand and local codes are followed. A higher-capacity version of the same type costs just a few hundred dollars, but changing fuels usually means bigger expenditures and permits.
Ventilation
For gas heaters, proper venting prevents a buildup of combustion byproducts and carries them safely outside. Electric heaters require no venting, which eases placement and reduces venting costs.
If your venting is not right, it can cause carbon monoxide, moisture, and code violations, and you will pay for a rework. Here is a summary table of typical ventilation requirements.
| Requirement | Gas Water Heater | Electric Water Heater |
|---|---|---|
| Venting to outside | Required (flue or direct vent) | Not required |
| Combustion air | Required | Not applicable |
| Indoor placement limits | Restricted without sealed venting | More flexible placement |
| Risk of combustion gas | Present if venting fails | None |
Potential Risks
Gas heaters pose hazards of gas leaks and carbon monoxide, both potentially lethal without detectors and upkeep. Electrical heaters pose a potential for fault, short circuit, or poor grounding that can cause shock or fire.
Routine maintenance reduces hazards for both and can help avoid water damage from leaks. Place CO detectors in areas where gas appliances are located and make certain breakers, GFCIs, and proper fusing safeguard electric units.
Note suggested water temperature is 120°F or below to minimize scald potential. Regular maintenance increases longevity and helps detect minor issues early.
To go from gas to electric often costs $1,500 for a panel upgrade, permit, and other expenses. Switching from electric to gas is about $2,000 if a new gas line is necessary. Both kinds usually run between $550 and $1,500 upfront, including installation.
Conclusion
Electric vs. Gas water heater: which is cheaper to run Electric models are cheaper to buy and require less maintenance. Gas units heat faster and reduce running costs in regions with inexpensive natural gas. Homes with solar or heat-pump ready wiring benefit even more from electric units. Tight space or vent limits tend to push toward electric. Homes with lower gas rates or high hot-water consumption favor gas.
For a concrete example, a family that showers twice daily and lives where gas is cheap will likely save on bills with a gas heater. A tiny city household with a high gas price will save more with electric. Check local energy prices, accessible fuel, and the unit’s efficiency before purchasing.
Or if you like, I can run the numbers for your ZIP code and household hot water usage.
Frequently Asked Questions
Which is cheaper to run: electric or gas water heaters?
Electric water heaters tend to be less expensive to purchase and maintain, making them a great choice for homeowners. However, gas water heaters usually cost less to run where gas is cheap, and local energy prices and efficiency dictate the real running cost.
How do energy prices affect running costs?
The running cost of a water heater will depend on your local electricity and gas rates, as well as the unit’s efficiency. Higher electricity prices generally give the advantage to gas water heaters, while electric water heaters can be cheaper to run at low gas prices.
Do tankless (on-demand) models save money?
Tankless water heaters cut down on standby loss and potentially reduce energy consumption, making them a great choice for homeowners with low to moderate hot water demands. However, higher upfront costs extend payback time.
How does home insulation and hot water usage change costs?
Better insulation and less hot water use mean lower energy bills for both homeowners and businesses. Low-flow fixtures and pipe insulation reduce demand, helping you save quicker with efficient design electric water heaters.
Are there environmental differences between electric and gas heaters?
Electric water heaters can be cleaner if your electricity comes from renewables, making them a great choice for environmentally conscious homeowners. In contrast, gas water heaters produce combustion CO2 on-site.
What installation or maintenance costs should I expect?
Gas water heaters require venting and burner maintenance, which increases installation costs, while electric water heaters, known for their efficient design, are easier to install and maintain.
How do geographic factors influence which heater is best?
Climate and local fuel prices play an important role in selecting the right water heater. Colder climates might prefer high-efficiency gas water heaters or heat pump electric units. If you have clean, cheap electricity, then an electric water heater is advantageous, especially for homeowners looking to reduce monthly utility bills.