Electric vs Gas Tankless Water Heater Cost

If you are considering installing a tankless water heater, you need to decide whether a gas or electric device would be best. Both types of water heaters have their pros and cons, which we will discuss here.

Selecting a gas vs electric water heater ultimately comes down to convenience, you personal water usage and costs.

We will review the features, prices and best brands for both electric and gas tankless water heaters, so you can decide which one will work best for your home.

Cost Of Electric vs Gas Tankless Water Heater

If you are ready to install a tankless water heater, contact your local HVAC pros for FREE estimates!

Let’s first compare the upfront cost of a tankless electric vs gas water heater. Overall, and electric tankless water heater is 20-50% cheaper than a gas tankless model! Such a big price difference is across the board from cheap to high-end water heater models

You can install a budget friendly electric water heater for as low as $250, while a low-end gas tankless water heater costs at least $480.

When comparing mid-range prices tankless water heaters, an electric model costs $500-570, while a gas tankless water heater costs $900-1,170

Lastly when comparing prices for high-end tankless water heaters, electric models range in price from $700-850, while gas tankless water heaters cost $1,350-1,500+

You can get more in-depth pricing information in our complete Water Heater Installation Cost Guide.

Electric Tankless Water Heater

When considering a tankless electric water heater you will often run into HAVING to also upgrade your electric service to 200 AMP. Here is why:

What you need to know about this water heater type, when making a buying decision: An Electric On Demand heater uses a lot of electricity (from 9KW to as much as 27KW). 99% of residential units are running on 240V circuit and need to meet an average of 37-115 AMPS maximum power draw! (37KW can support 1-2 people living in the house, and 115KW is up to to 6 people).

So you understand this better – most homes in US have 100 AMP service (your circuit breaker panel), which can supply up to 24KW at 240 volts. This is simply not enough to run the most demanding electric on-demand water heater!

Water Flow Rate and Power Consumption: As a basic rule we can use this formula. Electric on demand water heater can provide 2 Gallons per minute for every 8KW of electric power usage. Most modern showers are rated at 1.3 to 1.7 GPM. So if you run a shower and a faucet at the same time, you won’t have enough hot water for both!

The 9KW unit, cannot produce a lot of hot water for more than 1-2 people living in the household!

Therefore, if you need a lot of hot water, you are best off using a more powerful 18 or better yet 27KW unit. And that is when you run into the problem of not having enough juice IF you only have a 100AMP panel.

So you will often have to shell out an extra $850-1250 for the circuit panel upgrade, which our calculator accounts for!

Why we like tankless electric water heater:

• It is less expensive to buy and install. Most quality models cost around $500, which is 50-60% less than good gas ones.
• An electric tankless hot water heater is a lot more efficient than a gas device. Most electric models offer about 98% energy efficiency, while even the best gas heaters peak at 80-85%

  This difference in efficiency can offset the potential savings from the cheaper cost of operating a gas heater. Thus, it is best that you calculate your savings based on gas and electric rates in your area, taking efficiency into consideration.

• Since it does not require any venting, you can install it pretty much anywhere around your home, provided there is enough electrical power to support it. It can fit into small spaces, such as under the sink, near a washing machine, or in a closet.
• If you don’t need to upgrade your electric panel to 200 amp, it is much cheaper and easier to install than a gas one. This is especially true in many new construction homes that have already been designed to meet high electric demand. However, even most newer houses are not built to accommodate a tankless gas device.
• In case there is a malfunction, an electric water heater is typically easier to troubleshoot, diagnose, and repair than a gas heater.
• Electric devices require minimal maintenance. All you need to do is clean the filters inlets a few times a year. In most cases, a homeowner can perform maintenance, without having to spend money on hiring an HVAC pro or an electrician.
• While both water heater types have a service life expectancy of about 20 years, electric units tends to last longer than gas ones, because they are a lot simpler to service and operate.

Pro Tip: An electric device uses as much as 36KW(!!!) of electricity, or 150 Amp maximum power draw. If you have a 100 Amp service, your water heater will not work, unless you get the lower 9KW unit.

However, it is only good for a small household of 1-2 people and provides 2 gallons per minute. Moreover, you will often need to upgrade your electric service (circuit breakers panel) to 200 Amps or more, which will cost $900-1200.

Note, our Water Heater Calculator accounts for this potential upgrade, so when you select your current service to be 100-150 amps, it automatically adds $1054 to your quote.

Some disadvantages to consider:

• An electric water heater may not produce enough water per minute to accommodate the demand of a large household. It ideal for households of up to 4 people.
• In some areas, the cost of electricity is much higher compared to gas, making it too costly to operate.
• Since it produces up to 50% less water per minute in cold temperature regions, compared to warm temperature areas, this unit may not be a good fit for people who live in areas where low and freezing temperatures are common for many months out of the year.

Best Electric Tankless Water Heater

Its important to note the mid-range and budget electric hot water heaters are not necessarily worse than the more expensive ones.

Often the price depends on the GPM rating (gallons per minute), extra features, and the popularity of the manufacturer.

1. High-end: Steibel Eltron Tempra Plus 29 kw. water heater. It costs $705

2. Mid Range: Ecosmart Eco 36 water heater. It costs $570

3. Mid Range: Bosch AE115 PowerStar water heater. It costs $500

4. Budget: Rheem RTE 13 water heater. It costs $320

5. Budget: Titan SCR2 N-120 water heater. It costs $230

Gas Tankless Water Heater

Unlike electric heaters, Gas units can produce CONSIDERABLY more gallons per minute (9+ on average!) and you don’t need to upgrade your electric service!

However, not every home has gas (although there are units that can work on Propane). If you do have gas in your home, it is recommended to actually go with it, instead of an electric device.

Why we like gas:

• It costs 10-15% less to operate than an electric one. This is because the price of gas around the US is usually cheaper than the price of electricity. Note, that propane is actually more expensive than electricity.
• A gas tankless hot water heater is considerably more powerful than an electric one. It provides 8-10 gallons of water per minute, compared to 5 gallons per minute, for most electric devices.

  In colder climates, an electric on-demand heater provides as little as 3-3.5 gallons of water per minute, while the rate that a has heater provides states about the same. Thus, a gas model is the right choice for larger households, that use a lot of water, and for people who live in cold regions.

• Gas hot water heaters will have much lower energy costs Think of it this way. Much of electricity in US is produced by burning gas, to heat the water, to spin the turbine, to produce electricity. An now you use this electricity to once again heat water. Kind of redundant 🙁
• No need to upgrade your electrical service: As discussed above, you don’t need to upgrade to 200 AMPs service (which is often required for most electric units), saving you $1000 on average.

Pro Tip: with a gas powered device, you can end up wasting money and energy if it has a constantly burning pilot light.

To lower your costs, we recommend getting a model that has a low operating cost for the pilot light (different manufacturers offer pilot lights that use various amounts of gas).

You can also manually turn off the pilot light, when you are not using the water heater.

Alternatively, you can avoid this issue all together by purchasing a model that has an intermittent ignition device, called IID, instead of a standing pilot light.

Some disadvantages to consider:

• A gas water heater not very environmentally friendly. As a result of the combustion process, these devices emit CO2 and other harmful greenhouse gases into the atmosphere. They also increase our collective dependence on fossil fuels.
• They are a lot more complex and expensive to install than electric ones. This is because in most retrofit applications, it is necessary to increase the size of the incoming gas line, to meet the demand of the gas model.

  Moreover, it is necessary to install proper ventilation to provide adequate air flow for combustion, as usually the existing venting system is not sufficient enough.

  Typically, this power venting system needs to go outside the house. This also often implies relocating your water heater closer to the outside walls of the basement, so you can vent it directly out.
  
  
  Very often, gas units cannot be vented into the chimney, for one reason or another. Consult with local plumbers to see if you need a direct vent or power vent option.
  
  
  Relocating also means re-routing gas and water lines. This, combined with the more expensive material costs, often make the cost of a new gas tankless water heater exceed $3000 (compared to $950 for a basic 50 gallon tank).

• A gas on demand water heater will require more maintenance than an electric one. In gas units, mineral scale builds up, and it needs to be flushed at least once a year, to clear out the debris. If this is not done, both the efficiency and the service life of a unit will significantly decrease.
  
  
  Additionally, you will need to have a professional come and inspect your hot water heater to ensure that the fuel is combusting safely. Because dealing with gas is dangerous, most homeowners choose to hire a professional for this task, spending $150-300.
• Because venting is required, you are limited in the options of where you can install it around your home.
• Tankless gas heaters are costly. Good quality models start at $1,200 and can go as high as 2,500+

Best Tankless Gas Water Heater

Keep in mind that the mid-range and budget models on this list are not necessarily worse than the more expensive ones. Usually, pricing depends on the GPM rating (gallons per minute), extra features, and the popularity of the brand.

1. High- End: Rinnai RUC98iN Ultra Series water heater. It costs $1,500

2. Mid-Range: Rheem RTGH-95DVLP. It costs $1,170

3. Mid-Range: Noritz NRC661-DV-NG water heater. It costs $920

4. Budget: Rheem RTG-64DVLN Prestige water heater. It costs $670

5. Budget: Takagi T-KJr2-IN-NG water heater. It costs $480

Should You Go Tankless, Or Stay With A Traditional Tank Water Heater?

This is a question for you to answer, and it depends on your set-up. If you need to relocate the gas unit toward exterior wall (and reroute Gas and Water Pipes), just for venting, or need to install new 200 AMP electric panel, it’s probably more cost efficient to go with a tank.

If your current GAS tank is by the wall, where it can be vented outside, or you already have 200 AMP electric service – your installation cost will be $1,000 – $1500 lower, and then it makes sense to go tankless, from financial point of view.

Overall, there are many positive aspects to using an on-demand water heater. The main one is much lower energy cost compared to regular storage tank units – you only make hot water when you need it – not 24/7. Another one is a much longer typical life span of these units – 15 years on average, vs 6 years for a basic tank.

However, you will quickly learn that the biggest negative aspect of a tankless water heater is the cost. These units will run you 40-200% more than a even high grade storage tank!

What did I do, when my old 40 gallon tank leaked?

I installed an new 50 gallon water tank! It was simply a matter of cost! Here is how I chose my water heater:

I didn’t want to and really couldn’t vent a tankless gas water heater outside (my foundation is 20 inches thick) and the only spot to place it was kind of crowded with other things. And it would cost me $2,000 more for a tankless unit!