Choosing a new water heater is a big decision. Traditional tank water heaters have been the standard for decades, but tankless water heaters are gaining popularity for their on-demand hot water and potential energy savings. Among tankless options, gas and electric models each have their own set of advantages and disadvantages, especially when it comes to cost. This comprehensive guide will break down the costs associated with gas and electric tankless water heaters, helping you make an informed decision for your home.
Understanding Tankless Water Heaters
Tankless water heaters, also known as on-demand water heaters, heat water only when you need it. Unlike traditional tank heaters that store a large volume of hot water continuously, tankless models heat water as it flows through the unit. This eliminates the standby heat loss associated with tank heaters, potentially saving energy and money.
How Tankless Water Heaters Work
- Gas Tankless: These units use a gas burner (natural gas or propane) to heat the water. When a hot water tap is turned on, the flow of water triggers the burner, which heats a heat exchanger. The hot water then flows to the faucet.
- Electric Tankless: Electric tankless water heaters use high-powered electric heating elements to heat the water as it passes through the unit. Like gas models, they only activate when hot water is needed.
Upfront Costs: Purchase and Installation
The initial investment is a significant factor when choosing between gas and electric tankless water heaters. This includes the purchase price of the unit and the cost of installation.
Purchase Price
Generally, gas tankless water heaters tend to have a higher purchase price than electric models. According to Home Depot, tankless gas water heaters can range from $700 to over $3000 depending on the BTU output and features. [1] Electric tankless water heaters, on the other hand, may range from around $300 to $1000 or more depending on the GPM (gallons per minute) output and features. [2]
Installation Costs
Installation costs can vary significantly depending on several factors, including the existing infrastructure in your home, local labor rates, and any necessary upgrades to gas lines or electrical panels.
Gas Tankless Installation
Installing a gas tankless water heater typically requires a licensed plumber and may involve:
- Gas Line Upgrade: Many homes need a larger gas line to accommodate the higher BTU demand of a tankless gas water heater. This can add significantly to the installation cost.
- Venting: Gas units require proper venting to exhaust combustion gases safely. This may involve installing new venting or modifying existing venting to meet code requirements.
- Permits: Most jurisdictions require permits for gas appliance installations, adding to the overall cost.
- Labor: Due to the complexity of gas line and venting requirements, labor costs for gas tankless installation are generally higher than for electric models.
According to Angi.com, the cost to install a gas tankless water heater ranges from $500 to $2,500, including labor and materials. [3]
Electric Tankless Installation
Installing an electric tankless water heater may require:
- Electrical Panel Upgrade: Electric tankless water heaters demand a significant amount of electricity. Many homes require an upgraded electrical panel to handle the increased load. This can be a major expense.
- Wiring: Running new wiring from the electrical panel to the water heater location may also be necessary.
- Permits: Electrical work typically requires permits, adding to the cost.
- Labor: While simpler than gas installations in some cases, electrical work still requires a qualified electrician.
According to Angi.com, the cost to install an electric tankless water heater ranges from $400 to $1,800, including labor and materials. [4]
Practical Example: Imagine you're replacing an old gas tank water heater. To upgrade to a gas tankless, you might need to spend $1,200 on the unit itself, $800 for a gas line upgrade, $300 for venting, and $500 for labor. This brings the total to $2,800. An electric tankless unit might cost $600, with a $1,000 electrical panel upgrade and $400 for wiring and labor, totaling $2,000.
Operating Costs: Energy Consumption and Utility Rates
The long-term operating costs of a tankless water heater depend on its energy efficiency and local utility rates. While tankless heaters eliminate standby heat loss, the cost of gas versus electricity plays a crucial role.
Energy Efficiency
Energy efficiency is measured by the Energy Factor (EF) for water heaters. The higher the EF, the more efficient the unit.
- Gas Tankless: Gas tankless water heaters typically have an EF of 0.82 to 0.99. The U.S. Department of Energy states that Energy Star certified gas tankless water heaters have a Uniform Energy Factor (UEF) of at least 0.95. [5]
- Electric Tankless: Electric tankless water heaters are generally considered to be more energy efficient, with an EF of nearly 1.0 (typically 0.95 or higher). This is because almost all the electrical energy is converted into heat. The U.S. Department of Energy states that electric tankless water heaters have a Uniform Energy Factor (UEF) of at least 0.87. [6]
While electric models appear more efficient on paper, the actual cost depends heavily on the price of electricity versus gas in your area. For example, in areas with cheap natural gas and expensive electricity, a gas tankless heater may be more economical despite its slightly lower EF.
Utility Rates
The cost of natural gas and electricity varies significantly across the country. Understanding your local rates is crucial for estimating operating costs.
- Natural Gas: Natural gas is typically measured in therms (1 therm = 100,000 BTUs). The average cost of natural gas in the US is around $1.16 per therm, but this can vary widely by state. [7]
- Electricity: Electricity is measured in kilowatt-hours (kWh). The average cost of electricity in the US is around $0.17 per kWh, but again, this can vary considerably by state. [8]
Practical Example: Let's assume you use 40 therms of natural gas per month for hot water at $1.16/therm, costing you $46.40. If an electric tankless heater used the equivalent amount of energy, it would require approximately 1172 kWh (40 therms x 100,000 BTU/therm / 3412 BTU/kWh = 1172 kWh). At $0.17/kWh, this would cost $199.24. In this scenario, gas would be significantly cheaper.
However, in a region with cheap electricity at $0.10/kWh, the cost would be $117.20. The difference is substantial. It is important to calculate energy costs based on your specific use and location.
Calculating Potential Savings
To estimate potential savings with a tankless water heater, compare your current water heating costs with the estimated costs of a tankless model. Use online calculators and resources to factor in your hot water usage, utility rates, and the EF of different models. Several online tools exist to help estimate costs. For example, the U.S. Department of Energy provides calculators and resources for estimating energy consumption.
Maintenance and Lifespan
Maintenance and lifespan also impact the overall cost of owning a tankless water heater.
Maintenance
- Gas Tankless: Gas tankless water heaters require regular maintenance, including burner cleaning and flushing the heat exchanger to remove mineral buildup. This should be done annually by a qualified technician. The cost of maintenance can range from $100 to $200 per year.
- Electric Tankless: Electric tankless water heaters generally require less maintenance. However, they should still be inspected periodically for mineral buildup. Flushing may be necessary, especially in areas with hard water.
Lifespan
- Gas Tankless: Gas tankless water heaters typically last 20 years or more with proper maintenance.
- Electric Tankless: Electric tankless water heaters also have a long lifespan, often lasting 20 years or more.
The longer lifespan of tankless water heaters compared to traditional tank heaters can offset some of the higher upfront costs. Traditional tank water heaters typically last 10-15 years.
Other Considerations: Hot Water Demand and Space Savings
Beyond cost, other factors may influence your choice between gas and electric tankless water heaters.
Hot Water Demand
- Gas Tankless: Gas tankless heaters generally offer higher flow rates than electric models, making them suitable for households with high hot water demand (e.g., multiple simultaneous showers).
- Electric Tankless: Electric tankless heaters may struggle to keep up with high demand, especially whole-house models. Point-of-use electric tankless heaters can be a good option for single fixtures or small apartments.
Space Savings
Tankless water heaters are much smaller than traditional tank heaters, freeing up valuable space in your home. This can be a significant advantage, especially in smaller homes or apartments.
Making the Right Choice
Choosing between gas and electric tankless water heaters involves considering a range of factors, including upfront costs, operating costs, maintenance, and hot water demand.
Here's a summary to help you decide:
- Consider Gas If:
- Natural gas is readily available and relatively inexpensive in your area.
- You have high hot water demand.
- You are replacing an existing gas water heater.
- Consider Electric If:
- Electricity is relatively inexpensive in your area.
- You have lower hot water demand or are considering point-of-use heaters.
- Upgrading to a gas line would be prohibitively expensive.
Actionable Advice: Get quotes from multiple qualified plumbers and electricians to assess the installation costs in your home. Compare these quotes with your estimated operating costs based on your local utility rates. Also consider any available rebates or incentives for energy-efficient water heaters. Many utility companies and government agencies offer rebates for installing Energy Star certified tankless water heaters.
Conclusion
Deciding between gas and electric tankless water heaters requires a careful evaluation of your specific circumstances. While gas models may have higher upfront costs, they can be more economical in areas with low gas prices and high hot water demand. Electric models may be cheaper to install and maintain, but their operating costs can be higher in areas with expensive electricity. By understanding the costs and benefits of each type, you can choose the tankless water heater that best meets your needs and budget.
Next Steps:
- Assess your hot water needs and usage patterns.
- Research local utility rates for gas and electricity.
- Obtain quotes from qualified plumbers and electricians for installation costs.
- Compare the total cost of ownership for gas and electric tankless water heaters over their expected lifespan.
- Check for available rebates and incentives.