Is electric or gas better for tankless water heater?


When it comes to tankless water heaters, homeowners often debate whether to choose an electric or gas model. Both offer advantages and disadvantages depending on your needs, home setup, utility costs and other factors.

In general, gas tankless water heaters tend to be more powerful and suitable for larger homes with higher hot water demands. However, electric models can be cheaper to operate in some areas and easier to install.

To help decide which is better for your home, here is an in-depth look at how electric and gas tankless water heaters compare:

Power and Hot Water Output

One of the biggest differences between electric and gas tankless water heaters is power and hot water delivery:


– More powerful heat output – can meet hot water needs for large homes with 3+ bathrooms. Most gas models provide 6-9+ gallons per minute (GPM).

– Maintains consistent hot water temperature even with multiple taps/showers running.

– Better for households with high demand – homes with multiple bathrooms, large families.


– Lower heat output – usually 2-5 GPM. Better for smaller homes and lighter use.

– May struggle to provide consistent hot water with multiple taps open. Temperature can fluctuate.

– Often sufficient for 1-2 bathroom homes with 1-3 people. Lower capacity for high demand.

So for larger homes that need more hot water capacity and flow, most experts recommend gas tankless water heaters. Electric models work better for smaller households with fewer bathrooms and lower water needs.

Operating Costs

Operating costs are another major difference. Gas is generally cheaper per heating BTU, but electricity prices also play a role:


– Less expensive to operate per heating unit – gas prices tend to be lower.

– Costs can vary though based on gas type, gas line installation, venting needs.


– More expensive per BTU, but total costs depend on electricity rates.

– In some areas with low electricity prices, operating costs may be lower than gas.

To determine actual energy costs, you need to factor in:

– The local price of gas vs. electricity per BTU

– Your household’s hot water needs

– The efficiency rating of the tankless unit

In many cases, gas comes out cheaper. But it pays to calculate the estimated annual cost based on your own utility rates. An efficient electric heater in an area with cheap electricity may cost less to run than gas.

Installation and Setup

Installation and setup is easier with electric tankless water heaters:


– Simple installation – 220V or 240V outlet needed. Wiring is simpler.

– Indoor or outdoor installation possible.

– Do not usually need venting or gas lines. More flexible on locations.


– Professional installation recommended for gas line, venting.

– Needs proper gas line capacity and new venting installed.

– Outdoor is safest location due to venting needs.

Keep in mind gas models need:

– Sufficient gas supply line capacity – may requirepipe and meter upgrades.

– Proper category III or IV venting installed per codes.

– Outdoor location is best for venting purposes.

So electricity has a clear advantage for easier installation and setup. This may help offset the lower equipment cost of a gas unit.

Environmental Impact

For eco-friendly homeowners, electric tankless water heaters are the greener choice:


– No on-site emissions. Greener if home uses solar or clean electric.

– Can reduce carbon footprint when powered by renewable electricity.


– Direct emissions from gas combustion during operation.

– Relies fully on natural gas – a fossil fuel.

So electricity is potentially cleaner and greener, especially if you get power from solar panels or your utility’s renewable energy program. This gives electric tankless units an environmental advantage.

Home Resale Value

One other difference is the potential impact on home resale value:


– May detract value in markets where gas is preferred.

– Buyers may view lower flow rates as inadequate.


– Usually adds more value for home buyers.

– Viewed as higher performance and suits more buyers.

In general, gas tankless water heaters are considered more desirable by home buyers shopping for a new water heater. This may bolster resale value somewhat compared to electric. However, other features like smart controls could also be viewed favorably.

Temperature Settings

You’ll also want to look at the available temperature settings:


– Often max out temperature around 140°F.

– May not get hot enough for appliances needing very hot water.


– Can heat water to higher temps – usually 160°F or more.

– Better for washing machines, dishwashers, and other uses needing hotter water.

While you don’t want scalding water coming from your taps, some homeowners do need higher temperature water for appliances and cleaning uses. Gas tankless units offer an advantage here.

Safety Factors

In terms of safety, both technologies come with risks:


– Risk of electrocution from improper installation.

– Must be wired properly with grounding to avoid shock risk.


– Risk of fire/explosion if improperly installed.

– Proper venting is critical to avoid carbon monoxide poisoning.

Provided professional installers follow all codes, both systems can be installed safely. But it’s important to hire qualified technicians to minimize risks.

Maintenance Needs

Expect the following long-term maintenance:


– Little maintenance except occasional descaling to prevent lime buildup.

– No vent or burner cleaning needed.


– More involved maintenance cleaning burners and venting.

– May need professional servicing 1-2 times per year.

Electric models have less maintenance without combustion systems to clean. Gas tankless water heaters require more work keeping burners and venting clear.

Smart Home Compatibility

Modern water heaters often include smart home capabilities:

Electric and Gas

– Many offer WiFi connectivity and smart phone control.

– Can integrate with smart home platforms and voice assistants.

– Provide usage alerts, custom schedules, vacation modes.

You’ll find smart tankless water heaters in both electric and gas. Look for features like remote adjustment, leak detection, custom scheduling and voice activation.

Installation Costs

Equipment and installation costs are a wash – gas units cost less but have higher installation costs:


– Equipment cost ranges $500 to $1500.

– Installation cost around $500 – $1000.


– Equipment ranges $1000 to $3000.

– Install often $2000+ with venting, gas line work.

Gas tankless water heaters cost more for the initial purchase. But electricity pulls ahead on installation costs thanks to simpler needs for wiring compared to gas lines/venting. Overall installation and equipment costs balance out between both options.

Tax Credits and Rebates

You may qualify for rebates and tax credits with either option:

Electric and Gas

– May qualify for rebates from local utility companies.

– Eligible for 26% federal tax credit until end of 2023.

– Check state/local programs that offer rebates.

The 26% federal tax credit applies to both gas and electric tankless models through 2023. This helps offset purchase and installation costs substantially. Be sure to research other utility rebates available in your area.

Usage Cost Calculator

To determine whether gas or electric will cost less annually, use this usage cost calculator:

Input Data Gas Electric
Heater efficiency rating 0.82 EF 0.99 EF
Daily hot water use (gallons) 65 65
Cost per therm of gas $1.80 N/A
Cost per kWh electricity N/A $0.12

Gas Water Heater Annual Cost

– Daily hot water use = 65 gallons
– Gas cost per therm = $1.80
– Heater efficiency rating = 0.82 EF
– Calculation:
– 65 * 365 / 0.82 = 29,268 therms
– 29,268 * $1.80 = $52,681
– Annual cost = $52,681

Electric Water Heater Annual Cost

– Daily use = 65 gallons
– Electricity cost per kWh = $0.12
– Efficiency rating = 0.99 EF
– Calculation:
– 65 * 365 / 0.99 = 23,390 kWh
– 23,390 * $0.12 = $2,806
– Annual cost = $2,806

In this example, the electric tankless water heater provides hot water at about half the cost of gas annually, thanks to lower electricity rates. Perform your own calculations with local utility costs and your actual hot water demands.


In summary, gas tankless water heaters offer more heating power but electric models can make up for it with lower operating costs in some electricity markets. Consider your household’s hot water requirements, energy rates and home setup to choose the best option. And be sure to utilize available rebates and tax credits, which help make both technologies more affordable. With some planning, you can determine whether electric or gas fits your needs and budget better.