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Gas vs Electric Tankless Water Heater: Which is Best?

 
 

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Gas vs electric is often one of the first questions a potential buyer asks when choosing a new tankless water heater. However, the decision between which type of fuel you select for your new water heater may not be an option. Many areas are not fortunate enough to have both gas and electricity to choose from, and therefore must purchase the only option available. Although, if you are lucky enough to have the choice, there are a few things you should consider.

The 3 most common fuel sources for tankless water heaters are electricity, natural gas and propane. An electric tankless water heater is a completely different design  than gas models. However, a gas unit is designed to burn either natural gas OR propane. Other than the type of fuel used, natural gas or propane, the units operate much the same. Most manufactures offer both a natural gas and a propane model.


Gas vs Electric Tankless Water Heaters: Which is the Better Choice

There really isn't a simple answer to the question of which is best. Both gas and electric water heaters are good choices and both have their own specific set of strengths. Each household has it's own unique circumstances, what is a perfect match for your neighbor, may not be a good fit in meeting your needs.

Selecting which type of tankless to purchase is a critical decision that should be based on your household hot water demands, budget, installation opportunities and personal preferences. We highly recommend consulting with a professional that can give you specific guidance for your individual situation.

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Gas vs Electric Tankless Water Heaters: Buying Considerations

A gas tankless water heater is entirely different than an electric tankless water heater. In fact, about the only common thing they share is that, in the end, they both heat water. The following are some of the things you should consider as you choose which type of tankless water heater best meets your household needs.

Dollar sign inside a magnifying glass

Initial Price

When it comes to the price you'll pay for the tankless system and the installation, hands-down, electric tankless water heaters are the better choice. Let's take a closer look:

Gas Tankless Water Heater

  • A quality gas tankless water heater can easily run over $1,000. And, as you might expect, the more "bells and whistles" you choose, the more you'll pay upfront. 
  • Non-condensing tankless systems are less expensive to purchase, however, they are also more expensive to install. This is largely due to the venting requirements.
  • Condensing tankless systems eliminate the need to vent altogether. These units have a more sophisticated design and are therefore, more expensive.

Electric Tankless Water Heater

  • Electric tankless water heaters are significantly less expensive than gas systems. A quality electric heater can be purchased for five to six hundred dollars.
Wrench and Screw Driver

Installation

We highly recommend hiring a qualified professional to install your new water heater. It's critical that tankless heating systems are installed correctly, both from a safety and results standpoint. A tankless water heater is a major investment and spending the money to have it properly installed is a worthwhile expense. 

Gas Tankless Water Heater

  • Gas tankless water heaters are far more complicated and expensive to install than electric systems.
  • Non-condensing gas tankless water heaters require a complex venting system that provides adequate air flow for combustion, as well as expensive category III venting material that's made from stainless steel.
  • A home's existing venting ducts and gas lines are rarely compatible with a gas tankless water heater.
  • There are frequently costly home modifications that'll need to be made in order to accommodate the venting and gas requirements.
 

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Electric Tankless Water Heater

  • Electric tankless water heaters are much easier to install, which generally equates to less expensive installation costs.
  • Electric water heating systems are much smaller in size than gas tankless units. In fact, they are typically about a third the size.
  • Because there is no gas combustion occuring, an electric system doesn't require ventilation. Not only does this significantly reduce the installation costs, but it also provides additional flexibility as to where these units can be installed.
  • Electric tankless systems are less complex than gas units, and because they are so much smaller, they can be installed in closets and in other out-of-the-way spaces. This is a particular advantage for new home construction where the tankless unit's electrical requirements can be planned.
  • If upgrading your home's power is not necessary, an electric unit is very easy and inexpensive to install.
Utility Bill with Pen

Operating Costs

There are 2 main components that make up the overall operating costs of a tankless water heater, the cost of the fuel and how efficiently the unit uses the fuel. Let's take a closer look at both:

Fuel Cost - Currently gas prices are lower than electricty in most areas. This makes the overall operating costs less expensive for a gas tankless water heater. Keep in mind that fuel prices vary in different regions. In some areas the price of gas is much higher than electricity.

However, gas prices are more volatile, and they fluctuate more dramatically than electricity prices. But, with that said, gas prices are expected to increase in the future. Most economists agree that electricity prices should remain relatively stable, while gas prices will likely increase significantly.

Efficiency - The efficiency rating of a water heater is based on the amount of hot water produced by a single unit of fuel. The more efficient a particular tankless water heater is, the less fuel is wasted when the hot water is being produced. Electric tankless water heaters are far more efficient than gas tankless systems. This helps offset the higher price of electricity.

Gas Tankless Water Heater

  • Gas tankless water heaters generally achieve 80 to 85% efficiency.
  • Currently the price of gas is lower than electricity, which makes gas tankless systems less expensive to operate. However, with fuel fluctuations, and the improved efficiency of an electric tankless water heater, this may not always be the case.

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Electric Tankless Water Heater

  • Electric tankless water heaters consistently achieve an efficiency score in the 98 to 99% range.
  • Many regions experience extremely high gas prices, which makes an electric tankless system less expensive to operate than gas units.
  • Even with higher electricity costs, the efficiency of an electric system will offset the higher fuel prices.
Hot Water Handle

Hot Water Needs

Tankless water heaters measure their output in terms of flow: How many gallons per minute (GPM) a unit can deliver. As a general rule, 8 GPM is enough hot water for the average family, but it's important to evaluate your specific household's hot water needs. There is nothing worse than running short of hot water . . . especially in the middle of a morning shower!

Colder regions will have a lower GPM flow rate than warmer regions. This is because the incoming water will be cooler and the tankless water heater will need to work harder in order to heat the water to the desired output temperature. In the gas vs electric debate, the gas unit often performs better, especially when larger amounts of water is needed. 

Gas Tankless Water Heater

  • Gas tankless water heaters are capable of delivering more hot water (over 8 GPM) than electric systems.
  • A gas tankless heater may be a better fit for a household with a large family that has a high demand for hot water.

Electric Tankless Water Heater

  • An electric tankless water heater is capable of delivering 8 GPM of hot water.
  • The output GPM of both electric and gas tankless systems is impacted by the incoming water temperature. In other words, the colder the incoming water, the lower the GPM.
Tool box

Maintenance

Maintenance is required on all water heaters to keep them operating at their peak efficiency rate and to maximize their service life.

Gas Tankless Water Heater

  • Gas tankless water heaters require more maintenance than electric heating systems.
  • A gas tankless should be inspected annually by a licensed technician who will ensure that the fuel is combusting safely and the appliance is performing properly.
  • Gas tankless systems are expecially prone to mineral scale build-up. Because of this, they often require more frequent flushing. 
  • General maintenance tasks can be completed by the homeowner, but many choose to hire a professional.

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Electric Tankless Water Heater

  • Electric tankless water heaters require very minimal maintenance.
  • The water inlet screen filter should be cleaned as needed, and the system should be flushed annually to remove lime scale build-up.
Warranty Key on a Keyboard

Warranty & Service Life

 A traditional tank-style water heater will eventually begin leaking and need to be replaced, but a tankless unit is built to last. Because they are designed to be repaired, the unit's parts can be replaced as needed. A typical tankless water heater service life is about 20 years regardless if it's gas vs electric.

These factors can impact your tankless water heater's service life:

Acidic Water - When water is too acidic it will break down the heat exchanger and plumbing within the water heater. It is also unhealthy and hard on your home's plumbing and other appliances. In most cases, acidic water is already treated prior to installing a tankless, but in the case of new home construction, it is an important issue to address.

Hard Water - Water that contains high levels of minerals will cause a gas tankless water heater to build scale within the appliance at a faster rate. A whole house water softener can be installed or simply performing more frequent flushings will resolve the problem. Keep in mind that it will still be necessary to complete the annual maintenance tasks.

Installation - Correct installation is key to getting the most from your new tankless water heater. A qualified professional can help you determine the best type of heater to purchase, correctly size the unit, and ensure that the gas pipes or electrical requirements and venting match the appliance's needs.

Maintenance - Performing annual maintenance is critical to extending the service life of a tankless water heater. Both gas and electric systems need to be flushed to remove scale build-up. If scale is not removed the efficiency of the heating unit will drastically decrease and the appliance's life expectancy will drop considerably.

Gas Tankless Water Heater

  • Gas tankless water heaters are designed to last up to 20 years.
  • Gas heaters are more difficult to service because they are more complex than electric units.
  • Warranty's vary, but it's common to see a 10-year warranty on a heat exhanger; 5-years for other parts; and 1-year for labor.
  • The service life can be negatively impacted if the gas tankless appliance is not serviced on a regular basis. 

Electric Tankless Water Heater

  • Electric tankless water heaters often exeed a 20-year lifespan because of the simplicity of their design.
  • Warranty's vary, but parts are typically covered for 5-years, and labor for 1-year.
  • When problems occur, an electric tankless system is easier to troubleshoot, diagnose, and repair.
Wooden house cut out with sun shining through

Homeowners Preference

As you can see, both gas and electric tankless water heaters ultimately do the same thing . . . they deliver hot water. But they are completely different in many ways. Often, the final decision simply comes down to your own preference. Here are a few things to consider:

Gas Tankless Water Heater

  • A gas fueled tankless water heater can be a good choice for homeowners who want to improve the energy efficiency of their traditional tank-style water heater.
  • If you have a large household with a high peak demand of hot water, a gas fueled tankless system may be your best choice. There are models capable of delivering higher levels of GPM (gallons per minute) of hot water than electric units.

Electric Tankless Water Heater

  • From a safety standpoint, some homeowners are more comfortable with an electric tankless water heater.
  • Many homeowners are uncomfortable using natural gas or propane for home appliances in the event of a natural disaster.
  • Homeowners are frequently interested in an electric tankless water heater because of environmental concerns. Electric systems are extremely energy efficient, and do not use fossil fuels or release greenhouse gas emissions.
Stacks of coins flipping into a piggy bank

Fuel Source Options

Buying a tankless water heater is an investment, both financially and for the future. With the proper care, these water heating systems could last up to 20 years or even longer. So it's a good idea to consider how fuel price fluctuations will impact both gas and electric units. This may not be a top priority today when fuel prices are relatively stable, but that may not always be the case.

Gas Tankless Water Heater

  • Currently gas prices are lower than electricity prices. However, fuel prices fluctuated from region-to-region.
  • There is no guarantee that gas prices will stay lower than electricity prices. In fact, most economists agree that gas prices will likely increase in the future.

Electric Tankless Water Heater

  • Electricity prices fluctuate less than gas prices.
  • An electric tankless water heater used a substantial amount of electricity to heat water. They are a high power appliance and it's not uncomon for homes, particularly old homes, not to have the necessary electrical power available.
  • If you house does not have the neccessary electrical power to operate an electric tankless system you can hire an electrician to do a power upgrade. Keep in mind that this will significantly increase your installation costs.
Womans hands holding globe

Environmental Impact

Whether you worry about greenhouse gases or your carbon foot print, it's always a nice feeling to know that energy efficiency will not only help your pocket book, but it'll also help our planet.

Gas Tankless Water Heater

  • Gas fueled tankless water heaters are more energy efficient than traditional tank-style water heaters.
  • Gas tankless heaters frequently reach mid-80% in eneregy efficiency.
  • Gas tankless systems emit greenhouse gases into the atmosphere.

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Electric Tankless Water Heater

  • Electric tankless water heaters are extremely energy efficient and tyically reach 98 to 99% efficiency.
  • Electric tankless systems do not burn fossil fuels or release green house gases into the environment.
Gas or Electric Tankless Water Heater

Final Thoughts

In the end, there's not a one-size-fits-all in the gas vs electric debate. Each homeowner has specific needs and therefore should draw their own conclusions. Many professional technicians feel that electric tankless water heaters are an excellent choice. They are less expensive, easier to install, and require minimal maintenance. Due to their simplistic design, there isn't a need for an annual inspection by a qualified professional, which will not only save you money but also contribute to a longer service life!

Gas tankless water heaters are also an excellent choice, especially if your household's hot water needs are higher than average. However, they are more difficult to troubleshoot and service in the field, largely because they have a complex heat exchanger. 

We do not recommend switching fuel sources. If your home is currently using an electric water heater the expense of retrofitting your house for a gas-fueled tankless may be cost prohibited. But it's important to note that even staying within your current fuel source your home may require costly power upgrades and modifications.

Tankless water heaters are gaining in popularity and are an excellent choice which will serve your home for several decades. The expense of transitioning to a tankless system can be costly, so it's a good idea to speak with a professional who can help you make the best decision for your individual situation.


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