Are Gas Tankless Water Heaters Less Expensive than Electric?

If you’re planning to install a water heater you are probably asking the question we have all asked, “Are gas tankless water heaters less expensive than electric?”In a past article Best Power Source  we covered the basics of picking a power source. In this guide we’ll explore more about gas verses electric.  In short, the answer is yes and no, and that requires explanation.

The Cost of the Tankless Water Heater

When you compare high-quality gas tankless heaters with electric models of the same quality and capacity, the gas model will typically be more expensive.  Their heating system is more complex than an electric tankless heater, so expect to pay 20% to 40% more for the gas tankless water heater.

One note here is that most gas tankless heaters offer much higher capacity than electric heaters so that one gas model may serve a 3 bedroom home but you might need 2 or 3 electric models to produce the same amount of hot water.  For this reason, it could be argued that for a typical home, your total equipment costs for gas versus electric tankless heaters might be very comparable.

The Cost of Installation

The gas tankless heater is going to cost more to install than the electric tankless model.  With a gas unit, a gas line needs to be plumbed and the combustion exhaust must be vented.  Because gas tankless water heaters are so efficient, most can use a direct vent out the side of the home rather than through the roof.  Very little heat is wasted so the exhaust is not very hot.  While this is less costly than running a vent through the roof, an electric heater requires no venting at all. Another option is to consider an outdoor unit. This type of tankless heater needs no venting and is designed to withstand the weather. Bosch makes several outdoor models.

The Cost of Operating the Tankless Water Heater

This is where gas tankless water heaters have the clear advantage.  Both gas and electric models make very good use of energy.  However, in most parts of the country electricity costs significantly more than gas to produce an equal amount of heat.  In fact, electric heat costs 2-3 times as much as natural gas.  For that reason, gas tankless models are less expensive to run than electric tankless heaters.

Follow these links to see a cost comparison of gas and electric heat:

Consumer Energy Center

Nicor Gas


These conclusions might help you decide which is best for you, an electric tankless water heater or a gas tankless water heater.

1. If you want a tankless heater for only one application such as a jetted tub or a new master bath, an electric model like the Ttitan Series might be a better choice.   Electric models can produce 1-3 gallons per minute of hot water which is about right for one or two faucets.  Gas models start at about 5 gallons per minute and tend to be designed for whole-house applications.

2. If you plan to live in your current home for 5 years or less, spending less on electric models, even if you pay more to operate the tankless water heater, will be most cost-effective.

3. If you want whole-house tankless hot water and plan to live in your home 5-7 years or longer, a gas tankless water heater is a superior choice.  You’ll make up the extra installation costs in 5 year or less and then the lower cost of natural gas will make the gas model much more cost-effective than electric tankless water heaters.

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