Gas vs. Electric On Demand Water Heaters – Which One is Top?

There is no doubt a tankless water heater is better than an old tank water heater. Again, tankless divided into two types based on power source – natural gas or propane operated and electric powered On-Demand Water Heaters. After you decide to buy a tankless water heater, the next question comes to mind – which one is best – gas or electric. Here we discuss details about Gas vs. Electric On Demand Water Heaters to give light on this topic. Be with us to conclude your final buying decision.

Power Option

A power source is the first point of analysis before moving to other topics. Gas or Electric? Which one is better entirely depends on which one is cheap and readily available in your locality. According to AAA gas price, as of 01 June 2018, the national average price of gas is $2.957/gallon, and the highest average price recorded $3.717 in Hawaii, followed by California, Washington, Alaska, and Oregon. In an interview on USAToday published 6:32 a.m. ET March 23, 2014, at 24/7 Wall St., with Michael Green, public relations manager at AAA, said that seasonal factors played a significant role in the recent run-up in gas prices. “Refinery maintenance, the switchover to summer-blend gas, and most recently growth” all played a significant role in the rise of gas prices, Green said.

According to the EIA of the U.S. Energy Information Administration, the national average electricity cost is 10.41 cents per KW, released in Jan 2018. The highest price recorded at Hawaii 23.87 cents per KW, followed by Alaska, Massachusetts, Connecticut, and California.

If we use 65 gallons of hot water daily –

A natural gas water heater with an EF of .82 and a fuel cost of $0.00000295/Btu

365 x 41045/.82 x $0.00000295 = $53.89

An electric water heater through an Energy Factor of 2.0 and an electricity cost of $0.1041/kWh

365 x 12.03 ÷ 2.0x $0.1041 = $228.54


So, as per the national average prices of gas and electricity, the cost of electric water heater is higher than gas all over the United States.

Initial Cost

The gas-fueled water heater is costly than the electric one. To purchase a gas-fueled water heater, you have to spend about $1000 – $1200, whereas by paying $500, you can get an electric water heater.

Also, non-condensing type gas water heaters are less expensive but need extra cost to install venting pipes. On the other side, condensing type gas water heaters are expensive than non-condensing, but their installation cost is lower as no need for any venting system.

Installation Cost

Installation cost varies on some factors; one of them is the place of installation. If you set it in a new custom-made house, it will be lower, or if you set it as a replacement for an old tank-type, the cost will be much higher than usual.

The gas-fueled tankless electric heater is expensive to install than the electric one. You have to consider a complex type III ventilation system for a non-condensing gas water heater made of stainless steel. It required enough airflow for proper combustion. If you change the old tank heater with gas tankless, you need to renovate the existing ventilation system per the manufacturer’s instruction.

The gas heater also demands up-gradation of the incoming gas line, as it needs high gas pressure to operate.

If you stay in a rental house to set ventilation system, you may require prior permission from your homeowner. In that case, you can configure your gas tankless water heater outdoor.

Compared to gas tankless, the electric water heater is much easier to install due to its compact size and less complicated design. The sleek design allows it to fit almost anywhere under the sink or kitchen cabinet too.

To power the electric heater, you need a particular supply line that may not match your existing electrical connection. Otherwise, the installation of an electric water heater is easy and inexpensive.

Operating Cost

Despite operating efficiency due to price, the gas-fueled tankless water heater is less costly to produce than the electric one. The energy factor of gas water heaters is 80-85%, and electric heaters are above 98%. The earlier part of our review showed the calculation of operating cost of both the water heater, which proves that the gas one is less expensive to produce, means you can save more energy bill.

Water supply and flow rate

One of the primary differences between the traditional tank water heater and tankless is the continuous hot water supply whenever required. In this case, a gas water heater is more efficient than the electric one.

Usually, an electric water heater supplies 5 gallons of hot water per minute, whereas a gas tankless can supply up to 8 gallons per minute. Thus a gas-fueled water heater is the better match for multiple uses in a large family.
However, hot water temperature and flow again depend on the temperature of incoming water. In winter, the inflow water temperature is colder, which reduces the hot water flow for both types of heaters.


Compare to storage or tank-type water heater, repair & maintenance of both types of tankless water heater is simple. As a gas tankless water heater is a little complex than electric, it needs extra support.

A gas water heater needs a regular checkup per annum by an expert plumber to get long life and better performance. Besides checking the performance of the gas water heater, it needs to check the venting system to ensure the safety of the combustion process.

For both tankless heater urges, flushing every 6 or 12 months interval depends on water quality to eliminate lime buildup. Also required to use pre-filter to avoid sedimentation inside heat exchanger or pipelines which may cause water leakage. However, it needs more cleaning for gas type as it operated by fuel.

Environmental Impact

There is no combustion process in an electric tankless water heater, and it emits less poisonous gases than other types. So it is more environmentally friendly. The energy factor of an electric water heater is almost 98%, which means it saves energy and conserves water. It is also beneficial to you.

On the other hand, gas water heater responsible for emitting carbon (iv) oxide among other gases during combustion. Carbon (iv) oxide is the main culprit of greenhouse emissions. Thankfully, due to the ventilation system, it will not directly affect you.

Service Life and Warranty

Usually, the service life of a tankless water heater is more prolonged than traditional water heaters. In the tankless system, gas and electricity both are lasting more or less 20 years. Among two, gas-fueled required more maintenance to get long service life.

Though a tankless water heater lasts long without any significant troubles, a warranty can save buyers in any accidental case. The gas water heater manufacturer offers a roughly 10-years warranty for a heat exchanger, 5-years for sprats, and 1-year for labor.

In the case of an electric water heater, many manufacturers offer a lifetime warranty, or some are offering five years sprats and a 1-year labor warranty. The electric water heater is required less troubleshooting and repair than the gas type.

Besides, some manufacturer offers free installation, if so you can cut your expense. To cover the warranty in most cases, manufacturers demand installation by a professional plumber. Otherwise, the warranty may void.


The tankless water heater is mostly manufactured by rustproof and non-corrosive materials, which plays an important role in increasing longevity. Moreover, proper maintenance shouted to get an extended lifespan.

Homeowner’s preference

If you prefer cost savings and high GPM (if large family), then a gas tankless water heater will come first.

If you think about compact design, safety, less troubleshooting and repair, low greenhouse gas emission – environmentally safe than electric tankless water heater will win your mind.

Tax Credit and Rebates

ENERGY STAR is a U.S. Environmental Protection Agency voluntary program that helps businesses and individuals save money and protect our climate through superior energy efficiency. According to them, Home builders are qualified for a $2,000 tax credit for a new energy-efficient home that achieves 50% energy savings for heating and cooling over the 2006 International Energy Conservation Code (IECC) and supplements.

According to Federal Tax Credit, if you install a gas, oil, or propane tankless water heater which achieves at least 0.82 energy factor will get a $300 tax credit benefit. However, it may vary from state to state.

We cover almost all the good and bad sides of both the tankless water heater. Now it is your turn – either you choose a gas water heater for a higher flow rate with low fuel cost, or if you want low maintenance and installation cost, then you may go for an electric one.

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