Gas vs. Electric Tankless Water Heaters

By Amanda Lutz Updated June 11, 2024

Tankless water heaters are becoming popular for saving homeowners space, and they can be more energy efficient than conventional water heaters. But homeowners must make the right choice between gas and electric models to reap the benefits. The guide below describes the basic features of tankless water heaters, and compares gas and electric heaters in terms of energy costs, initial costs, water temperature, and maintenance requirements. Read on to help you determine which type of tankless water heater is right for you. 

Tankless Water Heater Basics

A traditional tank-style hot water heater heats a large tank of water and continuously keeps the water hot until homeowners use it. This allows you to have hot water on demand, but you can run out if you use large amounts in a short period of time. 

Tankless water heaters heat water instantly when needed and without using a storage tank. When you turn on the hot water faucet, cold water flows through a heat exchanger, and a neutral gas burner or electric element instantly heats it. This provides a constant supply of hot water that never runs out. 

Tankless water heaters can be 24% to 34% more energy efficient for homes that use 41 gallons or fewer of hot water daily, and 8% to 14% more energy efficient in homes that use 86 gallons per day. Storage water heaters have a life expectancy of up to 15 years, but tankless water heaters can last for more than 20.

Gas Tankless Water Heaters

Gas tankless water heaters use natural gas or propane to heat water on demand and are the best option for homes in colder climates. They save energy and fuel because they’re not running continuously. However, gas water heaters with a pilot light use more energy than those that don’t have one. 

How well your tankless water heater meets your needs depends on its flow rate, or how many gallons per minute it can heat at a 70-degree temperature rise. Larger tankless water heaters have a higher flow rate, but you can expect most tankless gas models to supply 5 gallons per minute at a 70-degree temperature rise. Gas-fired tankless water heaters produce higher flow rates than electric ones. 

Gas tankless water heaters are especially efficient, but they have special installation requirements and require more space, materials, and venting. 

Electric Tankless Water Heaters

Electric tankless water heaters heat water on demand with metal heating elements that heat up when an electric current passes through them. The system then uses this to heat incoming water. Electric tankless water heaters have no need for fuel lines or venting, which means installation is easier.

Electric tankless water heaters aren’t as efficient as gas ones, and produce an average of 2 gallons per minute at a 70-degree temperature rise. Electric tankless water heaters are still much more efficient than tank-style water heaters, and they cost less to operate.

What Are the Key Differences Between Gas and Electric Tankless Water Heaters?

Both gas and electric tankless water heaters provide many benefits, but they vary with respect to energy efficiency, average operating cost, flow rate, and installation costs. Read more in the table below.

FactorElectric TanklessGas Tankless
Environmental ImpactDoesn’t emit greenhouse gassesRelies of fossil fuels and produces greenhouse gasses
Flow Rate and Temperature Rise2 gallons per minute (GPM) at a 70-degree temperature rise5 GPM at a 70-degree temperature rise
Ideal Home Size & Hot Water DemandsLower flow rates make these units more effective for smaller homes, or those with low water demands.Increased flow rates make gas models the best choice for large homes, or those with high water demands.
Maintenance & Life SpanMinimal maintenance requirements beyond flushing heating elements and visual inspections for wear, and life expectancy of 20+ yearsAnnual maintenance required to ensure safe fuel use and operation, and life expectancy of 20+ years
Operation Costs and Savings PotentialElectricity costs are more stable than gas and are projected to rise more slowly. Natural gas is slightly cheaper because of current gas models, but gas costs are expected to rise. 
Upfront Unit and Installation Costs$450–$1,500 for a unit suitable for a three to four bedroom home with average water usage, and labor costs between $75 and $130 per hour$500–$2,000 for a unit suitable for a three to four bedroom home with average water usage, and labor costs between $75 and $130 per hour
*Cost information in this article source from Fixr.

Tankless Water Heater Installation

Tankless water heater installation is more complex than a tank-style water heater installation, and homeowners should hire professionals to complete the work. You’ll have to consider access, clearance, and building codes when planning for the installation of either gas or electric tankless heaters. 

Gas Tankless Installation

Gas tankless water heaters have many complex installation requirements that vary by the unit’s model and size. Professionals must consider the location of the unit, vent pipe requirements, gas line size, water line size, and electrical requirements before beginning installation. 

Venting requirements differ depending on the unit and whether it runs through a roof or wall. Gas line sizes depend on specific unit features, while water line requirements are based on supplying sufficient water flow to meet specific household demands. Gas tankless water heaters typically require a standard 120-volt (v) electrical connection. 

Installation must comply with local building codes and permit regulations, which vary by location. Contact your county or city permitting committee to learn more about the building codes required for residential gas tankless water heater installation. 

Electric Tankless Installation

Electrical requirements are one of the most important factors in your electric tankless water heater installation. Most tankless units require a 220v to 240v electrical circuit, and the model you choose will dictate ampacity requirements. A dedicated 30 to 60 amp circuit is typically the best choice. Your water heater should have its own dedicated circuit breaker for optimal performance. 

Plumbing requirements for your electric tankless water heater depend on your specific unit. The unit you choose should be able to meet your household demands for water flow. 

Your electric tankless water heater installation must comply with residential building and permitting codes for your location. Contact your county or city permitting committee for more information.

Tankless Water Heater Maintenance

After you’ve installed your tankless water heater, you must keep up with basic maintenance tasks to make sure it runs efficiently, and to extend its life span. Gas tankless water heaters require more maintenance than electric alternatives, but maintenance requirements are minimal for both. 

Gas Tankless Maintenance

Gas tankless water heater maintenance includes inspection of gas supply components, air filter and vent cleaning, and inspection of components that handle water. Inspect and service your gas tankless water heater once per year, or contact a professional to conduct annual maintenance. 

Turn off gas, electricity, and water before conducting maintenance on your water heater. Make sure the ignition and gas valve are buildup-free and functioning properly. Consult your manufacturer’s instructions to locate the air filter. Clean the air filter with a brush or spray, and allow it to dry completely before reinstalling it. If the air filter is damaged, or cleaning is ineffective, replace the air filter. 

The interior of your water heater can build up sediment over time, and you’ll need to flush the heat exchanger to remove it. Use a cleaning agent that your manufacturer has approved in your heater’s instructions. Check all components for signs of corrosion or leaks as you work. 

Electric Tankless Maintenance

Electric tankless water heater maintenance includes inspection of electrical components for wear and damage, checking plumbing components for leaks, and flushing the heating elements. 

Electric tankless water heater maintenance is simpler than gas tankless water heater maintenance, but homeowners should still work to maintain electrical and plumbing components. If you’re uncomfortable handing these components, contact a professional plumber to conduct annual maintenance on your electric tankless water heater. 

Turn off electricity and plumbing to your electric tankless water heater before you start maintenance work. Check all electrical connections for frayed wiring, or signs of damage or wear. Consult your owner’s manual and follow the instructions to safely flush heating elements to remove sediment. Inspect all components for leaks or corrosion. 

Our Recommendation

Tankless water heaters last longer than traditional tank-style water heaters and use energy more efficiently. Consider a gas model’s higher GPM rating, an electric model’s lower cost, or a number of other variables when deciding which tankless water heater is right for you.

A professional should handle your tankless water heater’s complex installation. Once your heater is in, be sure to practice regular maintenance to keep it in good working condition, or hire a professional to complete annual maintenance.  

Gas vs. Electric Tankless Water Heaters FAQ

Can a tankless water heater work for an entire house?

A tankless water heater can work for the whole house. Experts will provide advice about the right size tankless gas or electric water heater for your home before installing the system.

Do tankless water heaters increase electric bills?

Tankless water heaters do not increase electric bills. In fact, they usually require less electricity than tank water heaters because they heat water on demand, instead of keeping a large amount of water hot at all times.

Is it worth switching to an electric tankless water heater?

Whether it’s worth switching to an electric tankless water heater depends on your expectations and your budget. Switching from a tank-style water heater to a tankless one requires more labor, and a tankless heater is also more expensive. However, tankless water heaters can lower your energy bills and last longer than traditional water heaters.

What is the downside of an electric tankless water heater?

The downsides of an electric tankless water heater are that professional installation is usually necessary, which means higher upfront costs. Electric tankless water heaters also have shorter life spans.