Electric vs. Gas Tankless Water Heaters

If you’re in the market for a new water heater, you’ll already know that tankless units offer several benefits over traditional tank boilers. When sized correctly for your home, a tankless water heater will provide continuous on-demand hot water, reduce utility bills by eliminating wastage, and run virtually silently.

But which type of tankless water heater is best to buy? Electric tankless heaters, gas tankless heaters, or propane tankless heaters? Both formats have their advantages, and the answer often depends on specific features of your home.

Here’s our buying guide for those trying to decide between electric and gas water heaters:

Gas tankless water heaters

How do gas tankless water heaters work?

No matter the type of fuel they use, gas tankless water heaters generally work in a similar way. When you turn on your hot water faucets, flow sensors in the heater are activated, which tell the control unit to ignite its gas burners. These quickly warm the heat exchanger, which transfers heat to the heating elements, and then your water (usually in under 10 seconds).

Most tankless water heaters use copper coil heating elements, which have a large surface area and can efficiently conduct heat throughout the water supply. The heater will release water when it reaches the desired temperature.

Many modern gas tankless water heaters are self-modulating, which means they can detect demand within a plumbing system and manage ignition and heating to produce an endless amount of hot water.

Condensing heaters

Some more expensive gas heaters contain condensing technology, which boosts efficiency by recycling the excess heat lost through the exhaust system. Condensing heaters have a secondary heat exchanger to deploy the extra heat to incoming water.

Condensing gas tankless water heaters can be over 90% energy efficient, putting them on par with electric models.

Natural gas vs propane water heaters

Standard gas tankless water heaters run on natural gas, and often require large gas pipe fittings than traditional heaters. Expect to need a 3/4 inch line for most models.

Propane gas heaters are popular in more rural locations where mains gas lines aren’t installed. Due to the nature of the gas, propane heaters often have larger heating capacities than natural gas models.

Gas tankless water heaters: Pros

Higher power for cold climates and peak demand periods

Gas tankless heaters are able to heat larger capacities of water to higher temperatures than most electric systems—up to 12 GPM. With greater average heating power, they can produce faster, more reliable results in cold weather, where the temperature of incoming water is very low.

Gas heaters are also often recommended for homes with more than three bathrooms, or those with higher than normal water consumption habits. If you live with several teens who all enjoy lengthy showers, an electric system may struggle to keep up!

Lower fuel prices than electricity

Most places enjoy lower gas prices than electricity. While fuel costs fluctuate depending upon local regulations and production methods, you’re likely to save on running costs with a natural gas or propane heater. Of course, there’s no guarantee that gas prices will always stay low. Many economists predict that the price of fossil fuel products is likely to become more volatile in upcoming years.

“Off-grid” heat

Gas heaters still need electricity to run the control panel/microprocessor, but they’re often more appropriate for rural locations. Propane gas heaters can run from refilled tanks installed on the exterior of properties, making them a great choice for cabins, cottages, and any home without a natural gas connection that can’t support the large circuit breakers necessary for an electric unit.

Gas tankless water heaters: Cons

Higher base cost

Most gas water heaters cost more than electric equivalents— sometimes as much as twice the amount. Units with condensing technology and above-average capacity often retail for over $1,000, in comparison to $600 or $700 for an electric heater. Of course, if you choose a basic model and shop around for the best deal, it’s possible to minimize the difference in base price.

More intensive installation needs

Working with a gas device is inherently more dangerous than electric units. installing a gas tankless heater means fitting new gas pipes and a venting system that will safely expel combustion gases from your home. These extra requirements come at an additional expense and usually require the services of a certified professional. Many warranties for gas tankless heaters are void if the product is installed by a non-certified homeowner.

More intensive maintenance

Any heater should be serviced regularly to ensure maximum efficiency. But gas tankless heaters tend to require more maintenance than their electric counterparts. We recommend that gas heaters are serviced annually by a certified professional to make sure that the heating element is in good working order and there are no issues with the ignition or exhaust system. Because the internal workings of gas heaters are more complex than electric heaters, repairs to gas systems also tend to be more expensive.

(Slightly) reduced efficiency

There’s no doubt that gas tankless water heaters are way more efficient than any tanked system. However, They can’t quite compete with electric tankless units. Most non-condensing gas heaters reach a maximum of 85% efficiency (15% of deployed energy is not transferred into the heating element), but if you add a condensing component, that number can reach above 90%.

When is a gas tankless water heater a good choice?

  • If your home is already on gas
  • If you’re in a rural location or want to go semi-off grid with propane
  • If your home won’t accommodate large circuit breakers
  • If gas prices are significantly cheaper in your region
  • If you have a large household with high hot water demands

Electric tankless water heaters

How do electric tankless water heaters work?

Like gas tankless heaters, electric water heaters contain flow sensors that detect when hot water outlets in a home are turned on. This activates the ignition, which begins the electrical heating process.

Again, most electric heaters use a series of copper coils to transmit heat through the water supply. However, some smaller devices use infrared technology for super-fast contactless heating.

The best heaters contain a large number of coils coated in anti-corrosion materials to protect the unit from any minerals and metals that are dissolved in water.

Electric tankless water heaters: Pros

Lower base price

One of the most attractive things about electric heaters in comparison to gas heaters is their base price. Many premium electric tankless heaters retail for between $500 and $750, so you can save hundreds on the initial purchase. The difference in cost is mostly due to simpler designs with fewer components needed.

Lower long term running costs (for most)

It’s true that natural gas is currently the cheaper fuel option in most areas of North America. But don’t forget that the lower base price of electric heaters means that several years of heating cost differences are offset. In addition, electricity costs are predicted to remain more stable and less volatile than fossil fuels in the years ahead.

When it comes to maintaining your heater, electric systems also have the advantage. While you should descale the unit and replace the filter screens on an annual basis, you won’t need to have your heater professionally serviced as often as a gas unit—and if any issues do occur, electric heaters tend to be easier to troubleshoot.

Ultra-long lifespan

One of the areas in which all tankless heaters win out, regardless of fuel type, is overall lifespan. The US Department of Energy estimates that correctly maintained tankless heaters will last for around 20 years, which is a little less than double their estimate for a tank boiler (on average). However, while estimates for gas heaters often state 20 years as the top-end expectancy, electric heaters regularly exceed the two-decade mark!

Smaller size

Electric heaters tend to be about one-third of the size of most gas systems. This, combined with a lack of venting requirements, greatly increases their flexibility when it comes to installation options. You can install an electric tankless heater in a hallway or on an apartment wall, inside a kitchen cupboard, or even directly on a shower cubicle as a point of use device.

Electric tankless water heaters: Cons

Higher month-to-month costs

Thinking long term, it’s likely that electricity will overtake gas as the more cost-effective fuel source. But right now, most people enjoy lower natural gas prices than electricity. So if you’re looking at costs on a purely month-to-month basis, it’s likely that an electric heater will cost you slightly more to run.

Serious wiring requirements

On a monthly basis, electric heaters can use up to 40% less energy than a traditional tank heater. But when they do use energy, they deploy much higher amounts over short periods of time. Large electric heaters can use 30kW or more of energy, which means that your home’s wiring needs to be able to handle high energy requirements without tripping the breakers or causing surges. Many heaters require multiple large circuit breakers and 240 volts, which not every home can accommodate.

Can struggle to meet demand in larger homes

Electric tankless heaters perform excellently in apartments, townhomes, and houses with a maximum of 3 bathrooms. Beyond that, when capacity demands start to exceed 8 GPM, they can struggle to provide enough hot water without affecting the flow rate. Propane and natural gas heaters, on the other hand, often have larger maximum capacities.

When is an electric tankless water heater a good choice?

  • If you’re home is already wired for an electric heater
  • If you prioritize saving on costs (base price, installation, and long term running)
  • If you live in a newer home with modern wiring
  • If you have an small-to-average sized home with normal consumption habits
  • If you want a heater that’s more future-proof and environmentally friendly

Electric vs Gas tankless water heaters: Side by side comparison

Electric tankless heaters Gas tankless heaters
Base cost Electric tankless water heaters are usually less expensive than gas heaters. Savings on the base retail price can range from 250-500 dollars. Because they contain exhaust systems and other additional components, gas tankless water heaters are usually more expensive than electric.
Fuel costs For most people, the cost of electricity is currently higher than natural gas, resulting in higher monthly running costs. Gas prices are lower than electricity in most areas. Keep in mind that fossil fuel prices are more volatile than renewable electricity.
Installation Electric tankless water heaters are smaller than gas units and don’t require venting. This makes them easier and cheaper to install. Gas heaters should be installed by a certified professional, who can safely fit exhaust vents to remove combustion byproducts.
Cold climate performance Electric tankless heaters are more likely to experience performance issues when the incoming water temperature is very cold. High-powered gas tankless water heaters can run in col climates without noticeable reductions in flow rate.
Efficiency Many electric tankless water heaters are almost 100% energy efficient. Gas tankless water heaters are usually around 85% efficient but can achieve better results with condensing technology.
Green tech Most new homes are fitted with electric tankless water heaters, as electricity looks set to become the standard energy source for the future. Gas prices will almost certainly rise in upcoming years as fossil fuel production slows and energy markets become more volatile.
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