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The decision to select an electric or gas tankless water heater should be made with the homeowner's or business' individual circumstances in mind. The following factors all play a role in choosing what type of tankless water heater is best for your needs:

  • The availability of a convenient source of natural gas or propane and/or an adequate electrical supply to support another high-output appliance.
  • The relative cost of installation
  • The difference in cost between an appropriately-sized electric and gas tankless water heater
  • Water usage habits and needs
  • Homeowner/ user preference
  • The differential between electric costs and gas costs in your area, and your personal outlook for changes in such costs in the future.
  • Desired installation location

Since electricity is generated by many means, it is not a single energy source and not as vulnerable to price fluctuations as individual fuel sources.  

Unlike the gas units, the electric models require no venting and have no combustion air requirements, however the tankless models must be hard wired and have minimum amperage requirements.  The most important factor in installing an electric tankless water heater is ensuring you can meet the amperage requirements.  Please ensure that you have adequate electrical capacity to operate electrical units.

While gas tankless water heaters are certainly more efficient than their tank cousins, their efficiency usually peaks at 80-85%. Even though natural gas is generally a cheaper input fuel than electricity per BTU of output power, this benefit is generally outweighed by the higher efficiency of the electric unit, longer service life, and cheaper installation. On top of that, electric tankless water heaters cost less than most tankless gas models. Moreover, gas prices tend to fluctuate more dramatically then electricity prices and most economists agree that in general, gas prices are expected to rise significantly in coming years whereas in most areas, electricity prices should be relatively stable.

There are three key aspects in the installation of a gas tankless water heater: 

Exhaust venting
Size of incoming gas line
Combustion air requirements
  • Exhaust Venting:

The heater should be installed as close as possible to a chimney or vent, and in a place not exposed to freezing, rain or other poor weather conditions.

  • Gas Line Size:

Check to make sure your gas line is sized properly.  Tankless water heaters draw many more BTU’s than a conventional tank water heater, so you will want to make sure your gas line is of the proper size and the distance the gas line is run is not too long, so the unit will function properly.

  • Combustion Air Requirements:

There will be times when the decision for gas or electric should be made on the basis of cost vs. overall benefit to the value of the home, the versatility of location etc.  If the consumer’s home has underground electric service to the house it will be more expensive to upgrade than overhead.

The consumer should look at all the variables. How close can he locate the heater to the major points of hot water use and what are the total costs one vs. the other? In most cases the electric version is designed as a basic model to take care of a family of two to four with a single heater. Different models are combined in parallel to get the power and heating rating desired. Most times two electric versions are about the same price or less than one of the higher Btu rated gas versions.

If natural gas costs do not increase from current levels, the overall life cycle cost for the tankless electric  water heater should, with few exceptions, be better than tankless gas  water heaters. When initial costs are included the  tankless electric water heater will virtually always be a better investment.

Electric and Gas Water Flow:

The standard shower will flow at 2.5 gallons per minute (gpm) and the shower temperature is typically 104º. In the winter when the incoming water temperature is 55º F, the average shower requires 1.95 gpm of 120º F hot water mixed with the cold water. In the warmer areas or times of the year when the incoming water temperature is 75º, the shower would require approximately 1.7 gallons per minute of 120ºF hot water from your heater. 

  • Keep in mind that this difference is the reason that tank heaters run out of water quicker from colder incoming water in the winter than the rest of the year. With the tankless you won’t run out but you may be limited to how many hot water uses you may perform at the same time.
  • A tankless gas  water heater having an efficiency rating (EF) of 82% would have to be rated at least for 116,000 Btu per hour and an electric at 95,500 Btu’s per hour or 28kW. This difference in Btu rating may be confusing but gas is rated at the heat output of the burner, whereas; the electric, for the heat that is going directly into the water. 
  • REMEMBER, the energy (and cost) required for a family of two to heat the water they actually use is less than the energy wasted by a 40-gallon gas tank storage heater in just reheating the same water. This is energy expended before the first drop of hot water is used.


Us Department of Energy 
Article on Tankless Water Heaters
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