Electric vs Gas Water Heater: Which Is Better for Your Home?

• Gas water heaters: Costs, efficiency and features
• Electric water heaters: Performance, operating costs and efficiency
• High-efficiency tank water heaters: Savings, performance and efficiency
• Tankless water heaters: Benefits, costs and energy efficiency

When you think of a water heater, odds are the picture in your mind is of a traditional gas water heater with a big and bulky tank and a gas pilot that ignites a burner. Gas water heaters tend to be more inefficient because it keeps reheating the entire tank as cold water gets added to it.

However, since they're less expensive and last up to 15 years, gas powered storage water heaters can be found in most homes. You may choose to avoid higher upfront costs by opting to go with a less expensive water heater but it may not always save you money in the long run.

Electric water heaters work like gas ones but without the flame. They're ready to use whenever you need hot water.

Electricity is often more expensive than gas, so these water heaters might cost more to run. But the good news is they're cheaper to buy and install since it doesn't require a complicated gas hookup, installation fees, and open flame heating mechanism of a gas water heater.

Any energy savings from purchasing an electric water heater is likely eclipsed by a gas water heater in the long run because of gas prices. However, if your home is solar powered, it would make more sense to install an electric water heater since your solar PV system would generate power to offset your usage.

Newer, high-efficiency water heaters have shown that you may still stretch out savings over the life of your water heater if you upgrade to an energy-efficient model.

Water heaters use energy factors (EF) to measure a water heater’s energy efficiency.  Traditional water heaters (natural gas and oil fired) have an energy factor (EF) of .53 to .70. Comparatively, energy-efficient gas water heaters have an EF of .67 or higher, while energy-efficient electric water heaters have an EF of 2.00 or 2.20, depending on tank size. By meeting EF standards, they can be considered energy efficient.

While many energy-efficient water heaters are gas-powered, there are also electric options that can be more efficient. Energy-efficient electric water heaters could cost more than their gas counterparts initially. In order to make the right choice and avoid any additional costs, make sure you look at prices when you're evaluating electric vs. gas water heaters.

Also known as demand-type or instantaneous water heaters, tankless water heaters are an option to avoid unnecessary heating costs related to standby heat loss. That's because instead of holding a tank of water that continually heats throughout the day, tankless water heaters provide hot water only as needed. Just turn on a faucet and you get hot water instantly.

Tankless water heaters come in both gas and electric options, so you don't have to decide between a gas (vs. an electric) water heater if you already have a preferred type. Tankless water heaters work by drawing in cold water when you turn the tap on, instantly heating the water as it passes through a gas burner or electric element.

There is a tradeoff when choosing to go with a tankless water heater. To start, you'll only get hot water if you're drawing less than a few litres a minute. That's enough for a shower or a bath. Multiple showers or a shower plus your washing machine or dishwasher running may be too much for just one tankless water heater.

Be prepared for a substantial initial cost when purchasing and installing each tankless heater. However, since a tankless heater can last twice as long as a traditional water heater, and they have easily replaceable parts, this potentially offsets their initial price.