Water heating is typically the second-largest energy expense in most homes—often 15–25% of the total bill. Choosing the right type of water heater can save hundreds of dollars per year. Here's how electric, gas, tank, tankless, and heat pump models compare in energy use and cost.
Electric Tank Water Heaters
Standard electric resistance water heaters use 3,000–5,500 watts to heat water in an insulated tank. They run throughout the day to maintain temperature, with recovery after hot water use. A typical 50-gallon unit might use 4,500 watts and consume 4,000–5,000 kWh per year, costing $480–$600 annually at $0.12/kWh.
Gas Tank Water Heaters
Gas water heaters use natural gas or propane for heating and only a small amount of electricity for the igniter and controls. They're generally cheaper to operate than electric resistance models where gas is available. Operating costs depend on local gas rates but often run $200–$400 per year for a typical household.
Tankless (On-Demand) Water Heaters
Electric tankless units heat water only when needed, eliminating standby losses. They draw 8,000–36,000 watts when in use—often requiring electrical upgrades. Gas tankless models are more common and don't need as much electrical capacity. Tankless can save 24–34% compared to tank models by avoiding standby loss.
Heat Pump Water Heaters
Heat pump water heaters extract heat from the surrounding air and transfer it to the water. They use 1–2 kWh per day for a typical household—compared to 12–15 kWh for a standard electric tank. They work best in warm climates or heated spaces; in cold basements, efficiency drops. Federal tax credits and utility rebates often make them very cost-effective.
Comparison Summary
- Electric tank: Lowest upfront cost, highest operating cost; good where gas isn't available.
- Gas tank: Moderate upfront, lower operating cost; requires gas line and venting.
- Electric tankless: No standby loss but high peak demand; may need panel upgrade.
- Heat pump: Highest efficiency; best in warm spaces; rebates available.
"If you have an electric water heater over 10 years old, a heat pump replacement often pays for itself in 3–5 years—especially with rebates. Run the numbers for your climate and usage."
Estimate Your Water Heating Cost
Use ElectriBill's calculator to estimate your current water heater's cost. A 4,500-watt electric tank running 3 hours per day uses about 405 kWh monthly—roughly $49 at $0.12/kWh. Compare that to a heat pump's estimated usage to see potential savings.