Gas vs Electric Tankless Water Heater – Complete Guide

If you are considering changing to, or need to upgrade your existing tankless water heater, then deciding which style and model of heater to purchase, can be confusing. There’s a lot to think about but, don’t worry, in this article we will help you make the right decision to ensure your household has plenty of hot water available just when you need it.

A tankless or demand-type water heater heats the water when you need it from a small wall mounted tank and then flushes it through to your showers, wash hand basins etc. These can be powered by electric, natural gas or propane. Tankless water heaters require a much smaller amount of space than traditional tank systems and generally last longer and can be more economic to run.

If you are looking for the top tankless water heater then be sure to check out our comprehensive tankless water heater guide here and for further advice on how to figure out which size heater you need than read our article water heater size guide here.

Firstly, here’s a few things to consider when making your decision:

  • Fuel Type – is natural gas available, how reliable is your electrical supply?
  • Hot Water Requirements/Size – what’s your daily water usage likely to be?
  • Available Space – where are you planning on siting your new system, is there space?
  • Purchase Cost – how much do you have or wish to spend?
  • Installation Cost – how much will it cost to install? Do I need to upgrade my electrics or gas supply to accommodate a tankless water heater?
  • Installation – how do I find a reputable contractor?
  • Running Cost/Efficiency – how much is it going to cost to run, now and in the future?
  • Maintenance – how much will it cost to maintain, are there ongoing costs such as serving etc.?
  • Troubleshooting – how easy is it to detect and repair problems?
  • Safety – how safe is it?

That may seem like a lot of things to consider but don’t worry, we’ll take each one step by step. If you don’t have time to read the whole article, check out this handy chart for a quick round-up.

Note: Although gas is cheaper than electric the efficiency and other costs saving features of electric tend to outweigh the savings of gas over electric.

Gas VS Electric Tankless Water Heater – Comparison Table

Purchase Costs$$$
Installation Costs$$$
Running Costs$$$
MaintenanceAnnual service is advisable to ensure the system is safe.Very little maintenance required.
Flow Rate

Fuel Type

With a tankless or demand-type water heater, you basically have a choice of the following fuels:

  • Natural gas
  • Electricity
  • Propane

In this article we are going to be concentrating on gas and electricity as these are the main fuel types used. If you want to know more about propane tankless water heaters, than check out our other articles.

There are pluses and minuses to using either of these fuels so read on to learn more and see which will be most suited to your home.

Hot Water Requirements / Size

To decide which size tankless water heater, you require you need to know a couple of things:

  • Your Flow Rate – this is typically in gallons per minute
  • Your Ground Water Temperature

Both are easy to figure out and knowing them will help you to choose the correct size and model of heater for your home. Purchasing the correct sized heater for your household is vital. It will not only ensure that hot water is available when needed and save your money on the purchase price but, also on the ongoing running costs.

Flow Rate

To calculate your households flow rate, you first need to know how many fixtures use hot water you will use simultaneously. So, add up the wash hand basins, sinks, and showers in your home. Don’t forget to add any small washrooms you may have in the basement etc.

To get a picture of how much flow rate you require – work out how many hot water faucets or showers you want to run at the same time. For example, in the morning you may wish to run two showers and the downstairs cloakroom hot water. This then is the amount of hot water you need to have available in your house for your morning routine.

A simple way to work out the flow rate is to place a five-gallon bucket beneath a facet or under a shower. Time how long it takes to fill the bucket, and this is the flow rate of that facet (or shower). For example, if it takes 3 minutes to fill the bucket, then the flow rate = 15 gallons per minutes or 15 gpm. Note this is a guide only, each facet or shower may have a different flow rate. But, it will give you an indication of the average rate within your home.

According to gas tends to have a higher flow-rate than electric.

If you have a high flow-rate you can install a low-flow water fixture.

Ground Water Temperature

This varies across the country and of course will alter with the seasons. This map by the Bradley company is a clear and helpful way to identify your regions ground water temperature.

Ground Temperature Map


For more information on the choosing the correct size tankless water heater check out our water heater size guide.

Available Space

  • Electric – easy to position due to the ease with which it can be fitted directly to the electricity supply without the need for external venting etc. It is therefore more versatile and easier to position in smaller spots than its gas counterpart
  • Gas – because it requires a natural gas supply and external venting, the placement of a gas tankless water heater can often be restricted

Purchase Cost

  • Electric – in the region of $500 - $750
  • Gas - $1,000+

Installation Cost

  • Electric – cheapest (due to its simpler install it is usually cheaper than having a gas heater installed – based on there being an adequate electrical supply to the property and no upgrades or re-wiring are necessary),
  • Note: the high electric usage needed to run these units means your home will require a minimum amount of AMP. If you lack the necessary AMP, your electrics may need to be upgraded before an installation can take place.
  • Gas – can be more costly (due to the complex nature of fitting and connecting required to install a gas unit. This can be a more expensive route than electric.)
  • Note: if your home doesn’t already have a natural gas supply, the cost of connecting one may make such an install prohibitively high.

Running Cost / Efficiency 

In deciding which model, size and fuel type water heater to choose, consider also the Energy Factor.

The energy factor (EF) indicates a water heater’s overall energy efficiency based on the amount of hot water produced per unit of fuel consumed over a typical day. This includes the following:

  • Recovery efficiency – how efficiently the heat from the energy source is transferred to the water
  • Standby losses – the percentage of heat loss per hour from the stored water compared to the heat content of the water (water heaters with storage tanks)
  • Cycling losses – the loss of heat as the water circulates through a water heater tank, and/or inlet and outlet pipes.

The higher the energy factor, the more efficient the water heater. However, higher energy factor values don’t always mean lower annual operating costs, especially when you compare fuel sources.’

This helpful information was provided by on whose website you’ll find a wealth of useful information on household appliances and how you can save energy around your home.

  • Electric – pricing for this utility tends to be more stable and cheaper than natural gas,
  • Gas – pricing is generally more volatile and is predicted to rise in the coming years.
Little Buddy Heater


The price of installation will vary considerably depending on whether you opt to install the heater yourself or use a contractor. It is worth keeping in mind that the correct installation of your heater will ensure it is safe, cost effective and will endure many years of use. Many suppliers will offer an installation service when you make your purchase but, if you need to select a contractor yourself, here are a few pointers:

  • Get quotations or cost estimates in writing (emails are okay for this too),
  • Ask for references and talk to past clients to see if they are happy with the work carried out,
  • Ensure any contractors are listed with your local Better Business Bureau,
  • Ask if they are happy to obtain any local permits (if necessary),
  • Ensure they are familiar with local building codes (this will be important should you ever decide to sell your home).

If you plan on installing the heater yourself than first consult the manufacturers manual for details of the correct installation and to ensure it meets safety requirements etc. You should also consult your city or town officials to ensure any permits needed are obtained before work begins. Check too that you will meet your local water heater installation code (if applicable).


  • Electric - requires very little maintenance other than cleaning of the inlet screen filter – check the manufacturers manual for details on how to do this,
  • Gas – should ideally be serviced annually by a trained technician. This ensures that they are running correctly and above all, safely.

The correct maintenance and servicing of your tankless water heater will not only ensure that it is safe but that it is running efficiently and can help to extend its lifespan both of which will save you money.


  • Electric – due to their simpler design, problems are generally easy to identify and resolve with electric units,
  • Gas – on the reverse, the gas units more complex design and fuel controls can make finding and repairing faults more difficult.


  • Electric – if correctly installed and maintained there are relatively few safety issues. However, if there is a power outage than you will be unable to use the system.
  • Gas – potential for gas leakages. If you have any gas appliance it is always prudent to have a Carbon Monoxide Detector. Carbon Monoxide (CO) poisoning is called the silent killer as you cannot smell nor hear the deadly vapours. Further some people aren’t comfortable having natural gas if there is a potential for natural disasters such as fires or flooding where gas may be more of a safety risk or concern.

As you can see there is a lot to consider when shopping for a new tankless water heater system. Do you opt for electric or gas? They both have their pluses and minuses that’s for sure. A lot will depend on the utilities you have available – if you only have a choice of electric because you don’t have a natural gas supply, it’s simple. But if you have both options then look at the bigger picture taking into account both current and future utility costs, maintenance and your personal preference.


According to ‘The average household spends $400-$600 a year on water heating – accounting for 14-18% of homeowners’ utility bills.’ Check out their website for lots of useful hints and tips on how you can lower your water heating (and other) bills.


Here at lahaaland we reccomend buying an electric tankless water heater over a gas one because they are:

  • Cheaper to buy
  • Easier to install
  • Easier to maintain/Troubleshoot
  • More efficient

Be sure to check out our tankless water heater buyers guide and our top recommendations here.

Leave a Comment