Gas vs Electric Water Heater

The short version

UEF (uniform energy factor) is the efficiency rating on the yellow EnergyGuide label. DOE warns that a higher UEF doesn't always mean a lower bill when you compare different fuels. That's why the electric tank looks fine on paper and still costs more to run in most places.

Is it cheaper to heat water with gas or electric?

Usually gas. A.O. Smith's take is that natural gas is cheaper than electricity in many regions, and HomeGuide's yearly estimates put a gas tank at $250 to $420 against $530 to $600 for an electric tank. Your local rates decide the real gap. Pull your last bills, then compare the yearly cost printed on the EnergyGuide labels of the two models you're considering, which is the method DOE recommends.

The exception is a heat pump water heater, which is electric but moves heat instead of making it. DOE says they can be two to three times more efficient than a standard electric tank, and HomeGuide puts a hybrid heat pump tank at $160 to $190 a year to run. If you're on electric already, look at our page on heat pump water heaters before you buy another plain electric tank.

How each one heats

A gas tank has a burner under the tank and a flue running up the middle. Hot exhaust passes through the flue, then out a vent. A.O. Smith notes that combustion heats water faster than electric models and gives a higher recovery rate than a similarly sized electric tank.

An electric tank uses one or two heating elements that sit in the water. There's no flame, no flue and no vent. The tradeoff is slower recovery, which you feel when three people shower back to back.

Upfront cost and installation

Electric models tend to cost less than gas models of the same size, and they're simpler to put in because there's no gas line or vent to deal with. Gas units cost more upfront partly because of the pipework and venting.

Switching fuels is the expensive part. HomeGuide lists an electric-to-gas conversion at $400 to $2,000 or more and gas-to-electric at $250 to $1,000 or more, on top of the heater. A gas line upgrade alone runs $350 to $2,000, and a new dedicated electrical circuit $250 to $900. Our water heater installation cost page breaks those numbers down.

Downsides of each

Electric water heater downsides:

• Higher running cost in most areas, unless it's a heat pump model.
• Slower recovery, so a smaller household gets more out of it than a big one.
• It stops during a power outage, like anything else on the grid.

Gas water heater downsides:

• It needs a vent and a gas supply, which adds install cost and limits where it can go.
• Combustion means carbon monoxide risk if the vent is blocked or disconnected, so a CO alarm nearby is cheap insurance.
• Power-vent gas models need an electrical connection for the fan, so they quit in an outage too. A basic atmospheric model with a standing pilot usually keeps working.

What plumbers usually recommend

Most plumbers will tell you to stay with the fuel you have. If the house has gas at the heater and a working vent, a new gas tank is the cheapest path to fast recovery and low bills. If it's an all-electric house, the choice is between a standard electric tank (cheapest to buy) and a heat pump tank (cheapest to run). Size matters as much as fuel, so check what size water heater you need first.