Electric vs Gas Water Heater: Annual Cost Comparison
The annual operating cost of a water heater depends on how much hot water you use, your local energy rates, and the heater's efficiency. Natural gas is generally cheaper per unit of heat in the US, but electricity rates vary widely by state. This calculator uses 90% efficiency for electric and 80% for gas heaters—typical values for standard tank models.
Heat pump water heaters can achieve 200–300% efficiency (coefficient of performance), making them 2–3× cheaper to run than standard electric heaters. If electricity is cheaper in your area, a heat pump model may be the best overall choice.
Frequently Asked Questions
Yes. Tankless (on-demand) heaters eliminate standby heat losses, making them 24–34% more efficient for homes using under 41 gallons daily, according to the US Department of Energy.
Check your utility bills for the exact rate per kWh (electric) or per therm (gas). Rates change seasonally and by usage tier.