Gas or Electric Tankless Water Heater – Which is Best?

Guide to choosing the right tankless water heater for you.

You drive home many miles from work, and set foot on the ground of your own palace – your very own home. You slam the car door, and approach your front door.

All this time you’ve been pondering one thing, and one thing only. You’re waiting for it – your hands might even be trembling with excitement. It is a seriously underrated experience, but you’re looking forward to it today. And what is this experience? Standing underneath a blissful hot shower, dripping droplets of hot water against you, cleaning you of your toils from the day. How wonderful will that shower be!

You ponder it over and over again, whilst opening your front door. The key goes in, and the door creaks open. You enter, ditch your coat, hat, gloves and scarf, ditch your work equipment, and grab a quick snack to the kitchen. Now, you’re heading straight up to your bathroom – the shower you’ve been looking towards all day.

Upon entering the bathroom, you also ditch all your clothes (hopefully?) and then leap beneath the shower head. You release a little squirm of excitement for the experience ahead, and begin adjusting the temperature knobs, and then you turn on the water.

But instantly, you step out of the stream that you once thought would be so incredibly pleasant. You take a step forwards and wait a bit, dreading the worst, your finger moves towards the stream again.

“Ah! Cold!”

Now that is a nightmare. You wait for a few minutes longer – begging some external being to fix your shower. Nope, you’re stuck with cold water, and the warmth you’ve been looking for all day is nowhere to be seen. Could this be the end of a good day at work? After receiving that promotion (or not) you finally just want to top all your experiences off with a pleasant shower.

But you can’t! Frustrated, you whack all of your clothes back onto your body, and you clutch the bathroom door handle tighter than you’ve ever clutched it before, hoping you won’t crush it underneath the wrath of your anger and vexation.

Your door is flung open, and you stand there incredibly irritated. Where do you go next? To your hot water tank. You storm into the room where it is held, and hope for the best.

Upon entering this room, you spot the tank, make haste towards it, and cast your eyes upon it. “There’s a leak”, you say. “and the heating element/ignition tool is broken!”.

Oh dear. You’re now in a predicament. Do you call up your local plumber and say, “Hey, could you fix this?”, or do you go out and purchase a new alternative? But then you look at the tank again – it’s old, rusty, and almost coated in dust. Fine, you’ll just have to get a new one.

But when you go downstairs to reach your computer, you find your utility bills. “Oh my god! I spent thousands on heating water!”. So, you sit down, and instead of searching for new hot water tanks, you search for other alternatives that don’t need replacing every ten years, and will hopefully be significantly more efficient, and less costly to run per annum, .

If you’ve reached a decision that you want a tankless water heating system, that’s fantastic. They break down far less often, maintenance is significantly easier (and cheaper, too) and run far more efficiently, bringing your heating and similar utility bills straight back down.

But after doing more research, you notice there are two variations of even a tankless water heating system or unit.

“Do I buy the gas one or the electric one?”

This is the question we set out to answer in this article. But we’ll shoot you with the short answer now – there is no right answer. The option you choose entirely depends on a myriad of factors.

But what are these factors, and what must we take into consideration? Well, let’s start with that, shall we?

Factors to Consider

This decision is very significant. It can make the difference between saving thousands on your utility bills over your lifetime, or even, in some cases, doubling the amount you should actually be paying – if you make the wrong decision.

The first factor to consider when deciding whether you should purchase a gas tankless water heating system or unit or an electric tankless water heating system or unit is your actual home, and what you have had before.

If you’re switching from a hot water tank water heating system or unit, it won’t really matter in most cases, as the installation will be just as complex for each (unless you’re going for a non-condensing gas model, in which case this might just be the only exception to this rule) and you’re very likely to have to pay the same for it.

However, if you’ve already had, say, an electric tankless water heating system or unit, you might just want to go for the same one again (if you’ve been satisfied with it) as this might save you thousands in installation costs, since all that is necessary for it’s functioning is already there.

Secondly, do you care about efficiency too much? Do you care about each cent, and not each dollar? Electric tankless water heaters are far less efficient than gas-based ones, although this does sometimes vary. As is always said, electricity is the least efficient wat of heating water. For this reason, you will really want to consider whether you’d like to purchase an electric tankless water heating system or unit, or if you’d like to swap to or buy for the first time a gas-based water heating unit.

Thirdly – how costly is your gas and your electricity at home? If your gas is twice as expensive as your electricity, then you’re obviously going to want to go for the electricity – no matter how inefficient they may be, they will still be cheaper to run than a gas if gas costs twice or three times as much as the regular electric.

Now that we’ve considered all of those factors, we’ll move onto the properties and the pro’s and cons of each of the systems. This will help you gain a solid idea of exactly which system you should be choosing, and why you should choose it. Remember, every home is different, every location is different. And that means that every decision will be different – there is no universal right answer, so ensure that you peruse this document in the greatest detail possible, analysing it with a critical eye, comparing given scenarios here to the situation in your home. Don’t just skim over this – it could save you thousands of dollars, or cost you thousands of dollars over your lifetime.

Let’s begin!

What are the properties of each? What makes them good, and what makes them not so good?

Here, we examine each of the individual units, and provide some pros and cons, as well as advice on whether you should purchase each for your given situation. We’ll begin by discussing everything that maybe of relevance to you about gas tankless water heating systems and units, and then move onto electric tankless water heating systems and units. With that said, let’s begin!


Quick Introduction

Gas powered tankless water heating systems and units are incredibly common. On the whole, they are significantly more efficient than electric tankless water heating systems and units, as the energy from the combusted gas goes straight into the water.

There are two types of these systems, and each will determine the cost of the unit or system upfront. Some gas tankless water heating system require a ventilation system, which can make them incredibly expensive to install if your house does not already have venting systems. However, these gas tankless water heating systems or units that require ventilation can be incredibly cheap upfront for the job that they do, some quality ones beginning at about $350 and up. This kind of system may require significant other jobs done at home, and could possibly even call for quite a large (and expensive) construction job.

However, you can also purchase a “condensing” gas tankless water heater, and this will not require any ventilation. However, be advised that these systems are significantly more complex on the inside, making installation, maintenance and repairs far more complex (and therefore expensive due to increased skill level required) and therefore may not be suitable for families on an incredibly tight budget! The “condensing” tankless water heating systems and units are naturally more expensive upfront due to their higher level of complexity. However, they will still save you on home adjustments and similar.


There are many pros to a gas system, but let us begin with the efficiency of such a product.

A gas system will always be significantly more efficient and effective at heating water using limited resources than an electric system, or any other heating system for that matter, such as a hot water tank. Such a gas system will waste minimal energy (although they’re still nowhere close to 100% efficient due to the laws of physics) and will produce maximal output. These machines are designed to be efficient, literally.

And as we all so very well know; an efficient machine is a machine that can save you a lot of money. And on the topic of money, in most areas all over the world, gas is actually cheaper than electricity per hour of running at maximum capacity. This means that you’ll pay less overall for your heating in the long run, provided you live in areas where gas is cheaper than electricity.

But sometimes, the most efficient of systems fail to actually output what you’re looking for them to output. In this case, this is hot water. The vast majority of gas systems have a much higher capacity for heating water on demand, and can produce for a much higher rate of flow. Therefore, if you’ve got a large household or big family, go with a gas!


Gas systems, with all their positives, do have some negatives as well, and here we explore them. We’ll begin with the installation costs.

If you’ve never had a gas system before, and have only had hot water tanks or electric tankless water heating systems and or units, then installation may be a struggle. Because some non-condensing tankless water heating systems or units that run on gas require strong ventilation to prevent carbon monoxide poisoning in your household, you’re going to need to install a ventilation system. This can be incredibly expensive, and complicated to do. For this reason, if you do decide that you’re going to go with a gas system, you need to do your research into whether your home can actually accommodate it.

However, even if your home can accommodate a gas tankless water heating system or unit, or you decide that you will purchase a system that does not require ventilation – a condensing unit, which is typically far more expensive upfront – you’re still going to have to get it installed. This can be an incredibly expensive job, whether or not you need construction work carried out to add ventilation. Whilst the installation of a condensing unit may usually be cheaper, this isn’t always the case.

Always do your research by calling local professionals who install these units to get it all checked out for yourself. This will help prevent you incurring any unwelcome fees in the future – and this is what can actually cost you many thousands – even tens of thousands of dollars if not done correctly.

They can also be far more expensive than electric tankless water heating units upfront.

If you’re strapped for cash now, you might not be able to afford a gas tankless water heating system or unit. But in the long run, it will save you money on efficiency and all sorts of things, so do try and get a finance package if your situation allows for it.

And now, we move onto the electric tankless water heating system and or unit.


Quick Introduction

We’ve already covered that these types of tankless water heating systems or units are less efficient than their gas-powered counterparts. But that certainly doesn’t make them at all bad, as they do have some fantastic benefits that every family can enjoy.

Electric tankless water heating systems and or units actually might be the solution for you if you’re cash strapped. They certainly can’t heat as much water, but they’re definitely the cheapest solution to go with if you’re living on your own or have a small family.

These systems can be purchased from as little as a shocking $100. Of course, they won’t be perfect at this price, but they can certainly do the job, and do the job to a reasonable quality.

And whilst electricity might be more expensive in the long run, many economists predict that due to current global situations, the price of gas will rise within the next 25 years (and that’s the average lifespan of a tankless water heater anyway) which will make the cost of running an electric tankless water heater in the future for an hour much lower than running it on gas for an hour. So, in a sense, you’re ‘making your home future-proof’.

But now, let us move on to the pros and the cons of an electric tankless water heating system or unit, so that you can reach your decision wisely, and decide which option is absolutely best for you!

The PROS of an ELECTRIC Tankless Water Heating System or Unit

There are many hundreds of pros of an electric tankless water heating system, but we’ll just cover them nice and quickly for you.

Firstly, there’s the upfront cost. If you’re a cash strapped family, this may just about be the best option you could take. They’re incredibly cheap to purchase, and installation isn’t all that difficult either. In fact, many people are able to install electric tankless water heating systems and or units by themselves, without the expense of a plumber. This can be incredibly cost saving.

Secondly, they last just as long as gas tankless water heating systems or units, and this means that you won’t have to bother replacing it for a long time.

Thirdly, they’re even portable – sometimes. That means that if you go on holiday with your family or go camping somewhere, depending on the model you get, you could take it with you.

The CONS of an ELECTRIC Tankless Water Heating System

Electric water heaters are incredibly inefficient. In fact, electricity, according to many scientists all over our globe, agree that heating water with electricity is the least efficient way of doing it.

For this reason, you might actually find your costs in the long run skyrocketing, as a result of poor planning and a wobbly purchase.

Also, you will find that depending on the size of your tankless water heater and the output it is designed to produce, many homes cannot actually provide even half the power required to work one of these machines for an hour. Do your research, as it could cost you quite a lot.

They also won’t be able to produce the same rate of flow as a regular gas tank. This makes them unsuitable for large families.

About the author

Steve Bates

Hi, I'm Steve and I currently reside in Chicago, Illinois. Although for most of the last 20 years I was a partner in a HVAC company down in Austin, Texas.

I understand the frustration involved with dealing with water heater repairs and replacing or upgrading to a new, more efficient model.

My aim is offer some basic advice on fixing home hot water systems. And if a repair isn't possible, then to make the process of selecting a new water heater – be it gas or electric - as simple as possible.

So that you can save money and have a safe and reliable hot water system in your home for many years to come.