How Much Does it Cost to Install a Tankless Water Heater?

Have you decided to replace a traditional, energy-thirsty, inefficient tank-based water heater with a more innovative, more modern, more energy-efficient water heating counterpart – the tankless water heater? If so, that’s fantastic.

You’ve gone to a store, and seen all of your options – but realise that you’re not only choosing the colour and the capacity. You’re also choosing whether you want a gas or an electric tankless water heating unit. But which one do you want, and which one is more expensive? And why?

What are the key differences? Well, that’s what we cover in this article, and we’ll cover exactly how expensive each of the two options are, and what the differences are between the two. It’s not just the way they heat, but the way that they are installed – and how much it costs to get installed – the safety of each option, and a bunch of other factors that will help you decide between the two options.

Don’t get us wrong – both options are absolutely fantastic, but the installation and running costs of each will be very varied between households.


Believe me – a gas water heater is certainly more efficient than an electric water heater by any means. This goes for all types of water heaters – you will always find greater efficiency in gas than you will in electric. But why doesn’t everybody just by gas, then?

Well, the simple answer is that gas water heaters are – tricky. They’re not suitable for every single household, as they typically require a lot of re-wiring and re-piping the gas pipes. As a result of this, people may actually end up spending more on simply re-doing their home gas system to actually deliver a nice stream of propane gas into a water heater than they would simply purchasing an electric one.

Also, the installation costs for gas are much higher. Not only because of households typically having to invest thousands in re-wiring and re-designing the layout of their gas pipes to suit their new water heater, but also the fact that the labour required to install such units in a man’s home is much more skilled, and therefore you’ll be paying your plumber a higher rate for the job.

Taking this into consideration, we can begin to reach a reasonably fair conclusion on the cost when it comes to efficiency. While gas may be more efficient, costing you much less in the long run (25+ years), you may find that electric is far simpler to set up and to fix, and even to replace, due to lower upfront costs and simpler installation.

For these reasons, we can say that on grounds of efficiency, the option you take is strongly dependent on where you live, and your budget at the time of purchase. If you live in a house where your gas delivery system does not need any adjustment whatsoever to accommodate a gas powered tankless water heating unit, you should absolutely go with the gas option if you can afford the installation and the unit itself upfront, as you’ll save a lot of money in the long run with regards to efficiency.

However, if you’re slightly more cash-strapped at the moment, and your home isn’t compatible with a gas tankless water heating system, go for the electric tankless water heater. This will enable you to spend less on installing the heater – possibly even installing it yourself – and have a lower upfront cost. However, with this option you should always be prepared to pay higher bills in the long run maintaining the heater on its everyday usage.

So, the final verdict in terms of efficiency? It really depends on your needs. Call a local plumber for a “free evaluation” – and find out whether your home is compatible with a gas heater.


As we have touched on in the previous section, the installation and the upfront cost of the water heater plays a huge part in the total cost of installing your new water heating system. None of these factors should be disregarded, as when you next walk into your bank to check your balance, you will not forgive yourself.

Heating water can be incredibly expensive if not done in the most efficient and cost-effective way possible. For this reason, it is essential you follow guidance.

In terms of installation, gas heaters are significantly harder to install, and are also far more dangerous to install. For this reason, it is paramount that you take the correct safety precautions, or even better hire a professional to install your unit for you.

Electric tankless water heaters are significantly easier to install and this operation is usually conducted by the individual who has purchased the water heater themselves. It is usually as simple as plugging in two flexible steel hoses into each ends of the tankless unit, one for cold water and one for hot, and then connecting the whole thing to a circuit breaker.

Gas tanks require much more work. Usually, as mentioned before, they require a lot of re-wiring or gas systems and sometimes even a total re-design. Also, playing with gas on your own is never a good idea in any circumstances, so for this reason the installation of a gas tankless heater is far more expensive than an electric tankless water heater.

Running Costs

In the long run, a gas based tankless water heating unit will certainly cost you less than an electric one, provided your area has a cheap supply of fresh propane ready to cook up in your system. However, not every area has this, and for this reason some people may switch to electricity.

It really depends on where you live, however. If you calculate how much you’d pay for constantly running gas vs constantly running 200A electricity for an entire month, you can start to get an idea of how much each option would cost you – but not really.

Since electric heaters are far less efficient, you will find that they tend to cost a lot more in the long run, even though a kilowatt hour of electricity may cost less than a full hour of gas usage.

Final Words

It entirely depends on your situation. If you can afford a gas unit, absolutely go for that provided your home is compatible. Otherwise, go for the electric. Simple!

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.