Most hot water heaters in the U.S. – and around the world – fall into one of two categories: storage-tank heaters powered by gas or electricity (a new technology growing in popularity is the hybrid heat pump hot water heater, which we’ll discuss below). Electric hot water heaters comprise more than half the units sold worldwide and that percentage is growing with the global shift away from fossil-fuel use. In this post, you’ll learn what the main differences are between gas and electric water heaters, and some steps to determine which is right for you.

Here’s what we’ll cover in this guide – feel free to jump to the section you’re interested in.

1. Benefits of Choosing Electric Water Heater
2. Pros and Cons of Gas and Electric Water Heaters
3. Disadvantages of Natural Gas Hot Water Heaters
4. Hybrid Heat Pump Electric Water Heaters

Benefits of Choosing Electric Water Heater

Why are more people buying electric hot water heaters? For one thing, electricity can be generated through renewable, zero-emissions sources. Electric heaters are also slightly more efficient to operate: gas heaters must vent exhaust fumes, which take some heat with them, while electric heaters can direct nearly 100% of their energy toward heating water. Some electric hot water heaters feature wi-fi connectivity that lets users monitor usage and adjust settings remotely. Lowering the water temperature can reduce your electricity bills when you’re away from home and Wi-fi connectivity and smartphone apps let you drop the temperature after you leave and restore it before you return, so your water is already hot when you walk through the door. Electric hot water heaters are more easily installed in a variety of settings since they don’t need to vent toxic fumes, don’t use an open flame for a pilot light, and of course, don’t need access to a gas connection. And finally, electric hot water heaters avoid the air-quality hazards – both indoor and outdoor – posed by gas appliances, which emit pollutants like carbon monoxide, formaldehyde, and fine particulates.

Pros and Cons of Gas and Electric Water Heaters

When shopping for a new hot water heater, first determine what size you need. Once you have a size in mind, there are three key considerations to keep in mind: price, water heating ability and reliability. When shopping for a new hot water heater, consumers often notice price first, and more often than not electric hot water heaters are less expensive to buy than gas hot water heaters. Standard tank heaters cost $300-1600 on average, with gas models being priced $1-200 more than comparable electrics.  In addition, gas water heaters can take longer to install, adding to the upfront cost. 

An important metric when evaluating a water heater is the first-hour rating – or FHR – which answers the all-important question: how long does the water heater take to heat up? Gas heaters typically have the advantage here, heating water faster than electric heaters.  Determining the appropriate size tank will make the speed of heating a non-issue as you’ll have ample hot water for your needs. As noted above, while electric hot water heaters are more efficient, they won’t work during a power outage. Gas heaters, however, will usually keep generating hot water even with the electricity off (fortunately, modern heaters have well-insulated tanks and the water inside will generally stay warm for days even without power). Overall operating costs for gas and electric water heaters are largely dependent on energy prices – which vary widely in different regions – but generally speaking a standard (non-heat pump) electric hot water heater will cost about $40 a month for a family of four, while the monthly cost for a gas water heater will be closer to $30. The savings in monthly energy costs for a gas heater may, over time, outweigh the higher initial investment. But the most cost-effective option by far is a hybrid heat pump water heater, which uses substantially less energy than traditional gas or electric models and can cut hundreds of dollars from your energy bill every year.

Disadvantages of Natural Gas Hot Water Heaters

Gas heaters have a major drawback that electrics don’t: they are dependent on a finite supply of fossil fuel, and replacing a gas heater with another gas heater locks a homeowner into another decade of dependence. Plus, natural gas has an uncertain future: faced with soaring infrastructure costs and mounting effects of climate change, some cities have already banned new gas connections – and others have scaled back plans to modernize or expand gas networks. Gas heaters also emit dangerous pollutants that reduce air quality and add to greenhouse gas emissions: a 2020 study found that replacing gas appliances with electricity would prevent 350 premature deaths and produce $3.5 billion in health benefits every year in California alone.

Hybrid Heat Pump Electric Water Heaters 

A third option that has developed only in the past several years is the hybrid heat pump water heater, which is in a class by itself when it comes to energy and economic efficiency. Hybrids run on electricity, but they don’t use power to heat the water directly. Rather, the electricity powers a heat pump that pulls heat from the surrounding air and transfers it to the water in the tank. Their only byproducts are cold air and a small amount of water from condensation.  These water heaters are far more efficient – two or three times more – than standard gas or electric tank water heaters, and they can save a family of four hundred dollars a year on energy bills. These energy savings, along with government and utility incentives, make hybrid heat pump water heaters the best choice both financially and environmentally. For more information, see “What is a Hybrid Heat Pump Water Heater?”