Is It True That Electric Tankless Are Too Expensive?

Facts about electric and gas prices and the cheapest tankless heater to run. There are no absolute answers, only what works for you.

A quick energy efficiency comparison.
If you do nothing more than a replacement, this is energy efficiency you can expect from a water heater. The economical benefit of tankless water heaters is one of their best features. How economical depends how much you pay for fuel as well as the installation costs.

EnergyStar ratings were raised in early 2009; most rate in the low range of their specific divisions.

Percent efficiency:
Gas storage .60-.65
Electric storage .90-95
Gas tankless .80-85
Electric tankless .95-.99

These numbers show how efficiently your fuel dollar is being used. As you can see gas has to be 15 to 20 percent less expensive to compete with electric.

How to compare gas and electric
Throughout the US prices for gas and electric power vary by state and locality. Gas prices, especially, vary greatly by season. Know what your local rates are before you decide.

Electric prices in the US range from $0.05 to $0.16 kilowatt hour. Prices have been pretty flat for the past decade but that could change tomorrow.

Natural gas prices rage from $1 to $2 per therm and have doubled in the past decade.

US Electric Map

US Gas Map

For anyone contemplating a tankless hot water heater, the best course is to use an extended time frame to calculate cost. The examples below use 10-years as a comparison.

Of course, before you get to this point you should already have calculated the size heater you need by taking into account your local climate and gallons per minute needs.

A Simple Comparison of Electric and Gas Tankless Heaters
In this table 4.5 gallons per minute X energy costs are used to compare gas and electric models.

For a 10-year cost basis here 2 models with the same output capacity:

ELECTRIC
At a rate of 2gpm (@ 60 F degree temp rise)
1 hr hot water per day: $1.26 x 3650 days = $4599 + $1000(instal) = $5599/10-yr cost

At a rate of 3gpm (@ 60 F degree temp rise)
1 hr hot water per day: $2.07/h x 3650days = $7555 + $1000(instal) = $8555/10-yr cost

NATURAL GAS
At a rate of 2gpm (@ 60 F degree temp rise)
1 hr hot water per day: $1.16/h x 3650 days= $4234 + $2000 (instal) = $6234/10-yr cost

At a rate of 3gpm (@ 60 F degree temp rise)
1 hr hot water per day: $1.76/h x 3650 days= $6424 + 2000 (instal) = $8424/10-yr cost

If you want to make your own calculations, use these handy conversions:
1 therm = 100 cu ft of natural gas
1 therm = 29.3 kwh
1 kwh = .03412 therms