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Water Heater Buyers Guide: Gas vs. Electric Water Heater

September 6th, 2022



Water heaters arent the types of thing that get ogled on Pinterest.

But when yours goes kaput, a new water heater quickly becomes your most coveted major appliance. We tell you what you need to know before buying an electric or gas storage tank water heater so you can pick the best option for your home.

First Things First: Water Heater Cost, Types, and Storage

Heating water is the second-largest expense in our homes, according to the Department of Energy, accounting for 14% to 18% of our utility bills. That makes picking the right water heater an important decision not only for your comfort, but for keeping energy costs under control, too.

Well cover four types here. They all keep water toasty in an insulated storage tank until its used. And all, except for point-of-use, are whole-house systems:

  1. Standard

  2. High-efficiency

  3. Solar

  4. Point-of-use water heaters

FYI: A fifth type, tankless water heaters, heats cold water on demand only as you need it. That makes them more efficient than standard tank models generally, but theyre more expensive to buy and install. And tankless models cant always handle hot water needs in high-demand homes.

Most tank water heaters are powered by gas or electricity. The type of energy available in your home will play a role in deciding which water heater you should buy.

Standard Storage Tank Water Heaters

By far the most popular option, standard water heaters use a gas flame or electric heating element to heat water.

Depending on your local utility costs, gas water heaters are typically cheaper to operate than electric. They also cost more upfront than an electric. However, based on energy savings, gas heaters generally make up the difference in price in about one year.

Cost: 300 to 600 for gas; 250 to 500 for electric. Installation costs add 700 to 2,000.

Standard residential tank water heaters:

High-Efficiency Storage Tank Water Heaters

As the name implies, high-efficiency (HE) models are the most energy-efficient storage tank water heaters you can buy. Youll find both gas and electric models.

Most gas-fired water heaters have an energy factor (EF) number, set by the U.S. Department of Energy, to help consumers compare the efficiency of similar appliances. The bigger the EF number, the more efficient the appliance.

Standard gas water heaters have an EF of about .50 to .60. On the other hand:

Cost: About 620 to 1,500. Installation adds about 700 to 2,000, depending on your location.

What if you want a high-efficiency electric? Your option is a heat pump, or hybrid, water heater. Theyre the only electric water heaters certified by Energy Star. Theyre more expensive than gas high-efficiency.

They pull heat from the surrounding air into the water in the tank. Because of this theyre best for mild to hot climates.

They cost more than standard electric heaters, but they can pay back the difference in price in less than two years. An Energy Star model uses up to 65% less electricity than a standard electric water heater, and can save up to 3,000 over the life of the appliance.

Heat-pump water heaters:

Cost: 1,100 to 3,000. Installation costs add 1,400 to 2,000.

Solar Water Tank Heaters

Solar water heaters can cut your water heating costs in half compared with a standard water heater -- if youre ready to pay a pretty penny. They have two basic components:

They work one of two ways:

Cost: about 8,000 to 10,000 for equipment and install in regions that experience freezing; costs are half that in areas where freeze protection for equipment is not needed.

It can take up to 30 years (longer than their projected lifespan) before their energy savings pay back the upfront costs. Local rebates and tax credits can reduce their cost.

Solar water heaters:

Point-of-Use Water Heaters

These augment your homes whole-house water heater by providing hot water for a specific application, like a kitchen faucet. They reduce the amount of water wasted waiting for the tap to run hot.

If you have basic plumbing skills, you can DIY install a point-of-use water heater.

Most models are electric and come in various gallon capacities: 2.5, 6, 10, 15, 20, and 30. The 20- and 30-gallon capacities are recommended for small, detached structures and home additions that dont require a whole-house water heater.

Cost: about 200 for 2.5-gallon heater to 400 for a 30-gallon heater.

Although a point-of-use water heater can reduce water waste, youll be adding another power-consuming appliance to your home that will boost your utility costs.

FYI: Energy Star doesnt certify point-of-use water heaters.

Whats More Important than Gallons? First-Hour Rating

Homeowners often buy water heaters based on capacity. Although an 80-gallon water heater will typically meet the daily hot water needs of a three- or four-person household, not every heater with an 80-gallon tank cranks out the same amount of hot water per hour.

What you really need to know is a water heaters first-hour rating (FHR). The FHR tells you how much hot water the unit will reliably deliver in a set amount of time. Does your family of four use 40 gallons of hot water while getting ready during the same hour in the morning? An 80-gallon water heater with an FHR of 30 gallons wont cut it.

A water heater retailer or professional installer can help you decide what FHR is right for you. Or, check out this FHR worksheet from the Department of Energy.

Features and Extras You Should Have

Brass valves: Tanks have a valve at the base that allow for easy draining during routine maintenance (which you should do at least once per year). A durable brass valve will last longer than plastic.

Glass-lined tank: Its a heavy-duty porcelain glass layer inside the water tank that combats the corroding effects of water storage.

Digital displays: They add function by allowing users to easily monitor water heating and set custom settings. The data you collect can help modify hot water usage behavior to trim energy costs.

Long warranties: Warranties span three to 12 years. Tank water heaters with longer warranties tend to be better quality. They also have a bigger heating element that combats mineral scale buildup at the bottom of the tank. Buildup can shorten a tanks lifespan.


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Disclaimer : The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Houston Association of REALTORS®

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