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Tankless Water Heaters: Gas vs. Electric for Phoenix Homes

So, you’ve got your eyes on a tankless (on-demand) water heater. But you’re not sure which kind you should get: gas or electric.

Answer this: Does your home currently have access to natural gas line? If so, then a gas tankless water heater is definitely worth considering.  If you do not have natural gas, then do not buy a tankless water heater. Consider a traditional high energy efficiency or a hybrid/heat pump type water heater instead.

We’re not the only ones who feel this way.

“If you choose a tankless unit look for a gas-fired model with at least an Energy Factor (EF) of 0.8,” says the American Council for an Energy-Efficient Economy (ACEEE).

Why don’t we recommend electric tankless water heaters?

First, we can’t find one that we truly like and can recommend. (We’re still looking for one we trust.)  All the ones we’ve found fall behind their gas counterparts in 2 big ways:

  • Operating costs
  • Flow rates (gallons of hot water provided per minute or “GPM”)

Let’s explore those issues in more detail.

Operating costs: Electric is way higher than gas

If you buy an electric tankless water heater, prepare for a large electric bill every month.

To run a whole-home electric tankless water heater you may need three to four 50-amp circuits. That’s enough amperage to run 3-4 air conditioners at the same time.

But aren’t electric tankless water heaters more energy efficient because they have a higher energy factor (EF) rating? Yes, but that rating can deceive you. EF does not take into account inefficiencies at the power plant where the water heater gets its energy from.

According to the ACEEE,

“The energy factor is based on site energy use, which is the amount of energy your water heater uses. However, it takes about three times as much source energy (this includes the energy needed to generate and distribute a fuel) to deliver a unit of electricity to the site as gas, since only about 1/3 of the fuel energy that enters the power plant reaches the house. The rest is lost due to inefficiency at the power plant and the power lines. Therefore, an electric water heater that appears to be 50% ‘better’ than a gas one (0.9 Energy Factor versus 0.6 Energy Factor) actually uses much more source energy than the average gas water heater.” (Emphasis ours.)

Bottom line: Electric tankless water heaters are not as cost efficient as gas-fired tankless water heaters and will skyrocket your monthly energy bill. All the while underperforming (keep reading)…

Flow rate: Electric fails compared to gas

Gas-fired tankless water heaters provide more gallons of hot water per minute (GPM) compared to electric models, according to the U.S Department of Energy.

This means you’re less likely to get enough hot water to keep your family happy.

According to Consumer Reports, many electric tankless water heaters “can’t deliver hot water fast enough to replace a conventional water heater if groundwater is cold. Even in areas with warm groundwater, most homeowners would need to upgrade their electrical service to power a whole-house tankless model.”

Bottom line: The reason you buy a tankless water heater is to enjoy the comfort of endless hot water on demand. You’re more likely to get that comfort from a gas-fired model than electric due to a higher flow rate.

Are there any downsides to gas tankless water heaters?

Clearly, we’ve painted a not-so-pretty picture of electric tankless water heaters. But are we saying gas tankless water heaters are perfect? No, they have their downsides including:


  • Higher price – Gas tankless units cost significantly more than a conventional gas tank type water heater.
  • High installation cost – Gas tankless water heaters require a large amount of gas. Your  home may or may not have the correct size gas line or amount of available gas to operate the tankless water heater to its fullest potential. If your gas line is undersized, then a dedicated gas line would be run to the tankless water heater location.

Despite these issues, they’re still a better choice compared to their electric counterparts since gas models are more efficient and actually provide you the hot water on demand that you desire. And for many people gas tankless water heaters are a great choice.

Want an estimate for a tankless water heater?

To get an accurate estimate to install a gas-fired tankless water heater, you’ll need a plumber to determine the unit size and gas lines you’ll need to match your family’s hot water needs.

Need a Phoenix area plumber? We’ve got you covered. Contact George Brazil Plumbing online for an installation estimate.

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