Everyone loves a hot shower on a cold day, but all that hot water can get expensive. Heating water can account for close to 20% of a household’s energy bill, according to the US Department of Energy.
This guide to electric water heaters covers the subset that don’t burn fossil fuel gas to do their jobs. Electric water heaters on their own can be cheaper than gas ones in some cases, but pairing an electric water heater with cheap, renewable energy from rooftop solar panels can really bring down the cost. Whether you’re heating water for a shower, laundry, washing dishes, or cooking, how you do it can make a big difference.
Let’s dive into the ins and outs of electric water heaters, how to shop for them, and why electric water heaters are a perfect fit for homes going solar.
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What Is An Electric Water Heater? (Definition)
Three types of electric water heaters currently dominate the market:
- Conventional: The traditional format, where electric heating elements inside of a water heater tank heat the water. The tank size determines how much hot water you have available, and the water is kept heated at all times.
- Tankless: Instead of a tank, instantaneous (or “tankless”) water heaters use super-heated electric coils to heat water only when you need it. These can be centrally located or located next to where the water will be used.
- Hybrid/heat pump: Heat pump water heaters draw in heat from the air or ground, making them more energy-efficient.
- Solar: While not traditionally part of the electric water heater group, solar water heaters use electricity and the heat of the sun to warm water.
What Is A Heat Pump Electric Water Heater?
Also known as a hybrid electric water heater, the heat pump water heater does its job with high efficiency. While conventional and tankless water heaters use a heating element, a heat pump water heater moves heat from the surrounding air or ground into the water and, thus, heats it.
You can think of this technology as a refrigerator in reverse. Instead of moving heat out of your fridge to cool your groceries, the refrigerant in the water heater’s evaporator coil takes in heat from the air to heat your water via a heat exchanger.
This process increases the energy efficiency of your water heater technology because it doesn’t use electricity to generate heat. By using ambient heat, the appliance requires less total energy to get your home the hot water it needs and can do so on a more consistent basis.
As a result, a heat pump water heater can use up to 60% less electricity than other types of water heaters, resulting in significant cost savings over the lifetime of the system. Depending on how it’s installed, a heat pump water heater can provide the additional benefit of cooling spaces, too.
Electric Water Heater Pros and Cons
What type of water heater you choose depends on your needs and your home’s design. Each comes with its own set of pros and cons.
Conventional electric water heater pros and cons
| Pros | Cons |
|---|---|
| Time-tested technology | Hot water available is limited to the tank size |
| Inexpensive to install | More expensive to operate |
| Most homes are built with this infrastructure |
Tankless electric water heater pros and cons
| Pros | Cons |
|---|---|
| Water is heated only when it is needed | Expensive to install |
| Doesn’t rely on a tank with a fixed capacity | Infrastructure must often be adapted to install this type of system |
| More energy-efficient than a conventional water heater | |
| Can be installed at the point of use |
Heat pump water heater pros and cons
| Pros | Cons |
|---|---|
| Most energy efficient option | Hot water available is limited to the tank size |
| Lower energy costs for heating | More expensive initial purchase |
| Can work in tandem with central heat pump | Installation may be more complex |
| Has higher space requirements |
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Gas vs Electric Water Heaters
Fuel source isn’t the only difference between gas and electric water heaters.
Installation
For both electric and gas water heaters, you will typically need a permit and inspections. However, the ease of installation does vary:
- All homes will have electricity, and some will even have an existing electrical connection running to the water heater area. If not, an electrician can add a new circuit.
- Not all homes have gas, and it can be expensive to bring in gas from the street to the house or have a large tank installed. If you have gas, you will still need a plumber to make the gas connections.
Size
You have more size options when it comes to electric water heaters. In addition to conventional tanks, you can install point-of-use options, which is a secondary appliance that provides hot water in areas of the home that are far away from the primary tank.
- Conventional tanks are typically available in sizes from 20 to 120 gallons.
- On average, the tank size used by most families will be between 30 and 50 gallons.
- Point-of-use tanks can be anywhere from 2 to 20 gallons.
To determine the right size for your family’s needs, here is a helpful guide, based on the number of people in the home.
- 1 or 2 people: 26 to 36 gallons
- 2 to 4 people: 36 to 46 gallons
- 3 to 5 people: 46 to 56 gallons
- 5 or more people: Add 10 gallons per additional person
Cost
In terms of cost, electric water heaters tend to be less expensive upfront, but they may cost more to operate than gas. However, this can vary depending on the size of your tank, how efficient your water heater is, and the cost of natural gas and electricity in your area.
- Electric water heaters typically cost anywhere from $400 to $1,200 or more, depending on the size, efficiency, warranty, and other factors. Expect plumbing and electrical installation labor costs to range between $600 to $1,000 or more, depending on how complex of an installation is required.
- Tankless electric water heaters can cost up to $1,500, and installation labor can run up to $1,500.
- Heat pump water heaters can cost anywhere from $1,500 to $2,500 or more. Installation costs can add another $600 to $1,000 or more, depending on the type of water heater that’s being replaced.
- Standard gas water heaters typically range from $250 to $1,800, with installation costs running from $150 to $800.
- Tankless gas water heaters can cost up to $1,500, and installation can add another $1,500.
Safety
There is no pilot light or gas line on an electric water heater, which is considered safer.
- Electric water heaters require a 240-volt electric connection, but they shouldn’t pose any electric shock risk when installed properly.
- Gas requires an open flame to heat the water, though modern models have an automatic ignition system that can help prevent gas leaks.
- If not properly vented and maintained, gas water heaters can produce carbon monoxide and may pose a threat of combustion or explosion.
Energy consumption by end us in American homes. Credit: EIA
Lifespan
Because electric water heaters operate more cleanly than gas, you can expect them to last for a few years longer than their gas counterparts.
- A conventional water heater can last between 8 and 12 years, though an electric model can run up to 15 years.
- Tankless water heaters can last up to 20 years because they aren’t constantly running to keep a full tank of water warm.
- Heat pump water heaters can last up to 15 years on average.
Energy efficiency
Gas water heaters are often considered cheaper to operate than their electric counterparts because the price of gas is cheaper than the price of electricity in some areas. That doesn’t mean they’re more efficient, though.
- Electric models experience little to no energy loss when heating water.
- Gas water heaters waste a lot of energy through the vent at the top that releases excess heat.
Energy efficiency can be compared with a metric called the Uniform Energy Factor (UEF). UEF measures the efficiency of a water heater as determined by a test method outlined by the U.S. Department of Energy. The higher the UEF value, the more efficient the water heater.
- Energy-efficient electric options have a UEF of at least 2.20.
- Energy-efficient gas models have a UEF of at least 0.64.
- Energy-efficient tankless gas models have a UEF of at least 0.87.
Thus, the price of gas might be cheaper than the price of electricity, but you will likely use more energy to power your gas water heater than what you’d use for an electric one.
Environmental impact
The big difference between natural gas and electricity is that natural gas is a fossil fuel, and electricity can be produced as a renewable resource. Fossil fuels are limited and have a significant negative impact on the environment. Renewable energy resources can't run out and are much better than fossil fuels in many ways.
The three main renewable fuels used to create electricity are wind power, solar power, and hydropower.
- Wind power uses windmills and wind turbines to produce power.
- Solar power uses the sun and solar panels to capture energy.
- Hydropower uses quickly flowing water in turbines to generate electricity.
If a renewable source produces your electricity, it is much more environmentally friendly than using natural gas or other fossil fuels.
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Benefits of an Electric Water Heater
Compared to heating your water with gas, there are many benefits to using an electric water heater.
- An electric water heater is much more efficient since it doesn't lose energy to venting.
- You don't run the risk of having a gas leak or producing carbon monoxide.
- If you have solar panels, it can be much less expensive to run an electric water heater. You are already producing electricity for your house, so you don't have the added expense of paying for gas.
- Electric heaters running on solar power are also more environmentally friendly than running your heater on gas or powering it with electricity generated from fossil fuels.
- You can spend less money on the electric water heater upfront, and if you have solar panels, you can also spend less money operating it, as well.
Electric water heaters are great for solar-powered homes
If your goal is to be environmentally friendly and save money, installing solar panels can be a great way to do both. Once you have solar panels, it is in your best interest to use as many electric appliances in your home as you can. This is called electrifying the home, and it helps maximize the value of the power you generate from your solar panels while also reducing your overall reliance on fossil fuels.
Tax Credits for Water Heaters
Thanks to the Inflation Reduction Act you can reduce your tax liability when you install a qualifying water heater.
Electric heat pump water heaters qualify for a 30% tax credit (up to $2,000) as long as they meet certain efficiency standards. Qualifying heat pump water heaters must meet the Consortium for Energy Efficiency’s highest efficiency tier at the start of the year they were installed. (Energy Star says that Energy Star certified heat pump water heaters meet those criteria.)
Solar water heaters are also eligible for a federal tax credit: 30% of their installation cost.
(When it comes to claiming tax credits and planning for them, be sure to consult your own tax professional.)
The Inflation Reduction Act also provided for state-run rebate programs for energy efficiency improvements. Those rebates are becoming available as states receive approval for their plans. For example, in Arizona, you could get a rebate of up to $1,750 for a heat pump water heater.
Check out this Department of Energy map to see where your state is in the process. Then check your state’s website to see if you qualify.
How to Shop for an Electric Water Heater
When it comes time to replace your water heater, most people just get the newer version of whatever they had before. However, you should consider all options when choosing your new water heater.
If you switch from gas to electric, you will need an electrician and a plumber to prepare your site for installation and change the hardware over. Some of the top factors you should consider when shopping for an electric water heater include:
- Type: You can choose a traditional storage tank, tankless/on-demand, solar-powered, or a heat pump electric option. Each option has pros and cons, so you have to pick the one that works best for your home.
- Capacity: You want to ensure you get a water heater that can keep up with the number of people in your home so you don’t run out of hot water when you need it most!
- Size: Measure the space you have designated for your water heater, and find one that fits that space.
- Energy efficiency: Find a water heater that is Energy Star certified for high efficiency.
Why you should look for Energy Star
The Energy Star designation was designed to indicate appliances that work as efficiently as possible. If you are switching to an electric water heater because you have solar power, you will want to find one that makes the most out of the electrical energy produced by your panels. Your panels can only generate so much energy, so you want a water heater that efficiently uses that energy so that you don't have to pull additional electricity from the grid.
The Best Electric Water Heater Brands
Many different companies produce electric water heaters, but these companies are popular and known for their quality:
- A.O. Smith: A leader in water heaters, but only available through local plumbing contractors.
- Bosch: Known for their point-of-use systems.
- Bradford White: Has been manufacturing water heaters since 1881, with manufacturing facilities located in the U.S.
- EcoSmart: Known for their tankless water heaters.
- General Electric: Makes GeoSpring, an electric heat pump water heater line manufactured in the U.S.
- Navien: A growing leader in tankless water heaters.
- Rheem: Industry leaders for nearly 100 years, including heat pump water heaters.
- Stiebel Eltron: A leader in the development of tankless water heater technology.
Electric Water Heaters and Solar Panels
Switching from a gas water heater to an electric one, or switching from one electric model to a larger or less efficient one, is likely going to raise your electricity bill. Using more electricity—whether for a new water heater, electric vehicle, or replacing your gas furnace with a heat pump—means you’ll spend more money on it. You might pay less for gas, but you will pay more for electricity.
The good news is that, while there’s no at-home gas generation solution, you can produce your own electricity. Solar panels for your home can save you money by providing some or all of the electricity you would have otherwise bought from your utility. In fact, the higher your electric bills, the more potential for solar savings.
If you’re interested in your possible savings from solar, use our solar savings calculator or reach out to a solar advisor today.
Shifting home energy consumption from fossil fuels to clean electricity is a necessary step in avoiding the worst effects of climate change. But, it can also be an opportunity to save money in the long run too.
Electric Water Heater FAQs
Will an electric water heater increase my utility bills?
If you’re replacing a gas water heater with an electric one, your electric bill will likely go up, though your gas bill will likely go down. The same will probably be true if you’re replacing an old electric water heater with a less efficient or significantly larger one.
That said, highly efficient options, like heat pump water heaters, may be the cheapest to operate. Pairing an electric water heater with solar panels can also greatly reduce your operating costs.
How big of an electric water heater do I need?
Picking the right size electric water heater depends on how much hot water you need. For water heaters with tanks, the Department of Energy provides a worksheet to determine how much water you may need in an hour, which can help you determine the appropriate water heater based on its first hour rating.
For tankless water heaters, you’ll need to estimate how much water you’ll need at one time in gallons per minute. Compare that to the tankless water heater’s flow rate.
You can also explore any number of online water heater size calculators.
How long do electric water heaters last?
An electric water heater can last up to 15 years, while a tankless one can last up to 20. Heat pump water heaters can last 15 years, too. These are just rules of thumb. Your actual water heater’s lifespan could be longer or shorter based on its level or use, the quality of your water, and whether it’s been properly maintained.
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Cory O'BrienSenior Director - Growth MarketingCory brings over 8 years of solar expertise to Palmetto, and enjoys sharing that knowledge with others looking to improve their carbon footprint. A dog lover residing in Asheville, NC with his wife, Cory graduated from UCSB. If you run into him, ask him about the company he founded to rate and review beer!
