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Guide to Electric Water Heaters

The words "Electric Water Heater" over an image of a futuristic-looking tankless electric water heater, representing the benefits of an electric water heater over a natural gas powered or fossil fuel powered water heater.
PublishedJune 29, 2022
UpdatedMay 7, 2024
AuthorCory O'Brien HeadshotCory O'BrienSenior Director - Growth MarketingEditorRyan Barnett HeadshotRyan BarnettSVP, Policy & New Market Development
In this article
What Is An Electric Water Heater? (Definition)
What Are The Different Types of Electric Water Heaters?
Gas vs Electric Water Heaters
Benefits of an Electric Water Heater
How to Shop for an Electric Water Heater
The Best Electric Water Heater Brands
Electric Water Heater Overview

Heating water in your home can account for up to 20% of your monthly energy bills, according to the U.S. Department of Energy. You might not think about your water heater much (unless you suddenly run out of hot water!) but if your water heater isn't efficient, you could be wasting a lot of money. By switching to an electric water heater, you can save on energy costs, and make the most of your solar power investment.

In this guide, we’ll explain what an electric water heater is, the pros and cons of electric water heaters, the benefits over gas water heaters, a buyers guide with tips on how to shop for an electric water heater, and why you should invest in electric water heating for your home, especially if you’re going solar.

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What Is An Electric Water Heater? (Definition)

An electric water heater is an appliance that uses electricity, instead of gas, to heat the water that will be used throughout a home. Electric water heaters can heat water in a tank, or be tankless, and can also heat water in a central location, or at the point of use. Electric water heaters can also be extremely energy-efficient by using a hybrid or heat pump system to concentrate existing heat from the air into the water.

What Are The Different Types of Electric Water Heaters?

Three types of electric water heaters currently dominate the market:

  • Conventional: The traditional format, where electric heating elements inside of an electric 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: A newer style of electric water heater, hybrid heaters heat water by drawing in and concentrating heat from the air and ground, making them more energy-efficient.

What Is A Hybrid Electric Water Heater?

Also known as a heat pump water heater, the hybrid electric water heater is an up-and-coming technology that provides hot water with greater energy efficiency. While conventional and tankless water heaters use a heating element, a hybrid electric water heater moves heat from the surrounding air and ground into the water to increase the water temperature.

You can think of this technology as a refrigerator in reverse. Instead of removing warm air to cool your groceries, the refrigerant in the hybrid 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 power the heating element. 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 hybrid 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.

Conventional Water Heater Pros and Cons

Pros of a Conventional Water Heater:

  • Time-tested technology
  • Inexpensive to install
  • Most homes are built with this infrastructure

Cons of a Conventional Water Heater:

  • The amount of hot water available is limited to the tank size
  • Expensive to operate, as all of the water must be kept hot at all times

Tankless Water Heater Pros and Cons

Pros of a Tankless Water Heater:

  • Water is heated only when it is needed
  • Doesn’t rely on a tank with a fixed capacity, so you have endless hot water
  • More energy-efficient than a conventional water heater
  • Can be installed at the point of use

Cons of a Tankless Water Heater:

  • Expensive to install
  • Infrastructure must often be adapted to install this type of system

Hybrid Water Heater Pros and Cons

Pros of a Hybrid Water Heater:

  • Increased energy efficiency
  • Lower energy costs for heating

Cons of a Hybrid Water Heater:

  • The amount of hot water available is limited to the tank size
  • It’s a more expensive initial purchase
  • Infrastructure might need to be adapted to install
  • Requires a large amount of space around the heater
  • Doesn’t work well in significantly colder climates

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Gas vs Electric Water Heaters

The fuel source that heats the water is not the only difference between gas and electric water heaters.


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.


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


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.
  • Hybrid 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.


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 post 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.


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.
  • Hybrid 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. The problem with that claim is that electric water heaters use energy more efficiently than gas versions.

  • 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, and 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.

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, installing solar panels is one of the best improvements you can make to your house. 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 power you generate from your solar panels while also reducing your overall reliance on fossil fuels.

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 hybrid 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. You don't want to end up running 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 ENERGY STAR Water Heaters Are the Best

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 electrical 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 hybrid water heaters.
  • Stiebel Eltron: A leader in the development of tankless water heater technology.

Electric Water Heater Overview

Electric water heaters are often a good choice for your home, and if you have solar panels, it's the choice that makes the most sense. However, you shouldn't just go out and pick up the first electric water heater you see. Determining what water heater is the best for you depends on what you need from it, and your family’s preferences.

It’s also important to understand the key difference between electric and gas water heaters:

  • Depending on your current setup, installing an electric heater could be simple, or more complex.
  • With electric heaters, you generally have more size options, a safer unit, a longer lifespan, and greater energy efficiency.
  • Gas heaters can cost less to run (unless you are using solar panels) and they can heat water faster than electric heaters.
  • When running an electric heater off the energy from solar panels, electric water heaters are more environmentally friendly than gas.

If you want to get solar panels installed as part of a switch to an electric-powered home, including an electric water heater, talk to Palmetto today. You can use our Free Solar Design and Savings Estimate Tool to learn how much you can save, and get a preview of what solar panels will look like on your roof.

See what solar can do for you:

My electric bill is $290/mo
About the AuthorCory O'Brien HeadshotCory O'BrienSenior Director - Growth Marketing

Cory 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!

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