I've been told that a tankless electric water heater is enormously more expensive than a tank water. I have a 50 gallon water heater that I must replace. I have a friend who is a plumber telling me that I would pay 2-3 times more for electricity with a tankless water heater, but what I've been reading doesn't seem that it would be more.

Does anyone have any experience with an electric tankless water heater that would do at least 7 GPM (2 bathroom home; don't need it for washer or dish washer)? What kind of an electric bill differential are you seeing?

  • What advantages do you see for a tankless heater over a tank (storage) water heater? Commented Jan 2, 2017 at 18:01
  • My water heater caught on fire and I am concerned about having this happen again. This was a rather new water heater (about 2 years old) and a leak caused an actual fire in the thermostat box that nearly lit the closet on fire. Barely caught it in time. Further, I'm also looking to possible SAVE on the electric bill if possible, but have found some very, ver mixed information on the energy bill impact for electric tankless heaters...
    – ylluminate
    Commented Jan 2, 2017 at 18:11
  • Where are you on this planet? Also, do you have a water softener, and if so, are you plumbing it through the heater? Finally, what was the state of the anode in the leaky water heater? Commented Jan 2, 2017 at 18:14
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    If your current 50-gal water heater is electric, you won't be able to get an electric tankless that will replace it. The only tankless that size would be gas fired. A tankless gas that would work would have a burner rated at 200,000 BTU/h. This converts to 60 kW which at 240 V would draw 250 A. Commented Jan 2, 2017 at 19:02
  • 2
    @Jim Stewart - not to mention that he would likely need to upgrade his transformer and service drop and add a second 200A service panel. If his utility has a demand charge for rate of consumption then the electric tankless setup would also cost more to operate.
    – user39367
    Commented Jan 2, 2017 at 19:15

4 Answers 4


...in a modern tanked heater with modern levels of insulation, and people actually using hot water from time to time, standby losses are microscopic .vs. use. So a tankless electric is a very expensive electrical installation (huge power draw needs huge wiring and often a service upgrade to support something like 3X 40A breakers) that might save 1-3% on heating water.

This answer provides some hard data on tanked standby loss in reality: https://diy.stackexchange.com/a/244644/18078

If you want to save money on heating water, consider a tanked heat pump water heater - there you can get some serious efficiency that actually applies to the hot water you use. Unless you heat your house with electric resistance heat, it's a win even in the winter, (your heating source heats the air that the heat pump removes heat from to heat the water) and in the summer it helps keep the house cool "for free."

  • What is the noise level of these heat pump hot water heaters? What is their lifetime? Commented Jan 2, 2017 at 22:38
  • Spec sheet on one heat pump hot water heater shows only 24 A at 240 V. cdn.globalimageserver.com/… Commented Jan 2, 2017 at 23:09

All else being equal, the tankless unit will use less KWH electricity than the unit with the tank because the tankless does not spend energy keeping hot water on standby. However, depending on your local electric utility's billing policy the tankless may be much more expensive to operate.

The reason is demand charge. Utilities support infrastructure for maximum rate of usage in addition to total KWH consumed. In some jurisdictions utilities do not bill residential customers for demand rate. In other jurisdictions demand rate is everything.

Based on the plumber's comments I imagine OP lives in an area where the demand rate is a big factor on the monthly bill. The utility should have a rate schedule available for customers to look at.


Tanked will lose about 2kWh/day, tankless 20Wh/day, so tankless will lose about 700kWh/year or about 105$/annum @ 15c/kWh electricity. On the other hand tankless needs big current (20kW at least to give decent flow of 10L/min) so if it's next to breaker box it'll be quick and easy to install, if it's far, just go to another tanked or switch to tanked heat-pump that can heat the same tank for 1/3 the energy.


Edit: I missed "electric tankless". Also, heat pump water heaters happened.

Heat pump water heaters completely change the game

The economics are insane. They are tanked heaters but they use typically 1/4 the electricity for the same heat, and are such a tremendous cost savings that they pay for themselves in a few years.

So where do they get the other 3/4 of the heat? They steal it from the room. This is either a blessing or a curse, depending on how you feel about a bunch of entirely free air conditioning in the utility room. For instance in the hot south or southwest, it's a no-brainer. But in winter you may be running primary heat more to replace that lost heat. But usually that primary heat is much more cost-efficient than resistive electric heat, so it's still a net win.

Electric tankless is a brute, though

My rule of thumb is 40 amps per GPM you want. GPM is a measure of flow, it means "gallons per minute". This is a monstrous load on a panel. So it really depends on what panel capacity you have vs what GPM flow you need. 90% of the time, this is not a pretty picture and requires a very costly electric service upgrade, and that's where that advice comes from.

I mean if nothing is done to manage GPM draws, some houses can draw 5 GPM from a water heater and you're talking 200 amps to power that.

But GPM is the key: a lot can be done to contain GPM, simply by not using the default non-California wasteful plumbing fixtures. Heck, the Europeans have "electric showers" that draw 35-45 amps! Barely 1 GPM at that point, but it works for them.

If you can contain GPM rates, and then either find the panel capacity or use Load Management, then absolutely, electric tankless can be a player.

Gas tankless, on the other hand, doesn't prevent an electric problem but might present a gas flow problem if your gas service isn't ready for it.

"Enormously more expensive" is silly.

Right off the bat, he's throwing out the baby with the bathwater: heat pump water heaters are expensive but very worth it, unless you have an irreconcilable problem with keeping the utility room warm.

Gas tankless are expensive too, but a fantastic solution.

And electric tankless are dirt cheap - as discussed, the issue is the electrical provisioning if nothing else is done to contain GPM flows.

So if he's making that as a blanket statement, he is just plain wrong. I would suspect an ulterior motive, and you probably don't want to start that conversation LOL.

New technology works better when you're smart.

Many new technologies are vulnerable to being applied in a klutzy and inefficient way that makes them not work well at all. That's where, again, skills pay the bills - and people without skills get frustrated trying to make new technologies work.

One example of a sizing issue: Adding a low-flow showerhead can allow use of a much smaller heater, which can mean running much smaller cable.

With on-demand, you might use more

This means the middle person in the shower who used to have to hurry to leave the last person anything at all, doesn't hurry anymore. The last person can take the time they need. That extra use is a true luxury you now have, but it's not free.

Crossing over from gas to electric may add energy cost

Since electric energy starts as heat, and only 33-40% makes it into electric energy, it's an inefficient way to buy heat. When you burn your own natural gas, you get 80-90% of the therms in your water. So, X therms of electric is generally more expensive than X therms of gas.

Unless you heat-pump it, of course.

It's not only about cost: convenience is worth it.

We are affluent Americans. We have money for conveniences. On-demand does some amazing things:

  • Unlimited hot water. This is huge. Especially if you have a family showering.

  • Quick hot water. With electric, you don't need a vent, and the unit is not large, so you can position it near the point-of-use. That means hot water in seconds, not minutes. What's your time worth? What's the water you flush down the drain worth? And that plays well with the European "electric shower" concept of put the tankless right at the showerhead.

  • Gas fired tankless heaters can be put on an outside wall. This means no damage if they fail catastrophically, but would mean a longer run of pipe to the point of use. Mine is however centrally located inside where the 40-gal tank used to be. I have a pan under it, but if it would start spraying water would get all over and cause damage. I am counting on it failing by developing a slow leak. I have had two gas fired tanks fail catastrophically. Damage was significant, but I was home both times so the damage was not colossal. Commented Jan 3, 2017 at 0:06
  • @JimStewart Tankless fails are really a 'little thing' compared to tanked fails. Tankless fail is like 'leaving a (cold) tap open' even though usually the 'failure' is having no hot water due to limestone clogging the heater while tanked fail il like 'having a bathub full of scalding-hot water running trough the house'
    – DDS
    Commented Mar 27, 2018 at 15:20
  • We were a family of 5 and everyone showered on a 40-gallon gas-fired tanked heater just fine. Including teenagers who took forever showers... :shrug:
    – FreeMan
    Commented Feb 16 at 13:29

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