What decides the yearly cost
- Hot water used. Every gallon heated by the same amount takes the same heat. Double the gallons and the energy doubles.
- UEF. The efficiency on the label. A higher UEF buys less energy for the same hot water.
- The fuel and its price. Gas is priced per therm and electricity per kWh. Which one is cheaper for the same heat depends on your state.
Cost for three levels of hot water use
The table applies the ENERGY STAR minimum UEF of each type to three amounts of hot water, with a 70 degree rise (all assumed for illustration), at the 2024 U.S. average prices: $1.40 per therm of gas and 16.5 cents per kWh. The minimums are what a certified heater must reach, not what every heater achieves.
| Type | 30 gallons a day | 50 gallons a day | 80 gallons a day |
|---|---|---|---|
| Gas storage tank (UEF 0.81) | $110 | $184 | $294 |
| Gas tankless (UEF 0.95) | $94 | $157 | $251 |
| Heat pump water heater (UEF 3.3) | $94 | $156 | $250 |
Why the winner changes by state
A heat pump water heater needs a fraction of the electricity of an electric resistance heater, but electricity costs more than gas per unit of heat in many states. Where gas is cheap, a gas heater can cost less to run. Where electricity is cheap or gas is dear, the heat pump can win. The calculator starts from the state averages so you can see which side you are on.
What the running cost leaves out
- The purchase and installation price. Enter both prices in the calculator to see a simple payback.
- Venting, gas line or electrical changes that a different type may need.
- Rebates and tax credits.
- How long the heater lasts and what it costs to repair.