Tankless water heaters can use either gas or electricity, depending on the model, offering efficient on-demand hot water heating solutions.
Tankless water heaters provide hot water on demand without the need for a storage tank. But do they use gas or electricity? The answer is both. Tankless systems come in gas-powered and electric models, each with distinct advantages. This guide explores the key differences to help you choose the best option for your home.
How Tankless Water Heaters Work
Tankless water heaters, also called on-demand or instantaneous water heaters, heat water directly as it flows through the unit. When you turn on a hot water tap, cold water enters the heater where either:
- A gas burner (natural gas or propane) rapidly heats the water
- Electric heating elements warm the water as it passes through
This process eliminates standby heat loss associated with traditional tank water heaters, making tankless models more energy efficient in most cases.
Gas Tankless Water Heaters
How They Operate
Gas models use either natural gas or propane to heat water. When a hot water tap opens:
- Cold water enters the unit
- A flow sensor activates the gas burner
- Heat exchanger transfers warmth to the water
- Hot water exits the unit to your faucet
Key Advantages
- Higher flow rates (5-10 GPM) than electric models
- Better performance for whole-house applications
- More cost-effective in homes with high hot water demand
- Can work during power outages (with manual ignition)
Important Considerations
- Require proper venting (direct vent or power vent)
- Need gas line installation if not already present
- Higher upfront costs than electric models
- Annual maintenance recommended
For homes with existing gas lines, a built-in gas heater system may be worth considering alongside tankless options.
Electric Tankless Water Heaters
How They Operate
Electric models use heating elements (similar to an electric kettle) to warm water on demand:
- Cold water enters the unit
- Flow sensor activates heating elements
- Elements heat water as it passes through
- Hot water is delivered to your faucet
Key Advantages
- Lower purchase price than gas models
- Easier installation (no venting required)
- More compact size for small spaces
- Higher energy efficiency (no standby losses)
- No combustion gases or carbon monoxide risk
Important Considerations
- Lower flow rates (2-5 GPM) than gas models
- May require electrical service upgrades
- Performance drops in colder climates
- Higher operating costs in areas with expensive electricity
For point-of-use applications, small on-demand water heaters can be an excellent electric option.
Side-by-Side Comparison
| Feature | Gas Tankless | Electric Tankless |
|---|---|---|
| Energy Source | Natural gas or propane | Electricity |
| Flow Rate | 5-10 GPM | 2-5 GPM |
| Installation Cost | $1,000-$3,000 | $500-$1,500 |
| Operating Cost | Lower (where gas is cheap) | Higher (where electricity is expensive) |
| Lifespan | 20+ years | 20+ years |
| Maintenance | Annual servicing | Minimal |
Which Type is Right for Your Home?
Choose Gas If:
- You have high hot water demand (multiple bathrooms)
- Natural gas is available and affordable in your area
- You’re replacing an existing gas water heater
- You live in a cold climate
Choose Electric If:
- Your home has limited space
- You have moderate hot water needs
- Electrical upgrades are more feasible than gas line installation
- You want the simplest installation
According to the U.S. Department of Energy, tankless water heaters can be 24-34% more energy efficient than conventional storage tank water heaters for homes that use 41 gallons or less of hot water daily.
Installation Considerations
Gas Models Require:
- Proper gas line sizing
- Venting system (stainless steel recommended)
- Combustion air supply
- Gas pressure regulator
Electric Models Require:
- Adequate electrical service
- Proper circuit breaker sizing
- Sufficient wire gauge
- Dedicated circuits
For either type, professional installation is strongly recommended to ensure safety and optimal performance. Some homeowners opt for tankless water heater replacement parts to maintain their systems over time.
Long-Term Costs and Savings
While tankless water heaters have higher upfront costs than conventional tank models, they typically last longer and can provide significant energy savings:
- Gas models save $100+ annually for homes using 86+ gallons daily
- Electric models save $50+ annually for moderate usage homes
- Both types qualify for energy efficiency rebates in many areas
- Longer lifespan (20+ years vs. 10-15 for tank models)
