When buying a new tankless water heater system one of the first questions most homeowners ask is, "which is better, gas vs electric?" Each has their advantages and shortcomings, but often the decision is out of your hands and is determined by which fuel is available in your area. There are 3 common fuel sources for tankless water heaters: Electric, natural gas and propane. Gas on-demand systems are designed to burn either natural gas or propane, but they operate in the same way. Many manufacturers offer the same model with the choice of either natural gas or propane for fuel.Electric systems, however, are a totally different design. Beyond the function of heating water there are very few similarities on how they operate. Quick Navigation Initial PriceInstallation RequirementsOperating ExpensesHot Water RequirementsMaintenance RequirementsService Life & WarrantyIndividual PreferenceFuel Source ConsiderationsEnvironmental Impact Which is the Right Choice: Gas vs ElectricWhich fuel source is right for you depends on many different factors. The first and most important, is which fuel do you have available in your area. Many communities don't have access to natural gas or propane and their only option would be electric.In other situations, your home electrical supply may not be able to support an electric water heater without major upgrades. Each household has it's own unique set of circumstances, and finding the best match plays a large role on your overall satisfaction for years to come.Tankless water heaters are designed to last for 20+ years, this makes them a major investment both from a financial and time perspective. Many homeowners find consulting with a professional on your specific situation to be very helpful. You should factor the following into your decision:Household hot water demandsInstallation requirementsBudgetPersonal preferences Making the Comparison:Gas vs Electric Initial Price Gas Gas on-demand units are higher priced. You can easily spend over $1,000 to buy a quality system.Non-Condensing systems are less expensive to purchase, but more expensive to install. Largely because of the venting requirements. Condensing units are more expensive to purchase, but since they do not need venting, the cost of installation should be lower. Electric Electric units are significantly less expensive than gas systems. A quality electric tankless water heater can be found for $500. Installation expenses are largely determined on the home's electrical situation. See below. Installation Requirements Gas Gas tankless units are much more expensive and complicated to install.A non-condensing unit requires a complex category III venting system made from stainless steel. The venting system will allow for adequate air flow for combustion. The existing venting ducts usually need to be replaced when transitioning from a traditional to a tankless water heater. The home's incoming gas line may also need to be upgraded to accommodate the new system's energy demands. Frequently, there are costly modifications necessary to accommodate the new unit's gas and venting requirements. Electric An electric on-demand system is easier and less expensive to install than a gas unit. Electric units are about a third the size of a gas unit.Because electric systems are less complex and so much smaller, they can be installed in many out-of-the-way areas such as closets.An electric unit doesn't require ventilation since there is no gas combustion taking place. This also allows for more flexibility on where they can be installed. If a power upgrade to the home's electrical is not necessary, the installation of an electric tankless is not only easy, it is also inexpensive. It's critically important that both gas and electric tankless water heaters are installed correctly to provide safe operations, as well as to achieve the best results possible. We recommend hiring a qualified profession to install your unit. Operating Expenses Gas As a general rule, you can expect a gas tankless water heater to achieve an efficiency rating of 80 to 85%.Fuel prices fluctuate, but currently the price of gas is lower than electricity. Because of this, gas tankless units are less expensive to operate.One thing to keep in mind: As gas fuel prices rise the price of operating a gas system will undoubtably increase as well. An electric system could easily become more economical to operate because of their higher efficiency rating. Electric Efficiency ratings of 98 to 99% are consistently reached with electric tankless water heaters. In many areas, gas prices far exceed the price of electricity. When this is the situation, an electric unit is more economical to operate. The impressive efficiency rating of an electric unit will offset the higher fuel prices. What Impacts the Overall Operating Cost of a Tankless? 1 - Fuel CostIn most areas the current cost of gas is lower than electricity. Because of this, operating a gas tankless unit is less expensive.In some regions gas is much higher than electricity as fuel prices vary in different regions. Electricity is less volatile than gas, which tends to fluctuate more dramatically.Most economists agree that gas prices will likely significantly increase in the future, while electricity prices should remain relatively stable. 2 - Efficiency (how efficiently the system uses the fuel)Efficiency ratings are determined by the amount of hot water produced by a single unit of fuel.The higher the efficiency rating, the less fuel is wasted while producing hot water.Electric tankless units are more efficient than their gas cousins. The improved efficiency helps offset the higher price of electricity. Hot Water Requirements Gas A gas tankless water heater can deliver a flow rate up to 8 GPM. If your household hot water need is high, a gas system may be better suited to meet your needs. Electric Electric tankless systems are capable of delivering up to 8 GPM of hot water. The incoming water temperature impacts the GPM performance of both electric and gas systems. A tankless water heater's capacity is measured by the amount of hot water (flow rate) it can deliver (GPM = Gallons Per Minute). Click HERE to learn how to determine your household hot water needs. General rule of thumb: 8 GPM should meet the hot water needs for an average family. A tankless water heater will have a lower GPM in a cooler region because the incoming water will be colder. The tankless will be required to work harder to heat the water to the desired temperature.In colder regions, a gas tankless water heater generally wins the gas vs electric debate. Maintenance Requirements Gas Because gas systems are more complex, they require more maintenance than electric units. A licensed technician should inspect the gas unit annually. He will be checking that the unit is performing properly and the fuel is combusting safely. Flushing the unit every 6 to 12 months is critical to prevent lime scale build-up. A pre-filter is highly recommended to prevent sediment from entering the tank for both gas and electric systems. Many of the general maintenance tasks can be completed by the homeowner. A gas tankless is more difficult to service because of the complex heat exchanger. Electric Electric tankless water heaters require very minimal maintenance.A pre-filter is recommended to prevent sediment, and in addition the inlet screen filter should be occasionally flushed. The entire unit should be flushed annually. Service Life & Warranty Gas Gas systems are designed to last up to 20-years. However, regular maintenance plays a role in the actual service. The service life of a gas unit can be negatively impacted if maintenance is not routinely completed. Warranties vary among manufacturers. Many offer a 10-year warranty for the heat exchanger, 5-years for other parts, and 1-year for labor.Many manufacturers require professional installation for the warranty to be valid. Electric Because of the simplistic design of an electric tankless water heater, these units often exceed a 20-year service life. Some manufacturers offer life time warranties, and others cover parts for 5-years and labor for 1-year.Electric systems are easier to troubleshoot, diagnose and repair when problems occur. Tankless water heaters are designed for a long service life, typically 20-years. Without a tank that leaks over time, every component on an on-demand system can be repaired or replaced. What are the Factors that Impact Service Life? Maintenance - Regular maintenance is critical to keeping your tankless healthy and helping it live a long life. Hard Water - A whole house water softener can treat the water before it enters the tankless. This will help minimize lime scale build-up especially if you live in an area with hard water. More frequent flushing can also prevent lime scale build-up. Acidic Water - In most cases the acidity of the water is already treated before it enters the tankless. But if the water is too acidic it is not only unhealthy, it is also hard on your household plumbing. Acidic water will break down the heat exchanger on your tankless as well as the plumbing within the unit. Pay particular attention the the acidic level of the incoming water during new home construction and take appropriate steps to resolve the issue. Installation - Many manufactures will not validate their warranties if the tankless unit was not professionally installed. Correct installation is critical to getting the best results from your water heater. Individual Preference Gas Gas tankless systems can be a good choice if you are looking to improve the energy efficiency of a traditional water heater. Some homeowners worry about the safety of using gas appliances within their homes and feel more comfortable using electricity. For homes that have very high hot water needs, gas units have models that offer higher GPM options. Electric Many homeowners are uncomfortable using natural gas or propane in the event of a natural disaster. Electric systems are easier to troubleshoot, diagnose and repair when problems occur. Electric units are very eco-friendly. They are extremely energy efficient, do not use fossil fuels or release greenhouse gasses. Fuel Source Considerations Gas At the present time, gas prices are lower than electricity prices, although this may not be the case in all areas since fuel prices fluctuate from region-to-region. Most economists agree that future gas prices will most likely increase. Electric Electricity prices are less volatile than gas and therefore there are less price fluctuations. Electric tankless water heaters use a substantial amount of electricity. In many cases homeowners will need to upgrade their electrical power in order to accommodate the energy demands needed to operate the unit. Environmental Impact Gas Gas fueled tankless waters out perform traditional water heaters in the area of energy efficiency. They frequently achieve mid-80% ratings.Greenhouse gases are emitted into the atmosphere with gas tankless systems. Electric Electric systems frequently achieve 98 to 99% energy efficiency ratings!Since Electric units don't burn fossil fuels or release greenhouse gasses they are very eco-friendly. Gas vs Electric: Which to ChooseUnfortunately, there isn't a one-size-fits all when it comes to the gas vs electric tankless water heater debate. Each situation is different and each homeowner has specific needs.Many professionals prefer electric tankless water heaters because of their simplistic design, easy installation, less expensive purchase price, and minimal maintenance.Other professionals feel that a gas tankless water heater is the way to go. They tend to be better equipped in meeting a household with higher than average hot water needs. However, they have a complex heat exchanger that requires annual professional maintenance, can be difficult to troubleshoot and at times, challenging to service in the field. In most cases the decision between gas vs electric may simply be the type of fuel your previous water heater used. We do not recommend switching fuel sources in situations as retrofitting your house can be expensive and may not even be possible.If you are upgrading from a traditional water heater, even if you are staying with your current fuel source, it may be necessary to make costly power upgrades and modifications to your home.