Gas or electric, and how to choose the fuel
Venting, circuits, outages, recovery speed, and how to read an EnergyGuide label when gas and electric prices are not the label’s prices.
Fuel is not a moral preference. It is a question of what already enters the house, what the room can vent or power, how fast the heater must recover, and what a kilowatt-hour and a therm cost where you pay the bill.
The Department of Energy’s comparison article treats gas storage, electric storage, tankless, and heat pump as different machines with different lifetimes and different installation constraints. This page is only the fuel decision, for both tank and tankless shapes. Anatomy sits in how a storage tank works and how a tankless heater works.
What each fuel demands from the building
A gas heater needs three things an electric heater does not: a listed gas supply at the pressure on the data plate, a vent or a sealed-combustion termination that the manufacturer allows, and combustion air if the unit is not sealed. Atmospheric tanks use a metal vent and a draft hood. Fan-assisted and condensing units often cannot reuse that vent.
The cost of a new sidewall vent, or of lining a chimney, is frequently larger than the difference in equipment price between two tanks. Condensing gas heaters explains why the old B-vent is the wrong hand-me-down. Venting and carbon monoxide explains why a closet door and a pile of storage are part of the gas system whether you meant them to be or not.
An electric resistance tank needs a 240-volt circuit sized from the nameplate. A common 4,500-watt element draws 18.75 amps at 240 volts. Because a water heater is treated as a continuous load, the National Electrical Code sizes the branch circuit at 125 percent of that current, which is why a 30-amp breaker and the matching copper wire show up so often.
A larger element, or a heat pump with its own nameplate, can require a different circuit. The data plate wins over the rule of thumb. If the panel is full, or the house has no spare capacity, the electrician’s work can erase the savings of a cheaper electric tank.
Whole-house electric tankless heaters are in another category again: their amperage can require a service upgrade. That is an electrician’s measurement, described as a boundary in electrical safety, not a DIY panel project.
Propane is not “gas with a different tank in the yard” in the sense that you can re-orifice a natural-gas heater from a universal kit. Some models have a listed conversion. Many do not.
Installing the wrong orifice is a fire and carbon-monoxide hazard. If the house is on propane, buy a heater listed for propane or a manufacturer conversion for that exact model, and have a licensed fitter do it.
Oil-fired water heaters, still present in parts of the Northeast, are a third fuel with their own burner service. Nothing on this site about gas valves transfers to an oil burner.
Recovery and the first hour
Gas burners in ordinary residential tanks are often 30,000 to 40,000 Btu/h or more. A single electric element near 4,500 watts is closer to 15,000 Btu/h, and the two elements on a typical tank do not heat simultaneously.
The practical result is that a smaller gas tank can have a first-hour rating similar to a larger electric tank.
Buy the first-hour rating, not the gallons. The worksheet is in how to size a tank.
Tankless gas units in the 180,000 to 199,000 Btu/h class can hold a useful flow at a 70°F rise. Electric tankless units that match that flow exist and are electrically huge.
The Department of Energy’s older sizing note, that electric demand heaters were associated with about 2 gallons per minute at a 70°F rise against about 5 for gas, is the historical shape of this gap. Current products move the numbers. They do not remove the panel constraint.
Outages
An atmospheric gas tank with a standing pilot can keep making hot water when the electric grid is down, as long as the gas supply is up and the vent still drafts. That matters in rural houses that lose power in storms and do not lose gas.
It does not apply to most modern electronic-ignition gas tanks, which need power for the control, or to tankless gas heaters, which need power for the fan and the board. Those units sit idle in an outage unless they are on a generator or a battery designed for them.
Electric resistance tanks and heat pumps make no hot water without electricity. If outage resilience is the reason you want gas, confirm the specific model works without a receptacle. Many people buy “gas” and discover they bought a power-vented appliance that is dark when the neighborhood is dark.
Reading the label without lying to yourself
The yellow EnergyGuide label estimates annual energy use and an annual cost. The cost uses a national average fuel price printed on the label, not your utility’s rate. Comparing the dollar figure on a gas label to the dollar figure on an electric label is a comparison of two national averages, and it can reverse under a local rate.
The honest method is to take the label’s therms or kilowatt-hours and multiply by the marginal rate on your own bill, including the parts of the rate that actually change when you use another unit of energy. Uniform energy factor explains why the efficiency number itself is not a single ladder across fuels.
A gas UEF of 0.80 and an electric resistance UEF of 0.92 do not mean the electric heater is cheaper to run. Electricity and gas are sold in different units, and a resistance element turns nearly all of its electricity into heat in the water while a gas burner sends some heat up the flue.
Heat pump water heaters break the electric side of this comparison. The Department of Energy says they can be two to three times as efficient as conventional electric resistance heaters, with ENERGY STAR models described as saving on the order of a few hundred dollars a year on the electric bill under that article’s assumptions.
They are still electric appliances, with a room-air requirement and a backup element for cold conditions. If the choice is “electric resistance versus heat pump” in a house that already has the right kind of room, the heat pump is the efficiency play.
If the choice is “heat pump versus an existing gas line and a sound vent,” run the local rates. Do not assume the federal tax credit still discounts the heat pump. For equipment placed in service after December 31, 2025, the IRS says the 25C credit is not allowed.
What a state or utility program might still pay, and what it will not pay for a gas-to-electric swap, is heat pump rebates in 2026. Published price ranges are in what water heaters cost. The head-to-head with a tankless unit is tankless or heat pump.
A short way to decide
| Situation | Usually the simpler fit | Watch for |
|---|---|---|
| Sound gas line and a vent the new unit is allowed to use | Gas tank or gas tankless | Vent type must match. Atmospheric is not condensing. |
| No gas in the house, panel has capacity | Electric tank, or a heat pump if the room qualifies | Circuit size from the nameplate |
| No gas, and the room is small, warm, and louvered | Heat pump water heater | Air volume, noise, condensate drain |
| Long outages, and you want hot water anyway | Standing-pilot atmospheric gas, if still available and code-legal | Electronic ignition will not do this |
| One distant sink, central heater is fine | Small point-of-use electric | Its own circuit, not an extension cord |
| Propane yard tank | A unit listed for LP | No improvised conversion |
“Usually” is doing real work in that table. A cracked heat exchanger, a recalled vent, or a panel that is already double-tapped overrides the row.
Two quotes that itemize vent, gas pipe or circuit, pan, expansion tank, permit, and haul-away will teach you more than another hour of comparison charts. Ask who pulls the permit. The permits guide lists what the quote is supposed to include so a low number is not missing the flue.
Sources
U.S. Department of Energy, Energy Saver, “Which Water Heater Is Right for You?” (energy.gov). U.S. Department of Energy, Energy Saver, “Sizing a New Water Heater,” for the gas and electric demand-heater flow note. ENERGY STAR, residential water heater criteria (energystar.gov/products/water_heaters/residential_water_heaters_key_product_criteria).
Internal Revenue Service, “Energy Efficient Home Improvement Credit” (irs.gov). National Electrical Code treatment of continuous loads is the reason the circuit is larger than nameplate current divided into volts; the nameplate and a licensed electrician set the actual breaker.