Water Heater Energy Efficiency Comparison
Tankless water heaters are 24-34% more energy-efficient than tank units for households using under 41 gallons per day, and 8-14% more efficient for high-usage households. Here is what that means in real dollars.
Annual Energy Cost by Household Size
| Household | Tank Gas | Tankless Gas | Gas Savings | Tank Electric | Tankless Elec. | Elec. Savings |
|---|---|---|---|---|---|---|
| 1-2 people | $285/yr | $188/yr | $97/yr | $435/yr | $285/yr | $150/yr |
| 3-4 people | $380/yr | $250/yr | $130/yr | $580/yr | $380/yr | $200/yr |
| 5-6 people | $513/yr | $338/yr | $175/yr | $783/yr | $513/yr | $270/yr |
| 7+ people | $627/yr | $413/yr | $214/yr | $957/yr | $627/yr | $330/yr |
Based on US average natural gas price of $1.20/therm and electricity at $0.17/kWh in 2026. Actual costs vary significantly by region and utility rates.
Efficiency Ratings by Water Heater Type
Conventional Tank (Gas)
UEF Rating
0.58 - 0.70
Efficiency
58-70%
Standby Loss
Significant (0.3-1.5% per hour)
Heats and reheats stored water continuously, even when not in use. Standby loss is the main inefficiency.
Conventional Tank (Electric)
UEF Rating
0.92 - 0.96
Efficiency
92-96%
Standby Loss
Low to moderate (0.1-0.5% per hour)
Electric resistance is more efficient at converting energy to heat, but electricity itself costs 3-4x more per BTU than gas in most areas.
Tankless (Gas, Non-condensing)
UEF Rating
0.82 - 0.86
Efficiency
82-86%
Standby Loss
Minimal (pilot light only)
Heats only when hot water is needed. Exhaust gases are vented directly. Typical upgrade from conventional gas tank.
Tankless (Gas, Condensing)
UEF Rating
0.90 - 0.96
Efficiency
90-96%
Standby Loss
Minimal
Recovers heat from exhaust gases for additional efficiency. Highest efficiency gas option. Costs $200-500 more than non-condensing.
Tankless (Electric)
UEF Rating
0.96 - 0.99
Efficiency
96-99%
Standby Loss
Nearly zero
Near-perfect efficiency but uses significant electrical draw (120-200 amps). Often requires panel upgrade. Best for warm climates.
Heat Pump Water Heater
UEF Rating
3.0 - 4.0
Efficiency
300-400%
Standby Loss
Very low
Moves heat from air into water rather than generating heat. Up to 4x more efficient than electric resistance. Qualifies for $2,000 federal tax credit.