Electric tankless water heaters cost less than their gas brethren. Electric water heaters for the whole house start at $500 and move up into the $1000+ range. Compare that to tankless gas water heaters which cost at least $1,000 minimum and go up into the several thousand dollar range. So which should you choose?

Answering that question really depends on a few different factors. Each households hot water needs really what need to be evaluated. While companies that make electrical hot water heaters say their performance is in-line with gas heaters, gas manufacturers have their own arguments for going that route. A local dealer can do cost comparisons for you to see if gas or electricity will work out best for you.

There are several selling points for an electric tankless water heater, including the aforementioned lower starting price tag. A savings of $500 or more over a gas or propane tankless heater is what most customers consider at the start. Another advantage is the smaller installation cost. Since electrical tankless water heaters are in the area of one-third the size of a gas heater, there is certainly more flexibility in where you can install the unit.

There are not the usual venting issues with an electric water heater, so they can be placed under sinks, in crawlspaces, or even in a closet where a full-sized water heater would never fit. Another option is placing the unit where your existing water heater was.

When contemplating a whole-house tankless electrical water heater, you may have an extra expense to upgrade an electrical panel wherever the heater is installed. This is because these units use high power, like your dryer. So something like a 200 AMP, 208 to 240 volt service outlet is usually required for higher power units. If you live in a warm area like Arizona, you may be able to use a lower rated tankless water heater, which uses a 100 or 125 AMP electrical outlet.

What will save monthly on your energy bill with an electric water heater? While you will usually save over your traditional water heater, generally you won't save as much as having a gas or propane tankless water heater. On the other hand, natural gas and propane rates continue to increase, narrowing the gap in energy costs between electric and gas tankless heaters.

What about the question of water use? Does a tankless electric keep up with its gas counterpart? Usually they do. Full sized electrical water heaters can produce three to eight gallons each minute of hot water. Why the large variance? It all is dependant on the incoming water. For example, the incoming temperature of water in Florida is much different than the water temperature in Montana during December. In cold parts of the country it is going to more in the range of three gallons a minute.

Gas and propane tankless hot water heaters are another option to consider, so be sure to do your research before buying.