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The choice between the two is simple. In many cases, however, the decision to go with a gas vs. electric water heater is determined by circumstances beyond mere economic motivations. When it comes to either or, the benefits and disadvantages need to be considered.
Gas vs Electric. Always go with the gas if it is available. The cost is less than electricity when measured on a per BTU (British Thermal Units) scale and they have higher flow rates and therefore more applicable uses. Electric tankless water heaters on the other hand, require less space and lower operating costs then conventional tank-type heaters.
Energy Requirements. The gas requirements for a tankless gas water heater are about 4 times the amount for a tank-type unit when measured in BTUs because the tankless system use more energy to heat a smaller amount of water for a shorter period of time. The gas lines feeding the system usually need to be larger to accommodate the higher gas flow.
The same applies for a tankless electric water heater. Far more wattage is necessary to heat the water for a shorter period of time. In some older homes, the electric service and wiring leading to the heater also needs to be upgraded.
Ignition Systems. Whether you have a standard tank or a tankless system in place, the gas needs to be ignited whenever there is a need for hot water. Some have a standing pilot light that continuously burns gas. This is generally used in high use applications, like restaurants or hotels. If the pilot goes out, the gas is automatically shut off to prevent leakage. The other option is an electric ignition that creates a spark to ignite the gas.
Energy Factors. This is a term used to determine the efficiency of either a tankless gas or electric water heater. How much energy is need to heat a certain amount of water under normal circumstances. It also takes into account heat loss through the wiring, venting, combustion and the walls of the unit itself. Higher energy factor means a more efficient water heater. Energy factors for tankless systems are always higher than for conventional tank-type heaters.
So although the costs to operate a gas or electric tankless heater are less over the long run, the cost of installation and possible upgrades needs to be taken into consideration when choosing between gas vs electric water heaters.