When your 40-gallon storage tank water heater finally gives up (usually after 8–12 years, with sediment buildup accelerating the inevitable), you start looking at tankless units. They’re smaller, more efficient, and they don’t waste energy keeping 40 gallons hot while you’re at work. But then you hit the decision: gas or electric? Both are technically “tankless,” but they behave very differently in a real house. Gas units can heat water faster, but they need combustion air and a vent pipe. Electric units are simpler to install, but they can struggle to keep up with two showers running at the same time, especially in cold climates where incoming water temperature drops. This article compares the two side-by-side on flow rate, installation realities, and long-term costs—so you know exactly what you’re committing to before you cut into your wall.
Natural gas tankless heaters use a burner that fires into a heat exchanger, typically made of copper or stainless steel. The burner modulates its flame intensity based on how much hot water you’re drawing—small flame for a single faucet, full flame for a shower and dishwasher simultaneously. The heat exchanger transfers that combustion heat to the water running through a coiled pipe. Efficiency runs between 82% and 96%, depending on the unit’s Energy Factor (EF).
Electric tankless heaters use high-power resistive heating elements—similar to what’s inside your electric oven or water kettle. Cold water passes over these elements, and the electricity resistance generates heat directly into the water. There’s no combustion, so no exhaust, but the power draw is enormous. A whole-house electric tankless unit typically needs 60 to 120 amps at 240 volts. For reference, your entire home’s electrical service might be 100 to 200 amps total. That alone tells you how this comparison goes.
Incoming groundwater temperature varies by region and season. In the northern US, winter groundwater can be 40°F. To get a comfortable 105°F shower, you need a 65°F temperature rise. In the southern US, groundwater might be 60°F, requiring only a 45°F rise. Gas units handle higher temperature rises much better because the burner output is massive—typically 150,000 to 200,000 BTU/h. Electric units are limited by how much power you can draw; the maximum temperature rise at a given flow rate is fixed by the element wattage.
The critical spec for any tankless water heater is the flow rate in gallons per minute (GPM) at a specific temperature rise. Manufacturers list performance curves. A typical gas unit rated for 9.5 GPM might deliver 6.5 GPM at a 65°F rise. An electric unit rated for 7 GPM might drop to 3.2 GPM at the same rise. That’s the difference.
If you live in a cold climate and want to run two showers simultaneously, gas is the practical choice. If you’re in a mild climate where groundwater stays above 55°F, a high-wattage electric unit can handle two low-flow showerheads. But you still need to check your electrical panel capacity first.
Gas tankless installation is not a weekend DIY job for most homeowners unless you’re already comfortable with black iron pipe, gas leak testing, and combustion venting. You’ll need:
Electric installation is simpler: mount the unit, run a dedicated 240V circuit from the main panel. But that “simpler” comes with a massive caveat: the circuit breaker and wire size. A 36 kW unit needs 150 amps. Most panels only have 200 amps total. Adding a 150-amp breaker often requires a service upgrade—$1,500 to $3,000 from an electrician. So “simpler” can still be expensive.
If you’re replacing an existing gas storage tank that already has a 3/4-inch gas line and a vent that can be repurposed (some vent types aren’t compatible with tankless), you can do the water lines and gas connection yourself in many jurisdictions if you pull a permit and have a leak detection tool. But most plumbers and gas fitters will tell you to call a pro for the gas line sizing and venting calculations. Electric tankless is a more realistic DIY if you’re comfortable with a subpanel and large-gauge wiring—but again, check the amp draw against your service.
Gas tankless venting is the single biggest hidden cost and complexity. Non-condensing units require stainless steel venting (Category III) that can handle flue gas temperatures around 300–350°F. These vents are expensive—around $15–$25 per linear foot for the pipe plus termination caps. You also cannot run non-condensing vent through a Class A chimney; it must be a dedicated, sealed system.
Condensing gas units use standard Schedule 40 PVC venting because the flue gases are cooled below 140°F before they exit. That’s cheaper pipe ($3–$5 per foot), but you still have to account for slope (1/4 inch per foot toward the heater to drain condensate) and the condensate drain line. You also have to route the intake air from outside or from a properly sized room.
Electric tankless? Zero venting. No exhaust, no flue, no intake. If your home has limited wall space for vent pipes or you’re in a multi-story condo without easy roof access, electric eliminates the venting headache entirely. But you still have the electrical service issue.
Let’s talk actual numbers. The U.S. Energy Information Administration publishes average residential energy prices. As of early 2025, the national average for natural gas is about $1.05 per therm (one therm ≈ 100,000 BTU), and electricity is about $0.14 per kilowatt-hour (kWh).
To heat the same amount of water (say, 100 gallons per day with a 65°F rise):
That’s a dramatic difference. Gas is roughly 3–4 times cheaper to operate in most regions. But there are exceptions: areas with very low electricity rates (like the Pacific Northwest, where electricity is around $0.09/kWh) or very high gas prices (like the Northeast, where gas can hit $1.60/therm). In those specific cases, the operating cost gap narrows. Also, if you have solar panels with net metering, electric tankless is effectively free to run during sunny months.
Both types require annual descaling with a vinegar or citric acid solution to remove mineral buildup from the heat exchanger. Gas units also have a burner and blower that need occasional cleaning—lint and dust can accumulate on the flame sensor and cause nuisance shutdowns. Electric units have fewer moving parts; the main failure point is the heating elements themselves, which can burn out if they run dry (always prime the unit before turning on power). Replacement elements cost $40–$80 and can be swapped in 30 minutes. Gas unit heat exchanger failures are more expensive—often $500–$800 in parts and labor.
Both units save significant floor space compared to a 50-gallon tank. A typical tankless is about 28–30 inches tall, 18–20 inches wide, and 9–12 inches deep—mounts on a wall. Gas units need combustion air clearance (typically 12 inches on sides and 24 inches in front if in a closet). Electric units can be mounted in tighter spaces because they don’t need air intake or exhaust clearance. However, electric units often require access to the main electrical panel, which might be in a basement or garage. Gas units need to be near a gas line and an exterior wall for venting, which limits location options.
If you’re trying to install a tankless heater in an unconditioned space like an unheated garage, gas condensing units can freeze if the condensate trap isn’t protected (some have built-in freeze protection down to -20°F, but you need to check the manual). Electric units are more freeze-resistant because there’s no water in the heat exchanger when not in use, but the pipes feeding it can freeze if not insulated.
Here is a straightforward decision matrix:
One final practical step: before you buy either type, measure the temperature of your cold water in the winter with a thermometer at the faucet. That single number—your actual temperature rise requirement—will tell you more than any sales brochure. Then go evaluate your existing gas line diameter or your electrical panel capacity. Those two checks will save you from buying a unit that cannot deliver hot water when you need it most.
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