Electric Water Heater vs Electric Tankless Water Heater: Which Costs More to Run? (2026)
A tankless heater avoids the standby losses of a tank, saving 10 to 30 percent for most households. The catch is electrical capacity: a whole-house electric tankless unit draws 18 to 36 kW at once and often needs a panel upgrade. If you already have a well-insulated tank, the savings are smaller than the marketing suggests.
At the hours shown, Electric Water Heater costs about $788.40 per year and Electric Tankless Water Heater about $886.95 in United States (average).
| Appliance | Typical watts | Hours / day | Per hour | Per month | Per year |
|---|---|---|---|---|---|
| Electric Water Heater | 4,000 W | $0.72 | $64.80 | $788.40 | |
| Electric Tankless Water Heater | 18,000 W | $3.24 | $72.90 | $886.95 |
Edit the hours to match your own use. Costs use the typical wattage of each appliance.
When the electric water heater makes sense
- Your electrical panel cannot support a very high load
- Several people shower at the same time
- You have cheap off-peak electricity to heat a tank overnight
When the electric tankless water heater makes sense
- Hot water use is light or irregular
- Space is tight
- You are building or rewiring anyway
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