What Is the Cheapest Way to Heat Water for Your Home

Which would be cheaper to run, an electrical or propane tankless water heater? -David

Hi David,

That would depend on the energy prices in your area. Usually natural gas is the cheapest way to heat water, followed by electricity, with propane being the most expensive.

To find out, plug in the prices you pay for electricity and propane on your utility bill in the hot water energy cost calculator in our article on Choosing a Hot Water Heater to compare the fuel prices in your area.

The calculator is designed for tank type water heaters, and tankless models are 20% to 30% more fuel efficient, but it should still give you a comparison of which type of fuel is the least expensive for heating water in your area.

While electric tankless water heaters are available, they’re usually smaller “point of use” units designed to supply hot water to a single sink or shower. Most of the tankless water heaters used to heat water for an entire home run on gas, since it would take a very large electrical line and breaker to supply enough electricity for multiple hot water users.

Also, keep in mind that gas tankless water heaters requires a larger gas line, so you will probably have to replace the gas line you have now running to your tank type water heater.

Good luck with your project,



  1. You also want to do your research on gas tankless water heaters (propane or natural). Most are 82% efficient. Some are 98% efficient. The 98% efficient models use PVC for their venting which is significantly cheaper than stainless steel.


  2. I am having to replace the hot water heater in my home. My home is extremely old. We have 6 people taking showers and a dishwasher that is run regularly. I am trying to keep the cost of this project under $700. Do you have any advice to be economic in my family’s water usage?

  3. I have an oil furnace that just broke. I cannot afford to fix it. I can deal with the loss of heat by using electric heaters but the hot water is the issue. It is only for me but I want to be able to take baths showers and wash dishes. What is the absolute cheapest way I can get hot water? Please help.

  4. my house is 30 years old and the heating unit in my oil furnace is no longer working effectively. What would be my cheapest route to replace other than the furnace. I live in the country and have propane already in the house. In fact I am paying a charge of $15 monthly because I don’t use enough propane! My choices are propane or electricity. Any words of wisdom would be greatly appreciated.
    Thank you

  5. Tankless water heaters are 20% to 30% more efficient? Sign me up! We run out of hot water after just 20 minutes the other day, so I think it would be best for us to get a new hot water unit.

    • Glad to hear you enjoyed this content, Sarah! Please share it with friends — that’s how we’re able to create similar content.


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