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Guide to Electric Hot Water Heaters

Standard Electric Hot Water Heater

Electric hot water heaters deliver hot water as needed throughout the home's plumbing system. They are an ideal solution in homes where there is no existing natural gas hook-up or in areas where the gas prices are higher than electricity delivery rates.

Types of Electric Hot Water Heaters

Electric water heaters are available in two different types - the standard tank variety and a newer version known as a tankless hot water heater. While they each use an electric element to heat the water, they're actually quite different in how they operate.

Standard Electric Water Heaters

A standard hot water heater is what most people think of when they imagine a hot water heater. It is a large, cylindrical tank with a copper water supply and delivery pipes connected to it. Large tank versions usually have two internal heating elements. They come available in a variety of sizes, with tanks ranging from 10-gallons up to 100-gallons in capacity.

The hot water heater uses a thermostat to regulate the temperature of the water contained in the tank. As hot water extracts out of the tank, the thermostat turns the heating element on to compensate for the change in internal temperature. Throughout the day, the heating element turns on and off as the water temperature fluctuates, regardless of whether or not the you are using the hot water.

Tankless Electric Water Heaters

A tankless water heater system does not feature a large tank of stored water. Instead, these appliances are installed in-line and heat the water on demand. Because of this, these types of water heaters are sometimes referred to as continuous flow, instant-on or instantaneous water heaters. Tankless hot water systems come available in two different styles, smaller units for point-of-use control and larger units capable of supplying the entire home.With a tankless hot water system, when hot water is called for, the unit senses the temperature of the incoming water, heats it until it reaches the desired temperature and then disperses it. Hot water will continue to flow until your turn off the tap, at which time the unit goes into standby mode and the heating element remains off until it is needed again.

Benefits and Limitations

Electric water heaters have benefits and limitations that can affect one's choice either way.

Benefits of Standard Electric Water Heaters

  • Inexpensive to purchase
  • Easy to install
  • Easily provides hot water to the entire home

Limitations of Standard Electric Water Heaters

  • Stored water looses heat throughout the day, requiring ongoing re-heating
  • Tank can corrode over time if anode rod isn't replaced
  • Requires occasional draining to remove rust deposits which can impact efficiency
  • Requires incoming and outgoing pipes to be insulated for the best performance

Electricity Usage

Hot water produced by electricity accounts for approximately 18 percent of the average electric bill. The electric hot water heater is typically one of the largest consumers of electricity in the home, second only to the air conditioner and/or electric baseboard heating. Energy consumption and related savings comparison between the two models are as follows:

Energy and Cost Comparison: Electric Water Heating - 50-gallon capacity
Electric Water Heater Standard Tankless
Energy Factor 0.094 0.99
Annual Consumption (kWhr/yr) 4,857 4,435
Annual Savings (kWhr/yr) None 422
Annual Cost of Operation (kWhr/yr) $505 $461
Annual Savings ($/yr) None $44
Life Expectancy 13 years 20 years
Lifetime Savings (kWhr) None 8,440
Lifetime Savings ($) None $878
Installation Costs ~$650 ~$1,000-$2,000
Price Premium None ~$350-$1,350
Payback on Price Premium NA ~8-31 years


If your local electricity company offers rates based on time-of-use or has lower rates for off-peak hours, a standard water heater may be a good choice, especially if it has a feature which allows you to adjust the tank's heating schedule. A large storage tank can hold sufficient hot water for use throughout the day and the heaters can run only when the rates are at their lowest, thus saving you money.

When shopping for a standard electric water heater, check the tank's first hour rating. This number is indicative of the combined capacity of stored hot water plus the heating capacity of the heating elements to sufficiently heat a depleted tank. The first hour rating should be slightly higher than the tank's storage capacity.

Electric hot water heaters of both types are available at most home improvement stores like Lowes, Home Depot, Ace Hardware and others and online from a number of suppliers. Top brands generally manufacture both types of electric water heaters and include:

Guide to Electric Hot Water Heaters