Propane Tankless vs. Electric Tank Water Heaters – Which is Better for your Home?

In this article, we will compare propane tankless vs. electric tank water heaters and cover advantages and disadvantages, things to consider, costs, and see which system is better for your home and why.

Since water heating accounts for roughly 18% of the annual household energy usage, choosing the right water heater is vital, not only for your budget but for comfort and the environment too. So, choose wisely!

When searching for information about tankless and tank-type, you will also notice that many factors can affect your decision, and some of these include:

Family size. Do you have a large family with teenagers or small kids? Large families tend to choose water heaters that can easily meet the high demand for hot water. These are high recovery tank-type or on-demand heaters, including condensing. Make sure to understand your family's water usage and habits.

Fuel type. What type of fuel is available to you and prefer? Electricity? Propane? Natural gas? Natural gas is the cheapest and widely used. Electricity is also present in many homes but is expensive, so is propane, which brings lots of power and an inconvenient way of delivery and storage.

Location. What is the location of your house? Warm or cold climate? Rural or urban? Rural areas often depend on electricity and propane, while urban community areas have easy access to natural gas.

Price. Tankless tend to cost more than the tank-type, while the operating costs are lower because of the high efficient water heating.

Features and technology. Tankless is more advanced, and they offer smartphone monitoring, voice control, and Wi-Fi connections. Also, troubleshooting is easier as they use an inventive diagnostics system.

User preference. This might include safety reasons, availability of some features, installation flexibility, comfort level, etc.

What is tankless water heating, and how it works?

Tankless water heaterTankless water heater

Tankless water heaters are heating devices that use small heat exchangers to heat water on demand. As the cold water runs through the heat exchanger, a gas burner that is located under it turns on and starts heating the water. As long as the hot water tap is open (there is demand), the burner is active, heating the water.

The most cost-effective and efficient tankless water heaters are powered by natural gas, propane, and then electricity.

You can often find heaters that can use both natural gas and propane, but as long as they are correctly converted from one type to another.

Propane tankless water heaters use different burner nozzle sizes and gas pressure, so be careful and make sure that the water heater is set up to the proper fuel type.

Did you know: Over 50 million Americans (opens in pdf) use propane gas to operate water heaters, furnaces, ranges, BBQs, pool heaters, outdoor heaters, etc.

If you require professional assistance, contact your local water heater expert! Get FREE estimates here

Advantages of installing a propane tankless water heater

Small and lightweight. Propane tankless water heaters are small and compact. They don't include storage tanks, making them lighter and easier to carry. As they are often installed on the wall, there will be more floor space for other use.

Endless and continuous water flow. As long as you have an uninterrupted fuel delivery and gas flow, your tankless can provide an endless and continuous supply of hot water, making them ideal for large families and high-demanding households throughout the year. Make sure to arrange a continuous fuel supply from your local propane gas provider.

High efficient. Tankless have higher energy efficiency as they don't use storage tanks, which is the main reason for the standby heat loss.

Environment-friendly. The most efficient propane tankless are condensing that have ultra-low pollution and minimal energy waste. Propane burns more cleanly than other fuel types, resulting in fewer greenhouse gas emissions. The gas is also nontoxic.

Innovative. Most modern propane tankless utilizes advanced electronics for better accuracy, enhanced comfort, and diagnostics.

Fast heating. Strong gas burners and high propane gas energy value ensure fast water heating and delivery. And with the addition of the recirculation pump, users can enjoy hot water instantaneously.

No rotten egg odor. The sediment build-up and stinky sulfur smell do not affect tankless water heaters. Since every element can be replaced, less waste will go to landfills.

Portable. Propane is portable, and since it is stored inside the small tanks, it can go anywhere. You can even use a small portable water heater outdoors.

Flexible installation. Available for indoor and outdoor installation.

Long-lasting. Typically, tankless can last from 20 to 30 years.

Great warranties. Tankless offers longer warranties, which is around 15 years for most advanced models.

Rebates available. Propane tankless may qualify for incentives and rebates.


Propane tankless water heaters have high fuel prices, making operating costs high.

They are expensive to buy.

Installation, service, and maintenance costs are also higher.

Tankless require minimal water flow to start the ignition.

Propane gas must be delivered by trucks and stored inside the large tanks, making it inconvenient for homeowners and risky as it can spill or leak.

If not properly winterized, tankless elements such as a heat exchanger can freeze and break.

Gas burning can cause gas, exhaust, and carbon monoxide leak.

Since they require venting, the installation might be complicated and expensive.

How much does it cost to install a propane tankless?

According to, a new tankless water heater can cost you between $250 and $2500, while the installation is between $400 and $1500. It takes approximately 8 to 10 hours to professionally install a tankless water heater.

The labor cost is between $45 and $150 per hour.

Things to consider when buying a propane-powered tankless water heater

When buying a propane tankless water heater, look at the gas input measured in BTUs (British thermal unit). Most tankless water heaters, especially Energy Star models, come with the power of 199,000 BTU and have an option to modulate the power to a minimum of 10-20,000 BTU, depending on the size.

Water heaters with more power can heat the water faster.

Those models with high efficiency of over 0.87 are Energy Star compliant and eligible for rebates and tax credits (when and where applicable).

For long-term and consistent water heating, make sure that your tankless water heater is professionally installed, hooked on the propane tank, and checked periodically for proper operation.

In order to buy the best propane tankless water heater, look for Rinnai, Noritz, or Takagi condensing and power vented models. Such models offer flexible installation, state-of-the-art technology, highest efficiency and water flow, Wi-Fi connection, recirculation, and voice activation system.

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What is tank-type water heating, and how it works?

Tank-type water heaters are the most popular type of domestic water heating systems in North America. They are equipped with large cylinders, typically holding from 30 to 50 gallons of water, and use either natural gas, propane, or electricity as the fuel source.

Electric water heaters use one or two heating elements to heat water and the same number of thermostats to control the temperature.

In storage tank-type water heaters, hot water is always ready because the system maintains the temperature set on the thermostat, no matter is there a need for hot water or not.

Advantages of installing an electric tank-type water heater

Proven track record. Electric water heaters are more common than other types. They are simple and come with reliable technology and an extensive service network.

Affordable. Storage tank water heaters are less expensive to purchase and install.

Simple. Easy to troubleshoot, service, and maintain.

Great for DIY. Electric installation could be a nice DIY project saving you a few hundred dollars.

No vents. No exhaust gases and no venting are required. Electric models are very safe and can be installed in no time.

Availability. How water is available even in an emergency.


Electric tank water heaters have higher operating costs as they operate no matter is there a call for hot water delivery or not. They constantly heat and reheat the water to the pre-set temperature.

As they continually operate, they don't last as long as tankless options. They last approximately 10-15 years, and the warranty goes from 6 (industry standard) to 12 years.

When they break, storage tanks often end on the landfills, polluting the environment.

Storage tanks have a limited capacity, so you might run out of hot water when least expected. This is why your water heater needs to be appropriately sized and have the proper recovery and first-hour rate.

It needs to be replaced more often than the tankless.

Electric tank-type heaters can be installed only indoors.

Storage tank-type heaters take up a lot of space. A typical tall size model is approximately 60 inches tall and about 20 inches wide. So, the more hot water you need, the large they become.

Unfortunately, none of the electric water heaters are Energy Star compliant, no matter the energy factor. This excludes hybrids (heat pumps with electric heating elements).

How much does it cost to install an electric storage-tank water heater?

As per, a new electric water heater with a storage tank can cost you between $400 and $1600, while the installation is between $150 and $600. The labor rates range between $45 and $150 per hour.

According to the same source, installing an electric unit takes up to 3 hours.

Things to consider when buying an electric water heater

Electric water heaters are rated by the power input, measured in watts (W). Depending on the size, the power ranges from around 1,440 watts for smaller models to 5,500 watts for larger, often having two heating elements.

Of course, water heaters with more watts can heat the water faster.

The best models include quality Incoloy heating elements, excellent protection such as commercial-grade anode rod and dip tube, digital display, and thick insulation.

What about operating costs?

According to PERC (Propane Education & Research Council), annual energy use for the propane tankless water heater is around $290 while for the electric tank-type water heater is approximately $645, which is more than double. In addition, the electric model has about 70% higher gas emissions (at the point where it is created). This study is based on a 2,400 sq. ft. home located in Iowa.

So, what's the best water heater option for you?

As we can see, both propane and electric water heaters provide great benefits and can include price, efficiency, flexible installation, simplicity, or convenience.

Whether you opt for a propane tankless or electric heat pump, you will get the most cost-effective solution followed by a long and reliable life. And when it comes to which brand to choose, check out Rinnai, Takagi, and Noritz for tankless, and AO Smith, Rheem, and Bradford White for electric tank water heaters.

Also, always consult an expert to help you choose the best fuel type and a model for your home, including professional installation and service afterward.