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Compare Electric and Natural Gas Water Heating Systems

Compare typical annual water heating costs.
Compare typical annual water heating costs.
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Water is most commonly heated by natural gas, where available, or by electricity, propane, or fuel oil where natural gas is not available.

Hot water can be supplied directly or indirectly by hot water storage tanks, tankless water heaters, space heating boilers, or by a combination of these systems.


  • Generally less expensive to purchase than natural gas water heaters.
  • Typically cost more to operate than natural gas, given current energy prices.

It is important to choose the proper size of electric water heating elements and storage capacity based on your hot water needs.

Customers who do not install sufficient storage capacity must use larger electric water heating elements to ensure an adequate supply of hot water is available. Oversized heating elements cause spikes in your electrical demand, resulting in costly demand charges that often exceed energy charges. In contrast to electric billing, natural gas does not have demand charges.

Electric water heaters are very energy efficient because all of the energy entering into the heating elements goes directly to heating water. Heat energy is only lost through the walls of the storage tank, accounting for less than 5 per cent of the electric water tank's annual energy consumption.

The most efficient electric tanks available on the market today are insulated with 75 mm (3 inches) or more of rigid foam insulation, which significantly minimizes heat loss.

Natural Gas

Unlike electric systems, the efficiency of natural gas water heaters may vary greatly. The amount of energy transferred to water from burning natural gas depends on the efficiency of the gas burner, the heat exchanger, and the venting system. Natural gas water heaters have 3 different levels of efficiency.

It is important to factor energy efficiency into your purchase decision as it affects your initial capital and ongoing operating costs. Energy efficient models may cost more initially, but reduced operating costs will provide savings over the system's lifetime.