Compare electric and natural gas water heating systems

Bar graph comparing water heating costs between electricity and natural gas.

Compare typical annual water heating costs.
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Water heating can account for more than 20% of your commercial building’s energy use. You have several options to choose from when supplying hot water for your commercial building. Both initial capital and annual operating costs should be considered when making your decision.

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. Find out how much you can save by switching to a high efficiency natural gas water heater.

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.


  • 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% of the electric water tank’s annual energy consumption.

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