Many people don’t realize how much electricity their tankless water heater uses day to day, or what that really means for their utility bills.
Most homeowners I talk to mention they switched to an electric tankless heater because it’s supposed to save ENERGY and MONEY, and they’re not wrong in theory. But in practice, the outcome isn’t always that straightforward, since a few key factors can make a big difference in how much you actually save.
Don’t worry, though, this won’t get overly technical or confusing. I’ll walk you through the real numbers behind POWER CONSUMPTION, explaining how much electricity they typically use and how that translates into actual costs.
By the end of this article, you’ll have a clear, realistic picture of whether your power savings are stacking up the way you expected or if there’s more to the story.
Do Electric Tankless Water Heaters Use More Energy Than Traditional Ones?
This is one of the most common questions I get, especially from people who have been using a traditional tank water heater for years and are now thinking about switching to tankless. And honestly, it’s a fair concern. After all, if making the switch doesn’t really LOWER your utility bills, what’s the point?
Here’s the interesting part. Electric tankless units are often thought of as energy-hungry appliances. That means they must draw a huge amount of electricity, right? Not exactly.
Even if your tankless water heater is rated at, say, 30 kW (higher kilowatts usually mean more electricity consumption), remember that it only runs when you actually need hot water. Unlike traditional tank heaters, which stay on most of the time, it draws 30 kW for just a few minutes per use and rarely at full capacity. That adds up to less power usage.
Conventional tank heaters may use fewer kilowatts per hour, but they run for more hours each day and heat water slowly. They also experience “standby heat loss,” which happens when stored water cools down while not in use. This standby energy loss is practically NONEXISTENT in tank-free systems because of on-demand heating. The result is that tankless heaters generally use less electricity overall.
According to the U.S. Department of Energy, a household that uses about 40 gallons of hot water a day, which is typical for smaller families, can save 24 to 34% in energy by switching to a tankless system. That is a noticeable difference.
For larger households using around 85 gallons a day, tankless heaters still offer savings, typically around 8 to 14%. In some cases, installing multiple units near major water appliances can reduce power usage even further.
BOTTOM LINE: On-demand water heaters use less energy than traditional tank-style heaters. If you’re looking for detailed electrical requirements, you may find this article useful.
How Much Power Does A Tankless Heater Actually Draw, And How Much Does It Cost?
Now that we’ve covered why tankless water heaters use less electricity than traditional tank-style ones, let’s dive into some real numbers and see how it all adds up.
Before we jump in, it’s important to understand that the power consumed by a tank-free unit isn’t the same for every situation. Different models have different power ratings, but there are also several other factors that affect energy use, which we’ll get into shortly.
A key thing to keep in mind is how these tankless heaters use power. Unlike traditional water heaters that keep the water warm continuously, they only run on demand, usually using full power for short bursts of around 40 to 50 seconds at a time. Their electricity usage drops sharply once the desired temperature is reached. In most cases, the unit operates at no more than half of its capacity, effectively cutting power consumption in half.
So when we calculate energy consumption, it’s the active heating time that matters, not the total time the unit is technically “ON.” Overlooking this can complicate your estimates and misdirect your expectations.
With that cleared up, let’s get straight to this power consumption calculator I’ve built, where you can enter a few details and it will estimate the daily, monthly, and yearly electricity usage with associated cost.
To understand this calculator better, let us consider that you have installed a Rheem 18 kW electric tankless water heater at home. Let us also assume that it actively heats water for 2 hours (on average) to meet your household’s daily hot water demands. Then,
A. Daily Electricity Consumption And Cost
Your on-demand heater needs 18 X 2 = 36 kWh of energy daily, amounting to 36 X 17 = 612 cents or $6 (approx.) a day.
Here, we have considered 17 cents as the average residential electricity rate in the USA per kWh.
Needless to say, if you use your tankless water heater for less time or need fewer gallons of hot water, the expense will also be reduced. Having said that, please bear in mind that the numbers will vary from one place to another in the US, with their respective unit price of energy.
For instance, if you reside in Washington state, where the unit cost of energy is around 13 cents (per kWh), your expenses will roughly hover at:
36 kWh X 13 cents = 468 cents, i.e., about $5 a day for 2 hours of active heating.
Again, if you are somewhere in Hawaii, where the unit cost of electricity is around 41 cents (per kWh), you will have to shell out approximately:
36 kWh X 41 cents = 1,476 cents, or roughly $15 daily for the same active heating duration.
B. Monthly Electricity Usage And Cost
Now that we have a ballpark figure for the daily electricity consumption and cost, let us move on to the monthly estimate.
If your heater uses 36 kWh per day, it will draw about 432 kWh of power in a month.
Correspondingly, your monthly expenses will range around $73 (approx.), considering 17 cents as the average unit price of residential power.
C. Yearly Power Consumption And Expense
In the same way, we can easily calculate the yearly power expenses at the same rates as above.
So, if our monthly electricity expense is around $73, the annual cost will be around $876.
That said, if your instant water heater packs in more power, say, 30 kW instead of the standard 18 kW, you can bet it will consume more electricity. And you will feel it in your utility bills!
And, if you’re working with a smaller unit, like a 10 kW model, your energy use (and your expenses) will be lighter.
Factors Influencing Electricity Usage
When it comes to understanding the actual electricity usage of tankless water heaters, it is not just about the wattage of their unit. If you are planning to install one (I have a detailed guide here) or are just looking to fine-tune your current setup, the following are the factors you should pay attention to.
Inflowing Water Temperature: This is quite straightforward – the colder the incoming water, the harder your tankless heater works to bring it up to your preferred temperature. If your groundwater is at 40°F instead of 60°F, the unit needs significantly more electricity to heat the water to 120°F. This situation is most common in colder regions with frigid temperatures.
Preferred Water Temperature: This point is related to the previous one – the higher your preferred water temperature, the more energy will be required to achieve it. I generally recommend setting it at 120°F, which is usually sufficient for our daily needs. However, if you want it higher, say 130°F or more, your heater’s electricity use will increase in most cases.
Water Flow Rate: On-demand water heaters are rated by their flow rate, measured in gallons per minute (GPM). Now, while a unit with a higher GPM is more efficient at supplying uninterrupted hot water to multiple water fixtures simultaneously, it also needs more energy to heat the water flowing through it at a higher speed. So, the more your simultaneous demand for hot water (for instance, you’re showering while the dishwasher runs), the more electricity the unit uses to maintain temperature across that higher volume.
Heater Efficiency: Not all tankless heaters are created equal. Larger units with multiple heating elements are more efficient in delivering hot water to more fixtures at once. However, they also draw more power under full load. The efficiency rating is also crucial; some models convert electricity to heat more effectively, meaning you get more hot water per kilowatt-hour (kWh). You can even avail of the benefits of the government rebates with this.
Hot Water Usage: This factor depends on how many people are in your household. The more people you have, the more hot water you will use – showers, dishes, laundry, it all adds up. That means your instant water heater has to run longer and more often, which naturally increases your electricity usage. Seasonal changes also play a significant role here. In the warmer months, most of us use less hot water, but in winter, the demand usually spikes as we rely more on hot water for comfort. So, it’s normal to see lower energy bills in summer and higher ones in the colder months.
Water Pressure: While this might sound trivial, let me assert – it is not. Your home’s water pressure and plumbing design can significantly influence your tankless heater’s performance and, ultimately, its electricity consumption. If the unit is located far from the point of use, or if the water pressure at your home fluctuates, the heater might have to work harder to maintain flow and temperature.
Hard Water: Mineral deposits from hard water form layers and act like insulators, making it difficult for your electric tankless water heater to transfer heat efficiently. As a result, the unit has to work longer and harder and use more power to heat the water to your desired temperature.
Utility Pricing Rate: Apart from the unit price of electricity (which varies with your State), another thing that can heavily influence the power consumption of your water heater is the utility provider’s pricing structure. Some companies levy peak or demand pricing, meaning they charge us more per kWh during high-usage times (like in the morning or evening when everyone’s home). If you generally use a lot of hot water during those peak hours, your tankless heater is likely to cost you more than you’d expect.
Pro Tips To Minimize Power Consumption With Electric Tankless Water Heaters
I have guided many homeowners to fine-tune their tank-free heater performance over the years. Below are some quick tips (gathered from my decade-long experience) that can go a long way in cutting energy use and keeping your power bills low.
Choose an appropriate size or capacity (GPM) of tankless electric water heater – ensure you properly size it. While oversizing wastes power (that you will be paying for), under-sizing forces the heater to overwork, often leading to higher power consumption.
Setting the temperature to 120°F is usually enough for daily use; anything higher generally wastes energy and can be potentially unsafe. So, lower the temperature for once, and you will be good to go!
Spread out your hot water usage just enough to EASE the load on your heater instead of doing all the water work during peak electricity rate hours.
Install low-flow showerheads and fixtures to reduce hot water use without sacrificing comfort. Less water flowing means less heating required, which means reduced energy use.
If your region experiences extreme winters, insulate those hot water pipes to minimize heat loss and avoid straining your heater.
Schedule regular cleaning and descaling of your on-demand water heater, especially if you live in a hard water area. I recommend hiring a professional to ensure it is done thoroughly and safely.
Detect and fix leaks in fixtures like faucets, showerheads, or even pipes.
If you have hard water, installing a water softener is a great way to prevent mineral buildup inside your instantaneous heater, helping maintain its efficiency.
Electric tankless water heaters are a smart investment, but to truly get the most out of them, we should understand what’s happening behind the scenes. It’s not just about flipping a switch for endless hot showers; rather, it’s about knowing how things like water temperature, usage habits, and even your utility’s pricing plan affect energy use.
The good news? You have more control than you think. TWEAK a few settings, FIX those small leaks, and STAY on top of routine maintenance. You will not only cut down on electricity use but can also help your system run better for longer.
Whether upgrading your on-demand heater or just looking to fine-tune it, being informed is the first step toward more EFFICIENCY. I hope this article gave you the clarity you need to make smarter, more energy-conscious choices.
