Average Cost of an Electric Water Heater
If the water heater in your home has ever broken, you’ll know the importance of hot water to a family. Showering, shaving, and washing with cold water is as unpleasant as it sounds. Getting the right water heater for your family is therefore imperative.
To find the right option for you, you need to look for a water heater that fulfills the following criteria:
Has a big enough capacity
Is reliable
Isn’t too expensive to run
Is within your budget
This guide is designed to walk you through the costs involved in an electric water heater. Electric water heaters differ from gas heaters (for cost information on gas heaters, visit our page on average cost of gas water heaters) in that they use an electrical coil element to heat the water and are connected to the main electricity.
There are a number of costs involved in an electric water heater, and by unpacking them, we can help you to make an informed choice and save money along the way.
THE OVERALL COST
The average cost of an electric water heater is $1,127. Generally, you will pay somewhere between $300 and $2,880.
The range from extreme low to extreme high end is $355 to $10,988. The top end of this range comes when you are installing an extremely comprehensive solar system or having to refit a new electrical system in order to fit a large storage tank. It is far more likely that your electric water heater will fall in the moderate $800-$1,500 range.
COST OF DIFFERENT MODELS
Your budget and specific requirements will determine what type of water heater you need.
As a general rule, the more you spend on a water heater, the cheaper it is to run in the long term.
- Electric water heaters tend to be cheaper than their gas equivalents by between $50 and $100 - in the case of tankless water heaters, the price is roughly half for an electric device.
- The general range for an electric water heater is between $300 and $2,880.
This range is obviously wide, and it depends on a large number of factors. Below are the four types of water heaters you can buy; which one you choose is dependent on your home, your family, and your budget – each has its own strengths and weaknesses when it comes to cost.
STANDARD TANK
A standard, or traditional, tank is the most basic model available. It uses an electrical element to cold water, which is then stored in a tank, ready for you to use.
Standard tanks range in size from 20 gallons to 80 gallons (in some cases there are even larger models available).
HIGH-EFFICIENCY TANK
High-efficiency tanks are those that are certified as energy efficient. The Energy Factor (EF) rating is a certification for gas heaters only, although there is a wide range of high-efficiency electric tanks – look for the Energy Star symbol.
A heat pump heater draws heat from the surrounding air to use to heat water. They use around 65% less energy than a standard tank, making them far cheaper to run.
For a heat pump system, you’ll pay between $1,200 and $3,500.
SOLAR TANK
A solar tank has two parts – a thermal collector (usually on the roof) where solar energy can heat water, and a tank to store warm water to use on cold days. Solar energy is becoming ever more efficient. As their lifespan increases, their cost of installation decreases, and their efficiency increases, they are becoming more of a savvy financial choice – despite the high upfront costs.
For a solar system, you’ll pay between $1,800 and $5,500. In some cases, the cost of solar goes up to $13,000 or more. In most jurisdictions, there are tax breaks for installing solar panels, reducing the effective cost.
POINT-OF-USE
A point-of-use, on-demand, or tankless water heater does not have a storage tank and only heats water as you need it. This is extremely energy efficient, with electric point-of-use systems running at 98%+ efficiency.
This means that your running costs for this type of system are far cheaper than with a tank-based model. You can buy point-of-use systems starting as small as 2.5 gallons (usually to provide hot water to a single faucet).
For an electric tankless water heater, you can expect to pay around $500 (in comparison, a gas version will cost around $1,000).
KEY COSTS TO CONSIDER
CAPACITY
The capacity of your tank goes a long way towards determining its price. The more water you can heat up and store, the more your tank can handle a large family with high hot water demands. There is a small economy of scale when it comes to capacity – the larger the tank, the less per gallon you will pay.
The chart below shows the cost range, as well as the dollar per gallon, for gas and electric water heaters based on the tank size.
SIZE (gallons) | PRICE | $ PER GALLON |
|---|---|---|
30 | $270 - $900 | $9 - $30 |
40 | $320 - $1,600 | $8 - $40 |
50 | $400 - $2,200 | $8 - $44 |
75 | $900 - $3,000 | $12 - $40 |
80 | $1,000 - $3,000 | $1,000 - $3,000 |
When you get to the larger tanks, your expected price will be at the lower end of the ranges listed above. In order to find the right size for you, you will need to calculate your family’s precise needs.
In order to do that, keep an accurate record over the course of a typical week of your family’s hot water usage. You can do this either by recording individual hot water usage (showers, laundry, dishes, etc.) or you can use your water meter to record it. Either way, it’s imperative to ensure you have a large enough tank or you’ll run out of hot water.
INSTALLATION COST
Once you’ve selected the capacity and the model of water heater you are going to buy, you need to think about installation. The good news is that many electric heaters are simple enough to install with very little expertise.
If you are installing an electric water heater and you do require a professional, it will cost you between $620 and $1,020.
RUNNING COST
The average water heater in a home will run for around three hours per day. For a standard 50-gallon water heater, running at 5,500 watts, with an energy factor (EF) of .90, and an electricity rate of $.16 per kilowatt-hour (all average assumptions), you will spend around $781 to run it each year.
This is obviously a rule of thumb calculation; larger water heaters will cost more to run and smaller (and tankless heaters) will cost less. Generally, however, you can expect to pay between $500 and $1,000 per year to run your water heater.
Water heaters usually carry a display on the label stating the expected cost per year to run. For water heaters of comparable size, the one with the better EF rating will be cheaper to run due to its higher energy efficiency.
CONVERSION COST
If you have a gas heater and you want to convert it to an electric model, this often is a cheaper option than installing a brand new electrical system. For the conversion, you can expect to pay between $200 and $500.
The bulk of this cost comes from installing a new circuit line, as the heating element requires its own dedicated circuit. If you do the work yourself, then the price will be at the lower end of this spectrum (i.e. around $200), although you should only attempt this if you have proficiency and expertise in wiring.
PERMIT COST
If you are installing a new water heater, you will need to get a permit to certify that it is up to code.
This will cost between $50 and $500 and is usually done by the contractor as part of the project (although the fee will be added on to the final bill).
REPAIR COST
The cost of repair naturally depends on the precise nature of the fault. Generally, however, you can expect to spend between $200 and $1,000 on any repairs to your water heater.
In some cases, this will be covered by homeowners’ or renters’ insurance. Your model may also still be under warranty, in which case you won’t have to foot the bill for repairs.
You should also always get a quote before any repairs take place. In some cases, it may be cheaper to simply replace the water heater than to repair an old one.
This is especially true if your heater is coming to the end of its life. Any repairs over $750 are usually a false economy – for an extra $200 you can have a brand new heater.
According to the Department of Energy, you’ll spend around 15% of your utility budget on heating water. Getting the right water heater is thus a critical financial decision for your family and your home.
As with many purchases, the goal is to make your money go as far as possible and to get the best possible water heater you can afford. Partially this involves doing your research, but it also involves working out where you can save money. After all, having all the information at your fingertips will help you make the best decision.