Electric Water Heater vs Tankless Electric Water Heater: Which Costs Less to Run?
Storage tank versus on-demand: the tank keeps 50 gallons hot all day; tankless heats ferociously only while a tap runs.
Electric Water Heater · per month
$72.60
2.9 hours/day · 3,500–5,500 W
Tankless Electric Water Heater · per month
$70.10
0.7 hours/day · 13,000–27,000 W
Verdict
Tankless wins modestly on energy — eliminating standby losses typically saves 10–25% — but electric tankless demands enormous instantaneous power that may require panel upgrades. The tank wins on install cost and off-peak flexibility. If the goal is purely a lower bill, a heat pump water heater beats both.
Side by side
| Electric Water Heater | Tankless Electric Water Heater | |
|---|---|---|
| Typical power | 3,500–5,500 W | 13,000–27,000 W |
| Typical usage | 2.9 hours/day | 0.7 hours/day |
| Energy per month | 397 kWh | 383 kWh |
| Cost per month (US avg) | $72.60 | $70.10 |
| Cost per year (US avg) | $872 | $842 |
| Cost per month in Hawaii | $190 | $184 |
Rates as of July 2026. Adjust the assumptions on each appliance's page: Electric Water Heater · Tankless Electric Water Heater.
Frequently asked questions
Which is cheaper to run: a electric water heater or a tankless electric water heater?
At typical usage and the current U.S. average rate (18.3¢/kWh), the tankless electric water heater is cheaper: about $70.10/month versus $72.60/month for the electric water heater — a difference of $2.50 per month.
How much could I save per year by choosing the tankless electric water heater?
About $30.04 per year at typical usage and average rates. In Hawaii (48¢/kWh) the annual gap grows to roughly $78.80.
Do these numbers apply to my state?
The ratio between the two stays the same everywhere, but the dollar gap scales with your rate — from Louisiana at 12.7¢/kWh to Hawaii at 48¢/kWh. Open each appliance's page for the exact cost in your state.