About the Water Heater Cost Calculator
This water heater cost calculator estimates what it costs each year to heat your household’s hot water with four common technologies: a standard electric tank, a heat pump (hybrid) water heater, a gas or propane storage tank, and a gas tankless (on-demand) unit. It works from the physics of heating water — gallons per day and how many degrees they are raised — then divides by each unit’s Uniform Energy Factor (UEF) and multiplies by your local energy prices.
Use it when your water heater is near the end of its life and you are deciding what to replace it with, or to check the savings a contractor quotes for a heat pump water heater. Pick your current and proposed types, enter the extra up-front cost of the upgrade, and the calculator shows yearly savings and simple payback.
UEF is the efficiency rating printed on the yellow EnergyGuide label and in manufacturer specs; it already includes standby losses for a typical draw pattern. Heat pump water heaters have UEFs above 3 because they move heat from the surrounding air instead of creating it, so their real-world performance is lower in a cold basement. Electricity and gas prices are your own; demand charges, maintenance and rebates are not included.
With the default inputs, the yearly savings from switching is $478.28. Change any value above to recalculate instantly.
How to use the water heater cost calculator
- 1Estimate daily hot-water use (about 15–20 gallons per person).
- 2Enter your incoming water temperature and the heater’s setpoint.
- 3Enter electricity and gas or propane prices from your bills.
- 4Adjust the UEF ratings if you have specific models in mind.
- 5Choose your current and proposed heater and the extra installed cost to see savings and payback.
Formula and method
Heating one pound of water by 1 °F takes 1 BTU, and a gallon weighs 8.34 lb, so the yearly heat load Q is gallons per day × 8.34 × temperature rise × 365. Each water heater’s energy input is that load divided by its Uniform Energy Factor, converted to kWh (3,412 BTU each), therms of natural gas (100,000 BTU) or gallons of propane (91,452 BTU), then multiplied by your price.
Yearly savings are the current type’s cost minus the proposed type’s cost, and simple payback is the extra up-front cost divided by those savings. The model assumes the rated UEF holds in your home; heat pump units lose efficiency in cold spaces, and very high or very low daily use shifts real-world efficiency away from the rating.
- Q
- Heat delivered to the water per year (BTU)
- UEF
- Uniform Energy Factor from the EnergyGuide label
- T_set, T_in
- Tank setpoint and incoming water temperature (°F)
Worked examples
Electric tank to heat pump water heater
Heating 60 gallons a day from 55 °F to 120 °F takes about 11.9 million BTU a year. An electric tank (UEF 0.93) uses about 3,741 kWh, or $636 at $0.17/kWh, while a heat pump (UEF 3.75) uses about 928 kWh, or $158. The $478 yearly saving repays a $1,500 price difference in about 3.1 years.
Gas tank to gas tankless for a large family
At 80 gallons a day the yearly load is about 15.8 million BTU. A 0.64 UEF gas tank burns about 247 therms ($371) and a 0.93 UEF tankless unit about 170 therms ($255). The $116 yearly saving takes over 21 years to repay a $2,500 premium, so tankless is mostly about endless hot water and space.
Propane tank to heat pump
Heating 60 gallons a day by 75 °F needs about 13.7 million BTU a year. A propane tank at 0.64 UEF burns about 234 gallons ($655 at $2.80), while a heat pump at $0.15/kWh costs about $161. Saving about $495 a year repays a $2,000 premium in roughly 4 years.
Frequently asked questions
How much does it cost to run a water heater per month?+
For a typical household using about 60 gallons of hot water a day, an electric tank costs around $50 a month at $0.17/kWh, a gas tank around $20–25 at $1.50 per therm, and a heat pump water heater around $13. Your cost scales with hot-water use, setpoint and energy prices.
Is a heat pump water heater worth it?+
It usually is when replacing an electric tank, because it uses roughly a quarter to a third of the electricity. Savings of several hundred dollars a year are common, so the higher price often pays back in a few years, faster with utility rebates. Against cheap natural gas the savings are smaller.
Is tankless cheaper to run than a tank?+
A gas tankless heater avoids standby losses, so its UEF is typically 0.90–0.96 versus about 0.60–0.70 for a standard gas tank, cutting gas use by roughly 30%. Because tankless units cost more to buy and install, the payback on energy savings alone can be long.
What is UEF on a water heater?+
Uniform Energy Factor is the US Department of Energy efficiency metric for water heaters. It is the ratio of heat delivered to the water to energy consumed over a standard 24-hour test, including standby losses. Higher is better, and heat pump units exceed 1.0 because they move heat from the air.
Does lowering the water heater temperature save money?+
Yes. The energy needed is proportional to the temperature rise, so dropping a setpoint from 140 °F to 120 °F cuts the heating load by about a quarter when incoming water is around 55 °F. 120 °F is a common recommendation that balances comfort, scalding risk and energy use.