How much does it cost to install an electric tankless water heater?

Reviewed by Cristina Miguelez remodeling expert. Written by Fixr.com.

Many people take hot water for granted, opening faucets or turning on showers and expecting warm water to appear. But you need a heater to heat the water - an appliance designed to warm the water you use each day. There are several water heater types and fuels to power them. One of the most efficient is an electric tankless water heater, which heats only the water you use each day through electric resistance. These heaters can be tiny and installed below your sink to give you hot water for tea or large enough to provide water for the entire household. This results in a wide range of associated costs.

The national average cost to install an electric tankless water heater is $800 to $2,000, with most people paying around $1,200 for a 6 GPM whole-house electric tankless water heater installed with minimal modifications. This project’s low cost is $250 for a 1 GPM point-of-use water heater installed just below a kitchen sink. The high cost is $3,000 for an 8 GPM whole-house electric water heater that requires modifications for installation and a custom access door.

Electric Tankless Water Heater Installation Cost

Cost of a Tankless Electric Water Heater by Type

Tankless water heaters work by heating the water as it passes through rather than heating the water in a storage tank. This means the heater size is directly related to how much water it may need to heat at once.

For this reason, tankless water heaters are typically broken into two categories - point-of-use and whole-house. A point-of-use heater heats the water for a single room or appliance, such as for a water tap in a sink or bathroom. A whole-house heater provides water for multiple rooms or water sources at once. Keep in mind that electric whole-house heaters do not tend to be as large as heaters fueled by gas or propane, so you may still require more than one heater for very large homes or homes with high water usage.

Below are the average costs for single-point and whole-house electric tankless water heaters and their costs installed.

What Size Electric Tankless Water Heater Do I Need?

Many factors determine the electric tankless water heater size you need. In addition to being sized as point-of-use or whole-house, tankless heaters are also sized by the amount of water they can heat in a minute. This measurement is gallons-per-minute or GPM. Electric tankless heaters come in sizes as small as 0.5 to 1 GPM or up to 8 GPM.

To decide which heater size you need, first determine how many gallons of water you use per minute. Point-of-use heaters may be used for a single appliance or they may be large enough to supply water to an entire bathroom. Whole-house heaters may be large enough to run a few bathrooms or even all the water sources in your home simultaneously, depending on your water usage. Because electric tankless heaters become more difficult to find after 6 GPM, it is very common to use a whole-house heater with one or two point-of-use heaters in larger households or households with heavy water needs.

Below is a chart showing how many gallons of water most water sources in your home need.

It is also common to find electric tankless water heaters sized to the number of bedrooms a home has. This can be a general way of discovering how much water you are expected to use in your home. This is only a guideline, and your water usage may vary.

Cost of an Electric Tankless Water Heater by Size

The cost of your water heater is directly tied to size. This is true for the installation and the unit. Very small units that can be installed in the open can be put in much less expensively than those requiring a wall to be opened and modified.

Electric tankless heaters are generally sold by the GPM output. There can be a range of costs based on manufacturer and other features the products may have. Some may have smart features that allow you to adjust the temperature or get maintenance alerts on your phone. Others may be more straightforward and offer no additional features but have a lower upfront cost.

Many brands of electric tankless heaters only produce sizes up to 6 or 7 GPM. A few make heaters up to 8 GPM, but they can be difficult to find and expensive to run beyond this size. For this reason, you may want to switch fuel sources or combine a whole-house heater with a point-of-use heater if you need more than 8 GPM.

Below are the average costs based on the water heater size and their average costs installed.

Electric Tankless Water Heater Output by Climate

Your location and climate can impact how well your tankless water heater functions. This also helps dictate the heater size you may need. The average temperature of the groundwater in your climate can have a big impact on how well a tankless heater functions.

Heaters in very warm climates do not have to work as hard to produce heat because the water entering the home is already much warmer. Therefore, you could get away with a smaller heater and still meet your needs. At the same time, a home in a cold climate has much colder groundwater, and your heater must work harder to warm it. For this reason, you may need a much larger heater than you previously thought to meet your needs.

If a heater is designed to output 4.5 gallons per minute of hot water, it likely produces this much in a moderate climate. However, that heater in a hot climate could produce as much as 7.1 GPM, while producing only 3.5 in a cold climate. For this reason, consider your local climate and groundwater temperature when sizing your unit. Below are the average fluctuations you can find for the average 4.5 GPM heater based on different climates and groundwater temperatures.

Electric Tankless Water Heater Prices by Brand

Many reputable brands make electric tankless water heaters in a range of sizes. Some focus on point-of-use and smaller heaters, while others offer a full range of sizes including whole-house options. Some of these companies you may already know as household names, such as Bosch, Rheem, and Black & Decker. Black & Decker specializes in electric tankless heaters rather than offering different fuel types.

Other manufacturers focus more on point-of-use offerings like Marey or ensuring you get an efficient and eco-friendly heater like EcoSmart.

Of these mentioned, Bosch offers the most options for sizing, including many whole-house heater options. Other companies offer a greater range of sizes, including Westinghouse, which has some of the most options and largest sizes on the market, and Bradford White, which specializes in high-quality and long-lasting heaters. Below are the average costs for a heater from each brand.

Labor Cost to Install an Electric Tankless Water Heater

The labor costs to install an electric tankless water heater vary based on several factors. These heaters are installed by plumbers, who charge an average of $75 to $130 an hour. The installation for a small under-the-sink point-of-use heater takes about an hour with an average cost of $100 to $150.

However, larger heaters are installed inside your walls and take more effort and labor to install. The wall must be opened, unless this is new construction. The pipes are cut and the heater installed between them. The heater also must be wired to an electric source. Having a wire run to the site for installation or upgrading a panel increases your costs, particularly because an electrician is required. Electricians charge between $40 and $120 an hour.

You may need an access door installed because your new heater may require maintenance. This makes it so that you do not have to repeatedly cut the wall open. This can be done by a handyman or carpenter at a rate of between $50 and $150 an hour. However, you do not need to cut the wall open or install an access door if the heater is installed in an unfinished basement wall. Therefore, your costs are lower.

Altogether, this means that with the exception of small under-sink heaters, electric tankless water heaters cost between $500 and $1,000 in labor to install. The exact amount depends on how difficult the area is to access, if you need to modify the electricity or other parts of the area, and if you have an access door installed.

Cost to Replace an Electric Tankless Water Heater

There can also be a wide range of costs associated with replacing a tankless water heater. Like installation, the heater may be in a difficult-to-access area or need modifications to make the replacement. Average labor costs for replacement are between $135 and $1,200, depending on how difficult the old unit is to remove and the new one is to install. Open-area installations are less costly than those in tight areas. Likewise, your costs are lower if this is a direct swap and not an upgrade in size or a change to a different heater. This can make the total average cost range to replace an electric water heater $235 to $2,700, depending on the model, style, and placement.

Cost to Run an Electric Tankless Water Heater

While electric tankless water heaters are considerably less expensive than gas or propane models, they cost much more to run. Costs vary based on the heater size, how much water you heat each day, and the cost of electricity in your area.

On average, total costs start at around $19 a month for a small point-of-use heater and can reach $63 a month for a unit that serves a family of four. Over the course of a year, this translates to $228 for a small unit and $756 a year for a larger unit.

Many things impact the cost of running your heater, such as the number of kilowatts it uses and the cost of electricity per kilowatt in your area.

Pros and Cons

Electric tankless water heaters are much more energy-efficient than standard heaters. They only use electricity when you are running them rather than all the time like a standard tank-style heater requires. They have only a few moving parts and little required maintenance. They are low cost and fairly easy to install when compared to other tankless heaters that use different fuel types. Small point-of-use heaters are excellent for additions or getting instant hot water at the tap for cooking or making tea. They only require a connection to your grid or some other electricity, such as solar power. So, this can be a good alternative if you live in an area with no natural gas.

However, they have the highest running costs of any heater on the market. They also are not always big enough to handle the needs of a large household. This is because the cost of running such a unit is often higher than most people want to pay. Therefore, they are usually only recommended for smaller homes, homes located in areas without access to other fuels, and small installations.

Maintenance

There is no real day-to-day maintenance that you need to do for your tankless heater. It does not store water, so it does not build sediment like a tank-style heater. It is also usually installed in your walls, so access is more difficult. Therefore, the only real maintenance is having a professional out to inspect it and make repairs every 1 to 2 years. Each model is different in how often inspection or maintenance repairs are required, so speak to your installer at the time of the project to get a good idea of how often they should return to service your unit. Typical service calls start at around $75 to $150 per visit.

Electric Tankless vs Tank Water Heater

There are two styles of electric water heater - tankless and traditional tank-style. Tankless heaters install unobtrusively in your walls. They heat the water as it passes through the heater, so they are much more energy-efficient than tank-style heaters, which maintain a larger reservoir of hot water that is ready to use. With a tankless heater, you essentially never run out of hot water because it continuously heats it. With a tank-style heater, you need to replenish the tank as it empties, which requires the water to heat back up.

Tankless heaters are slightly more costly than tank-style heaters. They cost more to install and purchase, but they may save you money monthly, depending on how much water you use.

Tank-style heaters are a little less expensive to purchase and install, but they require more maintenance and space. Below are the average costs of both styles fully installed.

Electric vs Gas Tankless Water Heater

Another choice you may have is whether to go with an electric tankless heater or a model powered by natural gas. Natural gas is not available in all areas and may not be a choice for every homeowner. However, if it is available and your home is already plumbed for it, it can save you considerably in monthly bills because it has much lower operating costs than an electric unit.

Electric units cost much less to purchase and install than gas-powered units. However, they cost more to run. Gas units require a gas line run to the location of the installation, increasing installation costs. Gas units may also require more maintenance than an electric heater. Below are the average costs to install tankless water heaters using both fuel types.

Additional Considerations and Costs

• Permitting. In some areas, a permit is required to install a water heater of any kind. Check with your local municipality for more information.
• Lifespan. The average electric tankless water heater lasts between 7 to 10 years. Regular inspections and maintenance can help it reach its longest lifespan.
• Warranties. Most tankless electric water heaters have warranties ranging from 3 to 5 years. However, you can find longer warranties on some specific products. Ask the manufacturer for more information.
• Water hardness. Hard water can shorten the lifespan of your tankless heater. As the water passes through the heater, it can leave mineral deposits behind that prevent it from working properly. You can address this issue with a whole-house filter.