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

Reviewed by Adam Graham remodeling expert. Written by Fixr.com.

When showering, doing laundry, and washing dishes, hot water is produced by the water heater. The two most popular water heaters are gas and electric. Electric water heaters are less expensive to purchase and maintain than gas models, and they are also more energy-efficient. Homeowners can choose tank, tankless, or hybrid variations of electric water heaters, depending on their needs.

The national average cost for an electric water heater with installation is $800 to $1,500, with most homeowners paying $1,000 for a 50-gallon electric tank water heater installed in a new location with an electrical upgrade. This project’s low cost is $595 for an installed 40-gallon electric tank water heater in a direct replacement that is easy to access. The high cost is $3,000 for a whole-house electric tankless heater installed in an existing wall.

Electric Water Heater Cost

Electric Water Heater Cost by Type

Electric water heaters come in three styles: storage tanks, tankless heaters, and hybrid units. Storage tank heaters keep hot water ready to go and can be found in several sizes. Most households find that 40 to 50 gallons is sufficient, but you may need a larger tank if you have high water needs. Tankless heaters heat water on demand without storing it in advance. The heater is installed inside your wall, so it uses less space but can be more expensive to install, depending on the location. Hybrid units switch between heating with a heat pump during times of high water usage, while using standard electric resistance for everyday needs. They can be a good option if you have high water needs and want low energy bills.

Electric Water Heater Cost (Tank)

Storage water heaters cost $350 to $2,500 for the unit. Installed, they cost $620 to $3,500, depending on the location and size. Tank-style heaters are the most common heater types. Tank heaters use a storage tank to hold a ready supply of hot water. Tanks come in various sizes, ranging from 20 to 100 gallons, and units last for 10 to 15 years. Since hot water is always available in the tank, conventional electric heaters are a good choice for homeowners who use a lot of hot water in a short time. Electric tank-style heaters can be expensive to run because they are always heating the water.

Electric Tankless Water Heater

Expect to pay an average of $500 to $2,000 for an electric tank water heater. This has an installed cost of $1,000 to $3,000. They heat on demand and do not store heated water. They can last for 20 years or more before needing replacement. According to Energy.gov, the tankless direct heating method translates to an 8-34% increase in energy efficiency compared to storage water heaters. Like tank-style heaters, tankless models come in a range of sizes. Some are designed to provide water to one source, while others are large enough to heat water for the entire house. You may need more than one heater if you have very high water needs.

Electric Hybrid Water Heater

A hybrid electric water heater costs $1,200 to $2,500. Installed, this costs an average of $1,500 to $4,000. Hybrid electric heaters, or heat pump units, combine elements of both tank and tankless heaters. They use rapid electric heating by using a heat pump during periods of high demand and revert to traditional tank-style heating during normal demand. This adaptiveness allows heat pump units to operate at 2-3 times the efficiency of a tank unit. Energy Star estimates a hybrid heater can save homeowners almost $300 a year compared to a tank heater. Hybrid heaters are particularly well-suited for warm climates.

Electric Water Heater Price by Number of Gallons

Tank-style heaters and hybrid-style heaters are sold by the number of gallons of water they hold. This ranges from 20 to 80 gallons for electric heaters, but most fall between 40 and 60 gallons. 20 and 30-gallon heaters are typically reserved for point-of-use, meaning they deliver water to a specific area. For example, if you build an addition with a new bathroom, you may purchase a 20 or 30-gallon heater for the addition rather than upgrading and rerouting the existing unit. Because they are not common, these heaters can cost as much as a larger, more standard-sized heater, which are made in larger amounts and can have lower costs.

At 80 gallons, it becomes too costly to heat the water using electricity, so 80-gallon models are generally hybrids. They can hold 80 gallons of water while providing some on-demand hot water, using a heat pump to help lower monthly costs.

Most households likely find that 40 to 60 gallons fits their family’s needs. It is only households with things like performance shower systems or large freestanding bathtubs that may benefit from larger tanks. Below are the average costs for tank and hybrid-style electric heaters in varying sizes.

Electric Water Heater Cost by Brand

Many reputable brands produce electric water heaters. Some brands produce both tank and tankless heaters, while others produce only one. Most companies have certain features they specialize in, potentially making one heater a better fit over another.

For example, Marey makes many point-of-use tankless-style heaters. This makes them good for additions and other small projects. Black and Decker, Bosch, Stiebel Eltron, and EcoSmart also specialize in tankless heaters. These companies all make a wide range of point-of-use and whole-house heaters of different sizes. Many focus on ensuring you have good energy efficiency and optimal flow.

Other companies, such as Rheem, Westinghouse, and Bradford White, make tank and tankless electric heaters. Rheem is a good budget brand focusing on affordability while the other companies focus on high quality. They may also help save with options like insulating tanks and higher efficiency. All three companies make a wide range of sizes in their tank and tankless styles, including some point-of-use and whole-house options for both, so you can more easily find what you need for your project.

Electric Water Heater Installation Cost

Regardless of which electric water heater you choose, you need to have it installed by a plumber. Plumbers charge an average rate of $75 to $130 an hour, depending on their location and expertise. This translates to between $270 and $1,000 for the installation of a tank-style heater, $300 and $1,500 for a hybrid heater, and $500 and $1,000 for a tankless model.

The costs vary based on several things, including whether this is new construction or a replacement, where the unit is located, and whether changes must be made to the pipes or electrical panel to support the heater. Replacements tend to have the least amount of labor involved, provided everything is in good condition. Installing a new electric heater in an area where no heater was previously installed or a different heater was being used has higher costs. This is because the space may need to be opened for the heater, pipes may need to be cut or rerouted, and the electrical wiring may need to be run to the area. Sometimes, an electrician is required to connect the heater to the electrical panel in new installations. Some units can plug or wire in quickly, but others may need their own dedicated circuit, particularly if you are going up in size, increasing the project cost.

Below are the average labor cost breakdowns for the installation of an electric water heater.

Electric Water Heater Installation Cost (Tank)

Expect typical installation costs of a tank electric water heater to average $270 to $1,000. They are the easiest to install because the unit is self-contained. All that must be done is place the unit, connect it to the water source, and tie it into the electrical system. Modifying or extending the electrical source to connect to the heater adds additional time and cost. Open area installations are the least expensive, while installations in tight quarters cost more.

Electric Hybrid Water Heater Installation

Installation costs for electric hybrid water heaters average $300 to $1,500. They fall in the mid-range of installation pricing because they are less complicated to install than a tankless heater but more involved than a storage tank model. They involve a tank, so they require space for installation like a standard tank heater. They also have more moving parts and may need more modifications to your plumbing and electrical systems for a successful installation.

Electric Tankless Water Heater Installation

Expect to pay $500 to $1,000 for the installation of an electric tankless water heater. They can take up to 8 hours to install, depending on the location. Installation of this electric heater is more involved than the tank model because an access hole must be cut in the wall. After the heater installation, you may need to have a carpenter repair the access hole and create a finished access door. Modifications usually must be made to the area’s plumbing to fit the heater in the wall.

Cost to Replace an Electric Water Heater

Expect replacement labor costs to be $150 to $450 plus an additional $45 to $65 for removal and $50 for disposal, for a total of $595 to $3,065. Some installation companies waive the removal and disposal fees if you purchase your new heater from them.

When changing from electric to gas or gas to electric and new access spaces are required, factor in an extra $100 to $1,500 for items like installing new wiring, gas lines, and plumbing and carpentry costs. Direct replacements are the least expensive methods, while moving your new unit to a new location or changing between heater types increases your total costs.

Cost to Run an Electric Water Heater

Your total costs to run an electric water heater vary depending on several factors, such as the electricity cost, heater size, and how many gallons of water you use in a day. According to the Office of Energy Efficiency & Renewable Energy, homeowners spend roughly $195 to $282 per year to operate an electric heater. This is a per-heater and average use cost, so adjust the estimate accordingly if your home has more than one heater or has heavy water usage. These costs also assume a household using 64 gallons of hot water a day, with an average electricity cost of $0.06 per kWh. If you use more or less water or the electricity cost in your area is different, your costs are different.

The Department of Energy (DOE) notes there are ways to save on your water heating bill. They advise taking short showers versus baths, replacing any pre-1992 showerheads with low-flow models, and turning the water off when you are not actively using it, such as when brushing your teeth. Decreasing the heater’s temperature setting also pays off with 3-5% savings for every 10º Fahrenheit temperature reduction. The DOE recommends an optimal setting of 120º Fahrenheit.

Cost to Convert a Gas Water Heater to Electric

Converting from a gas to an electric water heater is straightforward and incurs minimal additional costs beyond those generally associated with a heater replacement. Expect to pay an extra $250 to $600 to run electrical lines and transition from a gas to an electric heater, which includes disconnecting from and capping your gas line and removal and disposal of the old unit. This makes your total costs between $870 and $4,100 for the replacement of a gas heater with a new electric model.

Natural gas is less expensive than electricity in most areas. Therefore, you may see higher monthly costs in addition to the conversion costs.

Maintenance

No matter the type of water heater purchased, regular maintenance extends the heater’s life cycle. Some maintenance can be performed by the homeowner, particularly for tank-style models, while other maintenance should be done by a professional.

For storage heaters, a quarter of the tank’s water should be flushed every 3 months. This helps prevent sediment build up on the bottom of the tank, extending its life.

To clean the tank, drain all the water. Allow cold water to flow to the bottom to rinse the sediment. Continue to add water and drain until it flows clear. Replace the water in the tank.

Have the tank inspected yearly by a professional to check the pressure and valves. Tankless models should be inspected periodically by a professional to ensure they are working properly because they cannot be easily accessed. The plumber can perform the necessary maintenance or repairs during these inspections.

Most inspections have a base cost of $130 to $200, with additional costs for repairs.

Energy Efficiency

Electric water heaters are the most costly to run but also fairly energy-efficient. They convert nearly 100% of the energy used into heat for the water. This means your yearly costs go almost entirely to heat rather than coming off in exhaust like some gas or propane heaters.

Because tank-style heaters are in use at all times, they are constantly using energy. Hybrid heaters, which use a heat pump, are much more efficient because they are moving the heat from outdoors into the tank rather than generating it. Tankless heaters are also much more efficient because they only heat the water you use rather than heating it continuously.

While electric heaters are efficient at converting energy to heat, this does not necessarily make them eco-friendly. Some electrical plants may still be using coal to produce electricity, which may influence your energy choice.

Electric vs Gas Water Heater

You have an alternative to an electric water heater if your home is piped for natural gas. Electric units can be used in any home, but it is common for households with natural gas to use this for heaters and other appliances.

Of the two, electric heaters tend to be less expensive to purchase and install. However, they are more costly to run. Natural gas is generally a less-expensive form of energy, but gas units require more maintenance and cleaning. They also need to be vented, increasing installation costs.

Natural gas is also not available in all areas, making electric models more versatile. Below are the average costs of installing a 50-gallon heater in both types.

Oil-Fired Hot Water Heater vs Electric

While most homeowners use electric or natural gas hot water heaters, you may also use an oil-fired unit if you have oil heat. Oil furnaces and hot water heaters are most common in the Northeast because oil burns hotter and you can use less of it even in cold temperatures.

Oil heaters are less common than gas or electric, so you may have fewer choices available for size, energy efficiency, and style. Oil heaters also require more cleaning than gas and electric heaters. However, they have lower running costs than electric heaters because oil burns much hotter.

Electric units are still the least expensive to purchase, install, and maintain, but their monthly energy costs are higher. Below are the average costs for both types of 50-gallon heaters.

Enhancement and Improvement Costs

Specialty Tanks

Specialty tanks that include mobile alerts and smart capabilities have a higher cost, between $600 and $1,900 or between $820 and $2,900 installed. Smart water heaters can set controls and change the temperature and operating modes. They can also be modified with your smartphone through an app.

Expansion Tanks

An expansion tank is a small tank sitting with the water heater and protects an enclosed water heater system. In a closed system, pressure from your heater can build up without having anywhere to go. In an open system, this pressure can bleed into the municipal water supply, but closed systems can be damaged by excess pressure. An expansion tank gives the pressure a place to expand into. Some cities require expansion tanks for homeowners if they have a closed system. An expansion tank costs $45 to $65 and can be installed with your standard system.

Earthquake-Prone Regions

In earthquake-prone regions, water heaters can topple over. Heaters should be strapped to the wall with special straps if you live in an earthquake-prone region or have loose flooring. Small tanks can also be hung up to keep them off the floor. Speak with your plumber about what options may be available.

Additional Considerations and Costs

• Permits. Water heater installation and removal require permits in most states. Plumbers include this in their quoted price. Speak to your local municipality for more information on permit costs.
• Electrician. If an electrician is needed, they may charge a flat rate or per hour. The average per-hour rate is $40 to $120. New wiring and circuitry can take two to three hours, making the total cost between $80 and $360 in addition to your other installation costs.
• Old unit removal. Removal and disposal are typically included in the quote. Labor costs $45 to $65, and disposal fees are around $50. If you are savvy, you can remove it and salvage the parts.
• Measuring. For the most efficient installation, measure the old water heater and location and find a heater that fits the space. This makes the least expensive installation. Using a differently sized heater can increase costs.
• Safety concerns. While changing a water heater DIY is an option, most people do not understand the code and needs for changing a heater. Untrained homeowners should not play around with electrical panels or wiring. You may also have trouble passing your permit inspection without the proper installation.
• Drywall panels. New water heaters are often bigger than older, out-of-date models and require changes for the unit to fit. Drywall panels range in cost from $40 to $60. Depending on the size expansion, you may need one to four panels. You may also have finishing costs, depending on where the heater is.
• Lifespan. The average lifespan of an electric water heater ranges from 10 to 20 years. Some hybrid heaters may last even longer, up to 25 years.
• Scalding. Avoid scalding by setting the correct temperature, 120º Fahrenheit. Your plumber can assist you with this during installation.
• Leaks. Water heaters are known to leak, especially if they are old. Keep a buffer between them and storage items nearby, and watch out for floor damage. Inspect the heater regularly to catch leaks before they get bad.
• Warranty. Most water heaters come with a 6-year tank-and-parts warranty and a 1-year labor warranty. If anything goes wrong with the tank after 1 year, you must cover labor at a rate of between $75 and $130 per hour. After 6 years, homeowners also pay for parts, or a new tank must be purchased.
• Solar water heaters. Solar water heaters use the sun to heat water. You can use a solar water heater instead of an electrical one to save costs. Solar heaters range from $8,000 to $10,000. They are more expensive to install but save money in the long run.