Energy Cost Savings Calculator (Tank vs Tankless)
Compare the annual energy costs of a traditional tank water heater versus a tankless (on-demand) water heater and estimate your potential savings.
Formula
Step 1 — Daily useful heat required (BTU/day):
Q = Gallons/day × 8.3454 lb/gal × ΔT (°F)
where ΔT = Outlet Temp − Inlet Temp
Step 2 — Annual fuel consumption:
Gas: Therms/yr = (Q × 365) ÷ UEF ÷ 100,000
Electric: kWh/yr = (Q × 365) ÷ UEF ÷ 3,412.14
Step 3 — Annual energy cost:
Gas: Cost = Therms/yr × $/therm
Electric: Cost = kWh/yr × $/kWh
Step 4 — Annual savings:
Savings = Tank Cost − Tankless Cost
Total Savings = Annual Savings × Years
Assumptions & References
- Water density used: 8.3454 lb/gallon (specific heat = 1 BTU/lb·°F).
- 1 therm = 100,000 BTU; 1 kWh = 3,412.14 BTU.
- Average U.S. household hot water use: ~64 gallons/day (DOE / ENERGY STAR).
- Recommended safe water heater temperature: 120°F (U.S. DOE).
- Typical gas tank UEF: 0.60–0.70; gas tankless UEF: 0.82–0.96 (ENERGY STAR).
- Typical electric tank UEF: 0.90–0.95; electric tankless UEF: 0.96–0.99.
- U.S. average natural gas price: ~$1.20/therm (EIA, 2024).
- U.S. average electricity price: ~$0.16/kWh (EIA, 2024).
- Calculator does not include installation costs, standby loss differences beyond UEF, or maintenance costs.
- UEF (Uniform Energy Factor) is the current DOE standard replacing the older EF rating.
- Sources: U.S. DOE Energy Saver, ENERGY STAR, U.S. EIA.