Heat pump vs gas water heater: the running-cost math
Updated · Reviewed against the current HotWaterAtlas dataset
Short answer: at national average rates the median certified heat pump model costs about $184/year to run against $278/year for a median gas storage unit — roughly $940 over a ten-year life in the heat pump's favor. Gas wins mainly where electricity is unusually expensive, gas is unusually cheap, or the install can't accommodate a heat pump.
The efficiency gap is structural
A gas burner can never deliver more heat than the fuel contains — certified gas units top out just below a UEF of 1.0. A heat pump moves heat instead of making it, so it delivers 3–4 units of heat per unit of electricity. Across the current certified market:
| Category | Models | Median UEF | Median est. cost/yr |
|---|---|---|---|
| Heat pump | 567 | 3.7 | $184 |
| Gas tankless | 386 | 0.95 | $258 |
| Gas storage | 131 | 0.89 | $278 |
Costs use each model's certified annual energy use at national average rates (see the methodology for the exact rates and formula). Your local prices shift the dollars but rarely the ordering.
Adjust the math to your rates
The crossover is a simple ratio. A heat pump at UEF ~3.7 uses roughly a quarter of the energy a gas tank needs for the same hot water. Gas beats it on running cost only when your per-kWh electricity price is more than about 3.5–4× your per-kWh-equivalent gas price (1 therm ≈ 29.3 kWh). At the national averages — about $0.17/kWh and $1.45/therm (≈ $0.05/kWh-equivalent) — the ratio is ~3.4×, which is why the heat pump wins on median but not by a landslide in every state.
- Cheap hydro power or time-of-use scheduling (Pacific Northwest, overnight rates): the heat pump advantage widens dramatically.
- Expensive electricity + cheap gas (parts of New England in winter): a condensing gas unit can tie or win on running cost.
- Propane: at ~$2.70/gal, propane is usually the most expensive option — heat pumps win against propane almost everywhere.
What the running-cost math leaves out
- Installation. A like-for-like gas swap is the cheapest install; a heat pump may need a condensate drain, possibly a circuit (unless you pick a 120 V plug-in model), and space with enough air volume — see the installation requirements guide.
- Incentives. Federal, state, and utility programs frequently cover a large share of heat pump cost — check current programs before comparing sticker prices.
- Recovery behavior. Gas burners reheat faster than a heat pump in efficiency mode; hybrid mode closes the gap. Size by first-hour rating, not fuel loyalty.
- Side effects. A heat pump cools and dehumidifies its space — free dehumidification in a damp basement, a minor heating penalty in conditioned space.
Ready to pick a model? Start from your household size on the best-water-heater pages, or browse the 567 certified heat pump and 131 gas storage models directly.