The one equation underneath all of it
Heating water is the most predictable energy calculation in a house, because water has a fixed and well-known heat capacity. It takes one BTU to raise one pound of water by one degree Fahrenheit, and a gallon of water weighs 8.34 pounds. So the heat that has to go into the water is gallons times 8.34 times the temperature rise.
Sixty gallons a day raised from 55°F to 120°F is 60 x 8.34 x 65, which is 32,526 BTU a day. That is the useful output. What you buy is the input, which is that figure divided by the efficiency of the appliance. From there it is a unit conversion: one kilowatt-hour is 3,412 BTU, and one therm of natural gas is 100,000 BTU. Nothing in the chain is estimated except the efficiency and the gallons, and both of those are inputs you can adjust above.
Where the efficiency figure comes from and what it hides
Water heaters sold in the US carry a Uniform Energy Factor, which replaced the older Energy Factor rating. It is the ratio of useful hot water energy delivered to total energy consumed over a 24-hour test with a defined draw pattern, and the pattern matters: units are tested in one of four draw bins — very small, low, medium and high — and a unit's UEF is only strictly comparable with another unit tested in the same bin.
| Type | Typical UEF range | What sets it |
|---|---|---|
| Electric storage tank | about 0.90 to 0.95 | Standby loss through the tank walls; resistance heating itself is near total |
| Gas storage tank, atmospheric | about 0.58 to 0.70 | Flue losses while firing, plus standby loss up the flue between firings |
| Gas storage tank, condensing | higher again | Recovers latent heat from the flue gas |
| Gas tankless, non-condensing | about 0.80 to 0.87 | No standby loss; flue losses while firing |
| Gas tankless, condensing | about 0.90 to 0.96 | As above plus latent recovery |
| Electric tankless | about 0.95 to 0.99 | Almost no losses at all — and enormous instantaneous draw |
| Heat pump water heater | above 1.0, often well above 2 | Moves heat rather than making it; performance depends on the air around it |
Those are broad ranges across product categories, not specifications, and the last row is why the fuel selector here does not cover everything. A heat pump water heater has a UEF greater than one because it is not creating heat, it is moving it from the surrounding air, and its real-world performance depends on how warm and how large the space it sits in is. If you are pricing one, the arithmetic on this page still works — put its nameplate UEF into the field — but understand that the number is more sensitive to installation conditions than a resistance element ever is.
The important limitation of UEF is that it embeds standby loss for the test's draw pattern. A tank losing heat continuously is being charged against a fixed volume of hot water delivered. Draw much less than the test assumes and the standby loss is spread over fewer gallons, so your effective efficiency is worse than the plate. Draw much more and it is better. This is precisely why tank and tankless comparisons swing so much between a household that showers twice a day and a vacation home used four weekends a year.
The tankless question, answered honestly
Eliminating standby loss is a genuine saving and it is the whole of the energy case for tankless. On gas, where a tank loses heat through its walls and up its flue all day, that saving is meaningful — the difference between a UEF around 0.62 and one around 0.85 is roughly a quarter of the annual gas. On electric, where the tank is already at 0.92 and the tankless at 0.95, the saving is small enough to disappear into the uncertainty on everything else.
What tankless changes far more than efficiency is the shape of the demand. A tank spreads the heating load over hours, drawing modestly and storing the result. A tankless unit has to supply the entire heat of the draw while the draw is happening. That is why a whole-house gas tankless is rated near 200,000 BTU/h when a gas tank is 40,000, and why an electric whole-house tankless can be 27 kW — over 110 amps at 240 V — where an electric tank has a single 4,500 W element. The electrical service or the gas line frequently has to be upgraded, and that cost is not in any energy calculation.
The other thing to size against is winter. Tankless capacity is stated as flow at a given temperature rise, and the two trade against each other. A unit that comfortably runs two showers in September, when the inlet water is 70°F, may only manage one in February when it is 40°F and the rise has nearly doubled. Size on the coldest inlet temperature you actually get.
Setpoint, scald risk and stored water
The thermostat setting does three things at once and they do not point the same way. Higher stores more usable hot water in the same tank and improves recovery in practice, because you blend more cold at the tap. Higher also increases standby loss, since loss scales with the difference between the tank and the room. And higher increases scald risk sharply: the time to a serious burn falls from minutes at 120°F to a few seconds at 140°F, and faster than that for children and older adults.
Against that, water stored below roughly 120°F sits in a temperature band where Legionella can multiply. Public health guidance and plumbing practice weigh these two risks differently in different jurisdictions, and the common engineered answer is to store hot and deliver warm — a higher tank temperature with a thermostatic mixing valve at the outlet blending it down to a safe delivery temperature. That is a plumbing modification rather than a thermostat adjustment, and it is worth asking a plumber about rather than splitting the difference on the dial.
Read the plate, then use this page
Everything above depends on two figures that belong to your specific appliance and your specific household: the efficiency factor and the gallons a day. Both are editable here for that reason. The nameplate on the side of the unit carries its UEF, its input rating, its first-hour rating or recovery, and often its standby loss, and every one of those beats a category average. Your water bill and your own sense of how the household uses hot water beat any per-person convention. Put those numbers in, and the output stops being an estimate of a typical home and becomes an estimate of yours — still an estimate, because inlet temperature swings all year and nobody uses the same amount of hot water in July as in January, but one built on your inputs rather than a table's.
Questions people ask
How much does it cost to run an electric water heater per year?
For a three-person household using about 51 gallons of hot water a day at a 65°F rise, on a typical electric tank around UEF 0.92, roughly 3,200 kWh a year — about $515 at 16 cents per kWh. The three inputs that move it are usage, temperature rise and rate, and all three vary a lot: a household using 90 gallons a day pays nearly twice as much, and the same house on a 30-cent rate pays nearly twice again. Inlet water temperature also swings by season, so the winter months cost noticeably more than the summer ones even with identical usage.
Does a tankless water heater actually save money?
On gas it saves energy reliably; whether it saves money depends on what the installation costs. Eliminating standby loss moves a typical gas unit from around UEF 0.62 to around 0.85, which is roughly a quarter off the annual gas — often somewhere in the region of $50 to $100 a year for a normal household. Against that, gas tankless installations frequently require a larger gas line, new venting and a condensate drain, and cost substantially more than swapping a tank. On electric the energy saving is very small, because an electric tank is already about 0.92 and the tankless about 0.95, and the electrical service upgrade a whole-house electric tankless usually needs can cost more than the appliance. Any payback figure moves with rates and usage and should not be treated as a promise.
What is UEF and how is it different from EF?
Uniform Energy Factor is the current US efficiency rating for water heaters, replacing the older Energy Factor. Both express useful hot water energy delivered divided by total energy consumed over a 24-hour test, so a UEF of 0.62 means 62 percent of the fuel you buy ends up in the water. The change to UEF introduced draw pattern bins — very small, low, medium and high — so that units are tested against a usage profile appropriate to their size, and a UEF is only directly comparable with another UEF from the same bin. Both ratings include standby loss for the tested draw pattern, which is why a tank used far less than the test assumes performs worse in practice than its rating suggests.
What temperature should I set my water heater to?
This calculator deliberately does not decide it for you, because it is a genuine safety trade-off rather than an efficiency question. 120°F is the setting most commonly recommended for households, and it balances scald risk against energy use. Higher settings store more usable hot water and raise standby loss, and raise burn risk substantially — the time to a serious scald drops from minutes at 120°F to seconds at 140°F, faster for children and older adults. Lower settings put stored water into the range where Legionella can grow. Where both concerns are live, the engineered answer is a higher tank temperature with a thermostatic mixing valve blending the delivered water down, which is a plumbing job. Check what your local health and plumbing guidance says rather than picking a number for the bill alone.