Under some utility rates, the cost of heating water with an electric resistance water heater is greater than the cost with a gas-fired water heater, liquid propane, and fuel oil. However, the cost difference is frequently overstated by not considering the efficiency of the water heaters.
Water heating energy and demand cost is only one of the many components of the total cost of owning and operating a water heating system. Electric water heaters typically offer cost advantages over fuel-fired systems for these other cost components, including design, installation, maintenance, service life, and effect on space conditioning loads. Where the total cost of ownership and operation are considered, electric water heating often has an overall cost advantage.
Even in situations where electric water heating is more expensive, it is frequently the preferred choice. Any cost difference is usually viewed as a small price to pay for avoiding the potential safety hazards and inconveniences associated with fuel-fired water heaters.