Electric Water Heater Running Cost

Water heating is the second-largest energy expense in most homes, after space heating and cooling. An electric water heater with a 50-gallon tank and average usage typically costs $400-600 per year to run.

The physics

It takes 1 BTU to raise 1 pound of water 1 degree Fahrenheit. Water weighs 8.34 pounds per gallon.

BTU needed = gallons_per_day x 8.34 x temperature_rise (F)

kWh needed = BTU / 3,412 / efficiency

cost per day = kWh x electricity_rate

The temperature rise is from incoming cold water to the tank setpoint. Cold water enters at roughly 55-65 F in most U.S. climates (colder in northern states in winter). A tank set at 120 F with 60 F incoming water has a 60 F rise.

Standard tank efficiency

Most conventional electric resistance water heaters are 90-95% efficient (energy factor). The EF rating appears on the yellow EnergyGuide label. Heat pump water heaters are 2-4x more efficient — they move heat rather than generate it, achieving an effective efficiency of 200-400%.

What this calculator does and does not cover

It works out the energy to heat the water you actually draw. It does not model standby loss, the heat a full tank sheds through its walls around the clock whether anyone uses it or not. On an older 50-gallon electric tank that is often another 0.5 to 1.5 kWh a day, and it is precisely what the thermostat setting and an insulating blanket act on. Add it separately if you want the whole bill.

Reducing water heating costs

Dropping the thermostat from 140°F to 120°F cuts standby loss and scald risk together, and 120°F is the setting most manufacturers now ship. A timer that keeps the elements off during peak hours saves 5 to 15% if your utility bills time-of-use. An insulating blanket on an older tank cuts standby loss by 25 to 45%.

Then there is simply using less. At $0.16/kWh with a 60°F rise on a 92% efficient tank, ten fewer gallons a day is worth about $93 a year, which is one meaningfully shorter shower. The calculator works this figure out for your own numbers rather than a generic one.