At a glance...
Electric tank water heaters are the cheapest upfront and switching from gas dramatically cuts your home's pollution thanks to Ontario's clean grid
Heat pump water heaters have the lowest operating costs and qualify for $500 rebates, but cost more upfront and need space in your basement
Avoid leasing water heaters—buying outright saves you money over time, and staying on gas means you'll face rising fixed fees as the gas system shrinks
Lighting a big fire under a tank of water just isn’t the best way to heat your home’s water anymore.
If your current water heater is more than 10 years old, now is a great time to check out modern replacements. Replacing appliances on your schedule avoids that “Oh no, what now?” feeling of standing beside a shower that just won't heat up.
Before diving into all the different options, ask yourself these questions:
Is there anyone moving in or out of your home in the next 2-5 years? (This will change how much hot water you need.)
Will your water heater need replacement soon (is it more than 10 years old)?
Do you want a lower purchase price or lower operating costs for your water heater?
Which option is right for you?
Electric Tank Water Heater
An electric tank water heater is the most affordable install now, and switching from gas greatly reduces your home’s pollution.
PROS:
Immediate access to hot water
Steady supply if unit is sized properly for your household’s needs.
Lower upfront cost.
Much lower pollution than a gas water heater because of Ontario’s relatively clean electricity grid.
You can add a timer to some electric tank water heaters so that they only turn on when electricity is cheap (usually overnight).
CONS:
You can run out of hot water if you're using a lot at once
Higher operating costs than more energy efficient models.
Heat Pump Water Heater
A heat pump water heater is the most energy efficient, so it has the lowest operating costs. On its own, it might fall behind if a lot of people need hot water at the same time, but most include a backup electrical coil that kicks on when they need a boost (an installer may call this a hybrid water heater). Fair warning: they’re more expensive upfront. They’re also not common in Toronto yet, so you’ll need to dig around for a contractor whose installed them before.
Need a refresher on heat pumps?
PROS:
Very lower operating costs because heat pumps are very energy efficient.
Lowest pollution option.
Long life span.
The Ontario Home Renovation Savings Program has $500 rebates on certain models. You’ll need to get an Energy Assessment done first to qualify, but, as one of our volunteers discovered, the tests done in these assessments reveal simple improvements that drastically improve your home’s energy efficiency.
CONS:
Higher upfront costs. For example, you may need to get a 240V outlet installed (the same type of outlet that a dryer would use).
May be less efficient in cold, unheated basements, as they draw their heat from the surrounding air.
May not work in smaller homes because: 1) there’s not enough a big enough volume of air in the basement to draw from or 2) the ceiling may be too low (heat pump water heater are taller than standard electric tank water heaters).
May not keep up with hot water demand during peak periods, but there are hybrid models with electrical coil backups to help them bridge the gap.
It will lower room’s temperature as it draws in heat from the surrounding air to heat your water.
Clearly, there's a bit more to think about with heat pump water heaters. Check out this homeowner's deep dive into their requirements.
NOTE - Some vendors will offer to lease you a hot water heater, but these financing models are better for them—you’ll usually save a lots of money over time if you purchase your appliances outright.
Other Options You May Come Across
Replacing your gas heater with another gas heater
We do not recommend this for a bunch of reasons. If your gas water heater is your last gas appliance then you have a strong financial incentive to get off gas and save on fees. Take this example from Toronto:
Updating your home to 100% electric appliances will save you from this fee creep. Additionally, eliminating a source of gas leaks is a boost to your peace of mind. Gas explosions are uncommon, but basement Carbon Monoxide leaks do happen. You don’t need to heat water with an open flame anymore!
Solar Water Heater
These systems place a dark panel with tubes inside on your roof. A fluid circulates through the tubes and is heated by the sun’s rays. The heat from the fluid is transferred to the water in the home’s hot water tank for distribution throughout the home.
These systems work well in southern, sunny climates but are less effective in Toronto. Here, they deliver lots of hot water in the summer (when you’d prefer a cooler shower) but much less in the winter, when you need it!
Electric Tankless/On-Demand Water Heater
These units work well when demand is low (i.e. – when asked to supply a single room or appliance) but are less effective when used in a centralized hot water system that supplies the whole house.
Electric on-demand heaters also hog space on your electrical panel. Since they require large bursts on energy in a short period of time, so their amp requirements are much higher than regular appliances. This option isn’t recommended if you want to avoid an expensive electrical service panel update.