Heating water is one of the largest energy expenses in the average home. According to the Energy Information Administration's Residential Energy Consumption Survey, water heating accounted for approximately 15% of US household energy costs in 2020.

Figure 2. Energy costs by end use for the average US home.

For many US households, annual water-heating costs range from $300 to $700 per year, although actual costs vary considerably from one home to another.

One of the biggest factors affecting operating costs is the fuel used to heat the water. Electricity, natural gas, propane, and fuel oil all have different prices, and some water-heating technologies use these fuels much more efficiently than others.

For example, Table 1 shows the average annual water-heating cost by fuel type using 2020 energy prices, along with the projected annual cost for the same energy consumption using average 2025 energy prices.

Table 1. Average annual water-heating costs for US homes in 2020 by fuel type, with projected 2025 costs using the same energy consumption from 2020.