Gas furnace vs electric furnace: which is cheaper to run?

Gas Furnace Versus Electric Furnace Which is Cheaper to Run

The age-old question of whether a gas furnace or an electric furnace is more economical to run is a crucial one for homeowners seeking to control their energy bills, especially during the colder months. While both types of furnaces fulfill the fundamental purpose of heating a home, their operational costs can differ significantly, influenced by a complex interplay of fuel prices, efficiency ratings, regional climate, and installation considerations. Generally speaking, for most regions in North America, a natural gas furnace will be cheaper to run than an electric furnace.

This direct answer, however, warrants a deeper exploration into the factors that contribute to this cost difference and the circumstances under which an electric furnace might become a more competitive option. Understanding these nuances allows for a more informed decision when selecting or replacing a home heating system.

Understanding the Fuel Sources and Their Costs

The primary driver behind the cost difference lies in the inherent cost of the energy source itself. Natural gas, when available via a utility line, is typically a more cost-effective fuel than electricity for heating purposes. This is largely due to the energy conversion processes involved. Power plants that generate electricity often use fossil fuels (like coal, natural gas, or even nuclear power) as their primary source. During generation and transmission, there are inherent energy losses. Consequently, the cost of electricity reflects not only the generation cost but also the expenses associated with its extensive distribution network. In contrast, natural gas is delivered directly to homes through pipelines, with fewer intermediate steps and generally lower transmission losses.

Electricity, while convenient and increasingly utilized for a variety of household appliances and systems, often comes with a higher per-unit cost when measured by the amount of energy it delivers for heating. This is particularly true when considering the cost per British Thermal Unit (BTU) of heat produced. The price of natural gas, while subject to market fluctuations, has historically been more stable and lower than electricity when comparing its equivalent heating value.

Efficiency Ratings and Heat Output

Beyond the raw cost of fuel, the efficiency of the furnace itself plays a pivotal role in determining operational expenses. Furnaces are rated by their Annual Fuel Utilization Efficiency (AFUE), which represents the percentage of fuel consumed that is converted into usable heat for the home. For instance, an AFUE of 90% means that 90% of the fuel burned is used to heat the house, while the remaining 10% is lost as exhaust.

Natural Gas Furnaces

Modern natural gas furnaces typically boast AFUE ratings ranging from 80% to over 98%. High-efficiency models, often condensing furnaces, capture additional heat from the exhaust gases, significantly boosting their efficiency. Even a standard 80% AFUE gas furnace is relatively efficient in its energy conversion. The cost-effectiveness arises from the lower per-BTU price of natural gas combined with this efficient conversion.

Electric Furnaces

Electric furnaces, on the other hand, are inherently close to 100% efficient in converting electrical energy into heat *at the unit itself*. This is because most of the electrical energy is directly transformed into heat through resistance elements, similar to an electric space heater but on a larger scale. However, this 100% efficiency at the furnace does not account for the energy losses that occur during electricity generation and transmission. Therefore, while the furnace itself is efficient, the cost of that electricity per BTU delivered to the home is often higher.

To illustrate, consider a simple example: if natural gas costs $1 per therm (100,000 BTUs) and is used in an 80% efficient furnace, the cost per 100,000 BTUs delivered to your home is $1.25 ($1 / 0.80). If electricity costs $0.15 per kilowatt-hour (kWh), and 1 kWh is equivalent to about 3,412 BTUs, then to get 100,000 BTUs, you would need approximately 29.3 kWh (100,000 BTU / 3,412 BTU/kWh). This would cost roughly $4.40 (29.3 kWh * $0.15/kWh). This simplified calculation highlights the significant cost difference, even with favorable energy prices.

Regional Factors and Climate Considerations

The geographical location of a home plays a critical role in determining the cost-effectiveness of different heating systems. Regions with abundant and affordable natural gas availability will almost always favor gas furnaces in terms of running costs. Conversely, areas where natural gas pipelines are not accessible, or where electricity is generated from very cheap renewable sources (like abundant hydroelectric power), might see a narrowing of the cost gap or, in rare cases, even a situation where electric heating proves more economical.

The severity of the climate is another significant factor. In extremely cold regions that require extensive heating throughout the year, the cumulative cost savings of a cheaper fuel source like natural gas will become more pronounced. In milder climates where heating is needed only sporadically, the upfront cost of installation and the initial purchase price of the furnace might become more dominant factors in the decision-making process, and the difference in running costs may be less impactful on an annual budget.

Safety Considerations

It is also important to acknowledge the distinct safety considerations associated with each type of furnace.

Gas Furnaces:

Carbon Monoxide (CO) Poisoning: Incomplete combustion of natural gas can produce carbon monoxide, a colorless, odorless, and deadly gas. Proper ventilation, regular maintenance, and the installation of carbon monoxide detectors are absolutely essential.
Gas Leaks: Natural gas is flammable. While utility companies add a distinct odorant to gas lines to help detect leaks, a leak can still pose a fire or explosion hazard. Prompt attention to any unusual smells is critical, and appliances connected to gas lines require professional installation and maintenance to prevent leaks.
Soot and Exhaust: Gas furnaces produce exhaust byproducts that must be safely vented outside the home. A cracked heat exchanger or faulty venting can allow these byproducts to enter the living space.

Electric Furnaces:

High Voltage: Electric furnaces operate on high-voltage electricity, which poses a risk of electrical shock if not handled by qualified professionals during installation, maintenance, or repair.
Fire Hazard (Overheating): While less common than gas-related safety issues, malfunctioning electric heating elements or poor electrical connections can lead to overheating and a fire risk.

Installation Costs and System Lifespan

While the focus of this article is on running costs, it’s prudent to briefly touch upon installation expenses. Typically, the initial purchase and installation of a natural gas furnace can be more expensive than a comparable electric furnace, especially if new gas lines need to be run to the property. Electric furnaces are generally simpler in design and do not require extensive venting or gas line infrastructure, which can lead to lower upfront costs.

However, the lifespan of a furnace is also a factor in overall cost. Gas furnaces are often built with more robust components and, with proper maintenance, can last 15 to 25 years or more. Electric furnaces, while simpler, might have a slightly shorter lifespan, though this can vary widely based on usage and maintenance. When considering the long-term ownership, the potentially lower running costs of a gas furnace can offset its higher initial investment over the system’s life.

When Electric Might Be a Viable Option

Despite the general rule that gas furnaces are cheaper to run, there are specific scenarios where electric furnaces can be a cost-effective or even preferable choice:

No Natural Gas Availability: If your home is not equipped to receive natural gas, the cost and complexity of installing gas lines might make an electric furnace a more practical option.
Mild Climates: In areas with very short heating seasons, the total annual energy expenditure might be low enough that the difference between gas and electricity becomes less significant in the overall budget.
Lower Electricity Rates: In some rare instances, local electricity prices might be exceptionally low, potentially making electric heating competitive.
Hybrid Systems: Electric heat pumps, a different type of electric heating, are becoming increasingly efficient and can offer competitive running costs, especially in moderate climates. They can also provide cooling. These systems often “heat pump” existing heat from the outside air, making them more efficient than resistive electric furnaces.
Environmental Concerns: If a homeowner’s primary concern is reducing direct on-site fossil fuel consumption and their electricity is sourced from renewable energy, an electric furnace or heat pump might align with their environmental goals, even if slightly more expensive to run.

Making the Right Choice for Your Home

The decision between a gas and an electric furnace hinges on a thorough evaluation of several factors, with the cost of running being a primary concern for most. In most residential settings across North America, natural gas furnaces offer more cost-effective operation due to the lower per-BTU price of natural gas in comparison to electricity, even when accounting for the inherent efficiency of electric furnaces. The AFUE ratings of modern gas furnaces, combined with the economics of natural gas, typically result in lower monthly energy bills.

However, it is important to consider the totality of the situation. If natural gas is unavailable, or if you reside in a milder climate, electric furnaces can present a viable alternative, often with lower upfront installation costs. Always consult with qualified HVAC professionals who can assess your specific home, local energy prices, and climate conditions to provide a tailored recommendation.

EZ Home Heating is a free nationwide service that connects homeowners with independent local HVAC and heating professionals. We do not perform the work ourselves. The connection is free.

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