Cost Per BTU: Gas vs Electric Heating
The only fair way to compare heating fuels is cost per BTU of delivered heat. Raw fuel prices are misleading because each system converts fuel to heat at different efficiencies.
Here are the formulas:
Gas Cost per 100,000 BTU = (Price per Therm ÷ 100,000 BTU) ÷ AFUE
Electric Cost per 100,000 BTU = (Price per kWh ÷ 3,412 BTU) ÷ Efficiency
Propane Cost per 100,000 BTU = (Price per Gallon ÷ 91,452 BTU) ÷ AFUE
Using the current national average residential prices — natural gas at $1.49/therm (EIA), electricity at $0.178/kWh (EIA), and propane at $2.46/gallon (EIA Winter Fuels Outlook) — here's what each system costs to deliver 100,000 BTU of heat into your home:
| Heating System | Efficiency | Cost per 100,000 BTU | Annual Cost (60M BTU load) |
|---|
| Gas Furnace (80% AFUE) | 80% | $1.86 | $1,119/yr |
| Gas Furnace (90% AFUE) | 90% | $1.66 | $993/yr |
| Gas Furnace (96% AFUE) | 96% | $1.55 | $931/yr |
| Propane Furnace (80% AFUE) | 80% | $3.36 | $2,018/yr |
| Propane Furnace (92% AFUE) | 92% | $2.92 | $1,754/yr |
| Electric Resistance (baseboard/furnace) | 100% | $5.22 | $3,130/yr |
| Heat Pump (COP 2.0 / HSPF 6.8) | 200% | $2.61 | $1,565/yr |
| Heat Pump (COP 2.5 / HSPF 8.5) | 250% | $2.09 | $1,252/yr |
| Heat Pump (COP 3.0 / HSPF 10.2) | 300% | $1.74 | $1,043/yr |
| Heat Pump (COP 3.5 / HSPF 12) | 350% | $1.49 | $894/yr |
| Heat Pump (COP 4.0 / HSPF 13.6) | 400% | $1.30 | $783/yr |
Annual cost based on a typical 2,000 sq ft home in a moderate-cold climate with ~60 million BTU heating load. Your actual load depends on climate zone, insulation, and home size — calculate yours with our heating BTU calculator.
The takeaway is clear: electric resistance heating is by far the most expensive option. A heat pump with COP 3.0 or higher beats even a high-efficiency gas furnace on operating cost at national average prices. But a basic heat pump (COP 2.0) loses to gas across the board.
To understand these efficiency ratings better, check out our full AFUE rating guide for gas furnaces and our heat pump COP calculator for electric systems.
Gas Furnace vs Electric Furnace: Annual Cost Comparison
Let's compare the two simplest systems first: a gas furnace versus an electric furnace (resistance heating). This is not a heat pump comparison — this is gas combustion vs electric coils.
An electric furnace is 100% efficient. Every watt of electricity converts directly to heat. That sounds great, but electricity is expensive per BTU — roughly 3-4 times more expensive than natural gas at current national averages.
Here's the math for a range of home sizes:
| Home Size | Heating Load (BTU/yr) | Gas Furnace (90% AFUE) | Electric Furnace (100%) | Annual Savings with Gas |
|---|
| 1,000 sq ft | 30M BTU | $497/yr | $1,565/yr | $1,068/yr |
| 1,500 sq ft | 45M BTU | $745/yr | $2,348/yr | $1,603/yr |
| 2,000 sq ft | 60M BTU | $993/yr | $3,130/yr | $2,137/yr |
| 2,500 sq ft | 75M BTU | $1,241/yr | $3,913/yr | $2,672/yr |
| 3,000 sq ft | 90M BTU | $1,490/yr | $4,695/yr | $3,205/yr |
Based on national average prices: gas $1.49/therm, electricity $0.178/kWh.
The numbers don't lie: a gas furnace costs roughly one-third as much to operate as an electric furnace at national average rates. If you're heating with electric resistance and have access to a gas line, switching to gas could save you $2,000+/year in a typical home. To estimate your exact cost to run an electric heater, use our dedicated calculator.
Why Is Electric Resistance Heat So Expensive?
Simple physics. One therm of natural gas contains 100,000 BTU and costs about $1.49. To get 100,000 BTU from electricity, you need 29.3 kWh — which costs about $5.22 at $0.178/kWh.
That's a 3.5:1 price ratio between electricity and gas per unit of energy. Even though an electric furnace is "100% efficient," it still costs 3x more to run than a gas furnace that wastes 10% of its fuel up the flue.
This is exactly why heat pumps exist. They don't create heat from electricity — they move heat, which lets them deliver 2-4 times more heat energy than the electrical energy they consume. That COP multiplier is the only thing that makes electric heating competitive with gas.
Heat Pump vs Gas Furnace: Operating Cost Comparison
Now for the comparison everyone really wants: a heat pump versus a gas furnace. This is where it gets interesting, because the answer changes based on your climate, your local fuel prices, and the specific equipment you install.
A heat pump doesn't generate heat — it extracts heat from outdoor air (or the ground) and concentrates it inside your home. The Coefficient of Performance (COP) measures how much heat energy you get per unit of electricity consumed. A COP of 3.0 means you get 3 BTU of heat for every 1 BTU of electricity — effectively 300% efficiency.
Here's the annual operating cost comparison at national average fuel prices:
| System Comparison | Annual Heating Cost (60M BTU) | Difference |
|---|
| Gas Furnace (96% AFUE) vs Heat Pump (COP 2.0) | $931 vs $1,565 | Gas saves $634/yr |
| Gas Furnace (96% AFUE) vs Heat Pump (COP 2.5) | $931 vs $1,252 | Gas saves $321/yr |
| Gas Furnace (96% AFUE) vs Heat Pump (COP 3.0) | $931 vs $1,043 | Gas saves $112/yr |
| Gas Furnace (96% AFUE) vs Heat Pump (COP 3.5) | $931 vs $894 | HP saves $37/yr |
| Gas Furnace (96% AFUE) vs Heat Pump (COP 4.0) | $931 vs $783 | HP saves $148/yr |
| Gas Furnace (90% AFUE) vs Heat Pump (COP 3.0) | $993 vs $1,043 | Gas saves $50/yr |
| Gas Furnace (90% AFUE) vs Heat Pump (COP 3.5) | $993 vs $894 | HP saves $99/yr |
At national average prices, a gas furnace and a heat pump are nearly tied on operating cost when you pair a 90-96% AFUE furnace against a COP 3.0-3.5 heat pump. The tiebreaker is your local prices.
For a deeper dive into how heat pump efficiency changes in cold weather, see our heat pump efficiency by temperature guide. To calculate the running cost of a heat pump at your specific electric rate, use our dedicated tool.
At What Temperature Does a Heat Pump Lose Efficiency?
A heat pump's COP drops as outdoor temperatures fall. At 47°F, a modern heat pump might achieve COP 4.0, but at 17°F that same unit might drop to COP 2.5. Below 0°F, even cold-climate heat pumps may struggle to maintain COP 2.0.
This is why the "heat pump vs gas" debate is so climate-dependent. In the Southeast, where winter temperatures rarely drop below 30°F, a heat pump maintains high COP all season. In Minnesota, where it's -10°F for weeks at a time, the heat pump's seasonal average COP drops — and gas pulls ahead.
Here's a rough guide to seasonal average COP by climate:
| Climate Zone | Avg Winter Temp Range | Typical Seasonal COP | HP Competitive with Gas? |
|---|
| Southeast (FL, GA, SC) | 40–55°F | 3.5–4.0 | Yes — HP usually wins |
| Mid-Atlantic (VA, NC, TN) | 30–45°F | 3.0–3.5 | Close — depends on rates |
| Midwest (OH, IL, IN) | 20–35°F | 2.5–3.0 | Toss-up — gas often wins |
| Upper Midwest (MN, WI, ND) | 5–25°F | 2.0–2.5 | Gas usually wins |
| Northern New England (ME, VT) | 10–30°F | 2.0–2.8 | Gas often wins (high elec rates too) |
Cold-climate heat pumps (rated to -15°F or lower) can improve these numbers by 0.3-0.5 COP on average.
To properly size a heat pump for your climate, use our calculator — oversizing or undersizing both cost you efficiency.
Is Gas or Electricity Cheaper for Heating? State-by-State Data
At the national level, gas and heat pump costs are close. But at the state level, the gap can be enormous.
Idaho has natural gas at $0.78/therm and electricity at 12.1¢/kWh — gas wins by a landslide. Georgia has gas at $3.11/therm and electricity at 15.5¢/kWh — a heat pump wins easily.
Top 10 States Where Gas Heating Is Cheapest
These states have the lowest natural gas prices in the country (latest EIA data). A gas furnace is the clear cost winner here:
| State | Gas Price ($/therm) | Electric Price (¢/kWh) | Gas Furnace Cost (90% AFUE, 60M BTU) | Heat Pump Cost (COP 3.0, 60M BTU) | Winner |
|---|
| Idaho | $0.78 | 12.1¢ | $520/yr | $712/yr | Gas by $192 |
| Minnesota | $0.96 | 14.5¢ | $640/yr | $853/yr | Gas by $213 |
| Wisconsin | $1.01 | 16.0¢ | $673/yr | $941/yr | Gas by $268 |
| Montana | $1.09 | 12.5¢ | $727/yr | $735/yr | Basically tied |
| Utah | $1.10 | 12.2¢ | $733/yr | $718/yr | Basically tied |
| Michigan | $1.15 | 18.0¢ | $767/yr | $1,058/yr | Gas by $291 |
| South Dakota | $1.17 | 13.5¢ | $780/yr | $794/yr | Basically tied |
| Colorado | $1.18 | 16.5¢ | $787/yr | $970/yr | Gas by $183 |
| Iowa | $1.30 | 15.6¢ | $867/yr | $917/yr | Gas by $50 |
| Alaska | $1.35 | 27.7¢ | $900/yr | $1,629/yr | Gas by $729 |
Alaska is an extreme outlier — cheap gas and very expensive electricity makes it the most gas-favorable state in the country.
Top 10 States Where a Heat Pump Beats Gas
These states have expensive natural gas, moderate electricity, and/or mild climates where heat pump COP stays high:
| State | Gas Price ($/therm) | Electric Price (¢/kWh) | Gas Furnace Cost (90% AFUE, 60M BTU) | Heat Pump Cost (COP 3.0, 60M BTU) | Winner |
|---|
| Georgia | $3.11 | 15.5¢ | $2,073/yr | $912/yr | HP by $1,161 |
| Texas | $2.96 | 15.3¢ | $1,973/yr | $900/yr | HP by $1,073 |
| Missouri | $2.75 | 14.5¢ | $1,833/yr | $853/yr | HP by $980 |
| North Carolina | $2.46 | 13.5¢ | $1,640/yr | $794/yr | HP by $846 |
| Alabama | $2.36 | 16.2¢ | $1,573/yr | $953/yr | HP by $620 |
| Florida | $2.90 | 15.4¢ | $1,933/yr | $906/yr | HP by $1,027 |
| Vermont | $2.44 | 25.0¢ | $1,627/yr | $1,470/yr | HP by $157 |
| Oregon | $1.62 | 12.5¢ | $1,080/yr | $735/yr | HP by $345 |
| Washington | $1.80 | 12.0¢ | $1,200/yr | $706/yr | HP by $494 |
| Virginia | $2.00 | 14.5¢ | $1,333/yr | $853/yr | HP by $480 |
Southern states benefit doubly: expensive gas PLUS mild winters that keep heat pump COP high. A heat pump in Georgia might average COP 3.5+, making the savings even larger than shown above.
To compare these costs against your total average electricity usage, see our baseline guide. For a broader look at heating costs across all fuels, use our heating cost calculator.
Here's the formula that tells you exactly when a heat pump is cheaper than a gas furnace for your specific fuel prices:
Breakeven Electricity Rate ($/kWh) = (Gas Price in $/therm × COP × 0.03412) ÷ AFUE
If your actual electricity rate is below the breakeven rate, the heat pump wins. If it's above, gas wins.
Let's unpack why this formula works. The constant 0.03412 converts between the energy content of a therm (100,000 BTU) and a kWh (3,412 BTU). Multiplying by COP accounts for the heat pump's efficiency multiplier, and dividing by AFUE accounts for the gas furnace's combustion losses.
Here's a lookup table showing the breakeven electricity rate for various gas prices and system efficiencies:
| Your Gas Rate ($/therm) | Gas AFUE | Heat Pump COP | Breakeven Electric Rate ($/kWh) | HP Wins at US Avg ($0.178)? |
|---|
| $0.80 | 96% | 3.0 | $0.085 | No |
| $0.80 | 96% | 3.5 | $0.100 | No |
| $1.00 | 96% | 3.0 | $0.107 | No |
| $1.00 | 90% | 3.5 | $0.133 | No |
| $1.25 | 96% | 3.0 | $0.133 | No |
| $1.25 | 90% | 3.5 | $0.166 | No |
| $1.50 | 96% | 3.0 | $0.160 | No (barely) |
| $1.50 | 90% | 3.5 | $0.200 | Yes |
| $1.50 | 96% | 3.5 | $0.186 | Yes |
| $2.00 | 96% | 3.0 | $0.213 | Yes |
| $2.00 | 90% | 2.5 | $0.190 | Yes |
| $2.50 | 96% | 2.5 | $0.222 | Yes |
| $2.50 | 90% | 3.0 | $0.285 | Yes |
| $3.00 | 96% | 2.5 | $0.267 | Yes |
How to use this table: Find your gas rate on the left. Look across to your furnace's AFUE and a realistic heat pump COP for your climate. If the breakeven electric rate in that row is higher than what you actually pay per kWh, the heat pump wins.
The key threshold: when gas costs more than about $1.50/therm and your electricity is under $0.18/kWh, a good heat pump (COP 3.0+) starts winning. Below $1.00/therm gas, it's almost impossible for a heat pump to compete unless you have extremely cheap electricity.
Propane vs Electric Heating Cost
Propane is the most expensive common heating fuel on a per-BTU basis. At the current national average of $2.46/gallon (EIA), propane contains 91,452 BTU per gallon — which works out to roughly $2.69 per 100,000 BTU before accounting for furnace efficiency losses.
Propane vs Natural Gas: Cost Per BTU
| Fuel | Price | BTU Content | Raw Cost per 100,000 BTU | Cost at 90% AFUE |
|---|
| Natural Gas | $1.49/therm | 100,000 BTU/therm | $1.49 | $1.66 |
| Propane | $2.46/gallon | 91,452 BTU/gallon | $2.69 | $2.99 |
Propane costs roughly 1.8x more than natural gas per useful BTU. This is consistent with historical trends — propane has typically cost 2-3x more than piped natural gas per unit of energy.
Propane Furnace vs Heat Pump: Which Costs Less to Run?
For homes currently using propane, a heat pump is almost always the cheaper option. The math is straightforward:
| System | Annual Heating Cost (60M BTU) |
|---|
| Propane Furnace (80% AFUE) | $2,018/yr |
| Propane Furnace (92% AFUE) | $1,754/yr |
| Heat Pump (COP 2.5) | $1,252/yr |
| Heat Pump (COP 3.0) | $1,043/yr |
| Heat Pump (COP 3.5) | $894/yr |
Even a modest heat pump with COP 2.5 saves $502/yr over a high-efficiency propane furnace. A COP 3.0 heat pump saves $711/yr. Over 15 years, that's $7,500–$10,665 in operating cost savings.
If you're heating with propane and considering a switch, a heat pump is one of the strongest financial cases in all of HVAC. This is true even in cold climates — a cold-climate heat pump with seasonal COP of 2.5 still beats propane handily.
Gas vs Electric Water Heater: Full Cost Comparison
Water heating accounts for roughly 18% of household energy use (DOE), making it the second-largest energy expense after space heating. The gas vs electric question applies here too — and the answer follows the same cost-per-BTU logic.
Gas vs Electric Tank Water Heater Operating Cost
| Water Heater Type | Capacity | Efficiency (UEF) | Annual Operating Cost | 10-Year Operating Cost |
|---|
| Gas Tank | 50 gal | 0.60–0.70 UEF | $325–$475/yr | $3,250–$4,750 |
| Electric Resistance Tank | 50 gal | 0.90–0.95 UEF | $400–$600/yr | $4,000–$6,000 |
| Heat Pump Water Heater | 50 gal | 3.3–4.1 UEF | $104–$160/yr | $1,040–$1,600 |
At national average fuel prices, a gas tank water heater costs roughly $100-175 less per year to operate than an electric resistance tank. But a heat pump water heater crushes both — costing just $104–$160/yr to operate, which is less than half the cost of gas.
For a full comparison of tank vs tankless systems, see our tankless vs tank water heater guide. To find the right capacity for your household, use our water heater sizing calculator.
Gas vs Electric Tankless Water Heater Cost
| Tankless Type | Purchase + Install | Annual Operating Cost | 10-Year Total |
|---|
| Gas Tankless | $2,500–$4,500 | $200–$350/yr | $4,500–$8,000 |
| Electric Tankless | $1,500–$3,000 | $450–$600/yr | $6,000–$9,000 |
Gas tankless water heaters win on operating cost because of the electricity-to-gas price ratio. However, electric tankless units are simpler to install (no venting required) and cheaper upfront.
Heat Pump Water Heater vs Gas Water Heater
The heat pump water heater is the dark horse of this comparison. With a Uniform Energy Factor (UEF) of 3.3–4.1, it delivers 3-4 times more heat per unit of electricity than a resistance heater.
| Comparison | Purchase + Install | Annual Operating | 12-Year Total Cost |
|---|
| Gas Tank (0.65 UEF) | $1,200–$2,500 | $400/yr | $6,000–$7,300 |
| Heat Pump WH (3.5 UEF) | $1,800–$3,500 | $130/yr | $3,360–$5,060 |
The heat pump water heater saves $270/yr on average, which adds up to $3,240 over 12 years. After accounting for the slightly higher purchase price, the heat pump water heater wins on total cost of ownership — and that's before federal tax credits (up to $2,000).
Installation Cost: Gas Furnace vs Heat Pump vs Electric Furnace
Operating cost is only half the equation. Here's what each system costs to buy and install:
| System | Equipment + Installation | Provides Cooling? | Lifespan |
|---|
| Gas Furnace (alone) | $3,500–$7,500 | No | 15–20 years |
| Gas Furnace + Central AC | $7,000–$14,000 | Yes | 15–20 yr / 12–15 yr |
| Electric Furnace (alone) | $2,000–$5,000 | No | 20–30 years |
| Air-Source Heat Pump (ducted) | $5,600–$20,000 | Yes | 15–20 years |
| Cold-Climate Heat Pump | $8,000–$18,000 | Yes | 15–20 years |
| Ground-Source (Geothermal) HP | $15,000–$30,000 | Yes | 20–25 years |
A critical comparison detail: a heat pump replaces both your furnace AND your air conditioner. When comparing a heat pump at $12,000 against a gas furnace at $5,000, remember that the furnace also needs a $4,000–$7,000 AC unit. The fair comparison is heat pump ($12,000) vs gas furnace + AC ($9,000–$14,000).
Federal tax credits (through 2032) further narrow the gap: 30% credit up to $2,000 for air-source heat pumps, 30% with no cap for geothermal. Gas furnaces receive no federal tax credit.
For proper equipment sizing, use our furnace sizing calculator or heat pump sizing calculator.
Total Cost of Ownership Over 15 Years
Here's where operating costs and installation costs come together. This table models a typical 2,000 sq ft home with a 60 million BTU annual heating load at national average fuel prices:
| System | Install Cost | Annual Operating (Heat + Cool) | 15-Year Operating | 15-Year Total |
|---|
| Gas Furnace (90% AFUE) + AC | $8,500 | $1,393/yr | $20,895 | $29,395 |
| Gas Furnace (96% AFUE) + AC | $10,000 | $1,331/yr | $19,965 | $29,965 |
| Heat Pump (COP 3.0) | $12,000 | $1,393/yr | $20,895 | $32,895 |
| Heat Pump (COP 3.5) | $14,000 | $1,244/yr | $18,660 | $32,660 |
| HP (COP 3.5, after $2K credit) | $12,000 | $1,244/yr | $18,660 | $30,660 |
| Electric Furnace + AC | $6,500 | $3,530/yr | $52,950 | $59,450 |
| Propane Furnace (92%) + AC | $9,500 | $2,154/yr | $32,310 | $41,810 |
At national average prices, gas furnace + AC and heat pump land within $1,000-$3,000 of each other over 15 years. With the federal tax credit, a high-efficiency heat pump is effectively tied with gas on total cost.
The clear losers: electric resistance heating ($59,450 total) and propane ($41,810 total). If you're using either of these, switching to a gas furnace or heat pump pays for itself within a few years.
Gas Boiler vs Electric Boiler: Installation and Running Costs
For homes with hydronic (radiant) heating systems, the gas vs electric boiler question follows the same pattern. Gas boilers cost more to install ($3,500–$8,000) than electric boilers ($1,500–$5,000), but gas operating costs are roughly one-third of electric resistance. Air-to-water heat pumps are an emerging option that combines the hydronic distribution with heat pump efficiency.
Environmental Comparison: Emissions Per BTU by Fuel Type
For readers who factor emissions into their decision, here's a factual comparison. These are direct combustion CO2 emissions per million BTU of fuel, sourced from the EPA:
| Fuel | CO2 (lbs per million BTU burned) | CO2 per million BTU of useful heat (at typical efficiency) |
|---|
| Natural Gas | 117 lbs | 130 lbs (at 90% AFUE) |
| Propane | 139 lbs | 154 lbs (at 90% AFUE) |
| Heating Oil | 163 lbs | 191 lbs (at 85% AFUE) |
| Electricity (US avg grid) | ~237 lbs/M BTU (at source) | 237 lbs (resistance) or 79 lbs (COP 3.0 heat pump) |
A heat pump on the U.S. average grid produces roughly 40% less CO2 per BTU of delivered heat than a natural gas furnace. On a clean grid (hydro/nuclear/renewables), the gap is even larger.
On a coal-heavy grid, the advantage shrinks or disappears.
Natural gas produces the least CO2 of any combustion fuel per BTU. Propane produces about 19% more CO2 than gas, and heating oil produces about 39% more.
Sources: EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks, Annex 2; EIA CO2 Emission Coefficients.
Worked Examples
Example 1: Gas vs Heat Pump in Texas (Cheap Electricity, Expensive Gas)
Let's say you have a 2,000 sq ft home in Dallas, Texas. Texas has relatively expensive natural gas at $2.96/therm and moderate electricity at $0.153/kWh. Your estimated heating load is 40 million BTU (mild winters).
- Gas Furnace (90% AFUE): 40M BTU ÷ 0.90 = 44.4M BTU of gas needed = 444 therms × $2.96 = $1,314/yr
- Heat Pump (COP 3.0): 40M BTU ÷ 3.0 = 13.3M BTU electricity = 3,900 kWh × $0.153 = $597/yr
The heat pump saves $717/yr in Texas. Over 15 years, that's $10,755 in operating savings — more than enough to cover the higher upfront cost of the heat pump. Plus, Dallas winters are mild enough for the heat pump to maintain COP 3.0-3.5 all season.
Example 2: Gas vs Heat Pump in Massachusetts (Expensive Electricity)
Now let's try a 2,000 sq ft home in Boston. Massachusetts has moderately expensive gas at $2.25/therm and very expensive electricity at $0.28/kWh. Heating load is 70 million BTU (cold winters).
- Gas Furnace (96% AFUE): 70M BTU ÷ 0.96 = 72.9M BTU = 729 therms × $2.25 = $1,640/yr
- Heat Pump (COP 2.5, accounting for cold temps): 70M BTU ÷ 2.5 = 28M BTU = 8,205 kWh × $0.28 = $2,297/yr
Gas saves $657/yr in Massachusetts. The combination of expensive electricity and cold winters (lowering COP to ~2.5 seasonal average) tilts the math firmly toward gas in New England. Even with the tax credit, the gas furnace wins on total cost here.
Example 3: Propane Home Switching to Heat Pump
A 1,800 sq ft home in rural Virginia currently heats with propane at $2.50/gallon. Heating load is 55 million BTU, and the homeowner is considering a cold-climate heat pump. Virginia electricity costs $0.145/kWh.
- Propane Furnace (85% AFUE): 55M BTU ÷ 0.85 = 64.7M BTU = 707 gallons × $2.50 = $1,768/yr
- Heat Pump (COP 3.0): 55M BTU ÷ 3.0 = 18.3M BTU = 5,373 kWh × $0.145 = $779/yr
The heat pump saves $989/yr. Over 15 years, that's $14,835 in savings. Even with a $14,000 heat pump installation (minus $2,000 tax credit = $12,000 net), the system pays for itself in about 12 years — and the homeowner gets air conditioning as a bonus.
Example 4: New Construction — Gas Line vs All-Electric
Building a new 2,200 sq ft home in North Carolina. The builder quotes $3,500 extra to run a gas line and install a gas furnace + gas water heater vs going all-electric with a heat pump + heat pump water heater.
NC gas is $2.46/therm, electricity is $0.135/kWh, and heating load is 45M BTU.
- Gas Route: Furnace operating = $1,230/yr + Gas water heater = $350/yr = $1,580/yr total
- All-Electric Route: Heat pump (COP 3.0) = $598/yr + HP water heater = $120/yr = $718/yr total
The all-electric route saves $862/yr. The $3,500 extra cost of running the gas line is recovered in just 4 years of energy savings. For new construction in the Southeast, all-electric with heat pumps is the clear financial winner.
Example 5: Gas vs Electric Water Heater Decision
A homeowner in Ohio needs to replace their 50-gallon gas water heater. Ohio gas costs $2.22/therm, electricity costs $0.16/kWh. They're choosing between a gas tank, an electric resistance tank, and a heat pump water heater.
- Gas Tank (0.65 UEF): $410/yr operating, $1,500 installed, 10-year total = $5,600
- Electric Resistance (0.95 UEF): $490/yr operating, $1,000 installed, 10-year total = $5,900
- Heat Pump WH (3.5 UEF): $133/yr operating, $2,800 installed, 10-year total = $4,130
The heat pump water heater wins by $1,470 over 10 years vs gas, and by $1,770 vs electric resistance — before any tax credits. With the 30% federal credit ($840), the heat pump WH's installed cost drops to $1,960, making it the cheapest option from day one.
Frequently Asked Questions
Is Gas or Electric Heat Cheaper?
At current national average prices, a gas furnace is slightly cheaper to operate than a standard heat pump (COP 2.5 or below). However, a high-efficiency heat pump with COP 3.0+ is roughly equal to or cheaper than a gas furnace. The answer depends entirely on your local gas and electric rates — use the crossover formula table above to check your specific situation.
Is Electric Heat More Expensive Than Gas?
Electric resistance heat (baseboard, electric furnace) is roughly 3x more expensive than gas at national average rates. This makes it the most expensive way to heat a home. However, a heat pump (which uses electricity to move heat, not create it) costs about the same as gas or less, depending on efficiency and local rates.
How Much Does Electric Heat Cost Per Month?
For a typical 2,000 sq ft home with a 60M BTU annual load, electric resistance heating costs approximately $260/month during the heating season at national average rates ($0.178/kWh). A heat pump (COP 3.0) would cost roughly $87/month for the same heat output.
Is a Heat Pump Cheaper to Run Than a Gas Furnace?
It depends on three factors: your gas rate, your electricity rate, and your climate (which determines the heat pump's average COP). Generally, heat pumps are cheaper to run in the Southeast and Pacific Northwest (mild winters + moderate electricity) and more expensive in the Upper Midwest and New England (cold winters + expensive gas or electricity). Check our heat pump running cost calculator with your local rates.
Is Propane Heat Cheaper Than Electric?
Propane is cheaper than electric resistance heating in most areas. But propane is more expensive than a heat pump with COP 2.5 or higher in virtually every scenario. If you currently heat with propane, switching to a heat pump is one of the best financial upgrades available.
Are Gas or Electric Water Heaters Cheaper to Run?
A gas tank water heater costs about $100–$175/yr less to operate than an electric resistance tank. But a heat pump water heater beats both, costing just $104–$160/yr to run — roughly 60-75% less than gas. If you're replacing a water heater, a heat pump model offers the lowest total cost of ownership over 10+ years.