Are Gas Furnaces Cheaper Than Electric Heating

The choice between a gas furnace and electric heating hinges on installation costs, energy prices, efficiency, and long-term maintenance. This article compares operating costs, installation and lifecycle expenses, efficiency, environmental impact, and regional considerations to determine whether gas furnaces are cheaper than electric for typical U.S. households.

Factor	Gas Furnace	Electric Heating
Typical Installation Cost	$2,500–$7,500	$1,000–$5,000 (baseboard/heat pump higher)
Average Efficiency	80%–98% AFUE	100% (resistance) / 200%+ (heat pump HSPF COP)
Average Fuel Cost	Lower in many regions (natural gas)	Higher for resistance heat; lower for heat pumps if electricity rates moderate
Maintenance	Annual service recommended	Less for resistance; heat pumps require season service

How Cost Is Defined: Installation, Operation, And Lifecycle

Cost comparisons start with three components: upfront installation, ongoing operating expenses, and lifecycle or replacement costs. Each component affects whether a gas furnace is ultimately cheaper than electric heating.

Installation Cost includes equipment, ductwork, venting, and labor. Gas systems may need gas line runs and flues. Electric systems often have lower initial equipment costs but may require electrical upgrades.

Operating Cost is driven by fuel prices, system efficiency, and local climate. This is where gas vs electric comparisons vary most by region and season.

Lifecycle Cost covers maintenance, repairs, expected lifespan, and disposal. Gas furnaces and heat pumps have different lifespans and maintenance needs that influence total cost of ownership.

Comparing Efficiency: AFUE, COP, And HSPF

Efficiency metrics differ by technology. Gas furnace efficiency is measured by AFUE (Annual Fuel Utilization Efficiency), while electric heat pumps use COP (Coefficient Of Performance) and HSPF (Heating Seasonal Performance Factor).

Modern gas furnaces commonly range from 80% to 98% AFUE. High-efficiency models (90%+) use condensing technology.

Electric resistance heat is effectively 100% efficient at the point of use, but generating and delivering electricity often causes energy loss upstream. Heat pumps can deliver 200% to 500% effective heating because they move heat rather than create it, reflected in COP values of 2.0–5.0 or HSPF ratings of 8–13+.

Fuel Prices And Regional Variations

Fuel costs largely determine which system is cheaper in practice. Natural gas prices vary by region but have historically been lower per BTU than residential electricity in many parts of the U.S.

In regions with low natural gas prices and cold winters, gas furnaces often have lower monthly bills than electric resistance heat.

In areas with high electricity penetration, low electric rates, or mild winters, heat pumps can outperform gas on cost due to higher efficiencies and lower per-unit energy use.

Electric Options: Resistance Heat Versus Heat Pumps

Electric heating comes in two primary forms: resistance heating (baseboard, electric furnaces) and heat pumps (air-source, ground-source).

Electric resistance has simple installation and low capital cost but high operating cost in most climates because it converts electricity to heat at 1:1 efficiency.

Heat pumps are often more efficient than gas furnaces because they transfer heat. Modern cold-climate heat pumps can work effectively in subfreezing temperatures, narrowing the operating cost gap with gas.

Installation Costs: What To Expect

Typical installation costs depend on system type, home layout, ductwork condition, and local labor rates. Gas furnaces require venting, gas line installation, and sometimes more complex ductwork.

Electric resistance units have the lowest equipment costs but may require upgraded electrical service if the home’s panel or wiring cannot support the load.

Heat pump installations often cost more upfront than standard electric resistance but less than high-end gas furnaces with full ductwork and condensation management.

Maintenance, Repairs, And Lifespan

Gas furnaces typically require annual maintenance, including burner inspection, heat exchanger checks, and vent cleaning. Regular service extends life and maintains safety.

Electric resistance systems need minimal maintenance, mostly electrical checks. Heat pumps require seasonal service for refrigerant charge, coils, and reversing valves.

Average lifespans: gas furnaces 15–20 years, heat pumps 10–15 years, electric resistance often 15–20 years. Repair costs and frequency vary; gas systems can have costly furnace or combustion component repairs.

Safety And Indoor Air Quality

Gas furnaces involve combustion, producing CO2 and potential carbon monoxide (CO) risk if venting fails. Proper installation and CO detectors are essential for safety.

Electric systems eliminate combustion risks and can provide cleaner indoor air if paired with filtration because they do not produce combustion byproducts.

Environmental Impact And Emissions

Direct emissions from gas furnaces produce CO2, methane leaks in the supply chain can raise greenhouse gas impact. Electric systems have zero on-site combustion emissions, but upstream emissions depend on the electricity mix.

As the grid decarbonizes with more renewables, electric heating (especially heat pumps) becomes increasingly low-carbon and can outpace gas on lifetime emissions.

Cost Comparison Examples And Calculations

Simple cost comparisons use fuel prices and efficiency. Example: If natural gas costs $1.00 per therm and a furnace is 90% AFUE, effective cost per delivered therm is about $1.11.

If electricity costs $0.15 per kWh, and an electric resistance heater uses 1 kWh to produce 3,412 Btu, cost per million Btu is higher than gas in many regions. Heat pumps with COP 3.0 reduce delivered kWh needs by two-thirds compared to resistance heat.

Rule of thumb: Multiply gas price by (1 / AFUE) and compare to electric price divided by COP equivalent to determine relative operating cost per unit of heat.

When Gas Is Typically Cheaper

• Cold climates with high heating demand and low natural gas prices favor gas furnaces.
• Homes without good insulation where higher continuous heat is required often see lower bills with gas.
• Existing gas infrastructure (line, meter) and ductwork reduce incremental installation cost advantages.

When Electric Heating Is Typically Cheaper

• Mild climates with low heating loads, especially when paired with a high-efficiency heat pump, often favor electric.
• Homes with high electricity from renewable sources or time-of-use plans can benefit from electric heat.
• Where natural gas supply is expensive or unavailable, electric heat pumps are usually more economical long term.

Incentives, Rebates, And Future Savings

Federal and state rebates increasingly support electrification through heat pump incentives, tax credits, and utility rebates. These can substantially reduce upfront costs for electric heat.

Gas furnace upgrades may qualify for efficiency rebates, but policy trends favor electrification to reduce emissions, which could shift relative costs over time.

Practical Decision Steps For Homeowners

1. Collect current local fuel prices (natural gas $/therm, electricity $/kWh).
2. Estimate annual heating load in BTU or consult an HVAC contractor for a load calculation.
3. Compare system efficiencies (AFUE for gas, COP/HSPF for heat pumps) and calculate expected annual energy consumption.
4. Factor installation, maintenance, expected lifespan, and available rebates into total cost of ownership.
5. Consider non-cost factors: safety, indoor air quality, emissions, and future fuel price uncertainty.

Case Study Snapshot: Typical U.S. Home

A 2,000 sq ft home in the Midwest with 60 million Btu annual heating need: a 95% AFUE gas furnace would use about 63,158,000 Btu input, roughly 631 therms/year. At $1.10/therm, annual fuel cost ≈ $694.

A heat pump with average seasonal COP of 3.0 needs roughly 20.0 MWh/year. At $0.14/kWh, annual electricity cost ≈ $2,800, but improved cold-climate units or lower kWh rates can narrow this gap. Rebates and grid clean energy can tilt economics toward heat pumps in many regions.

Key Takeaways For U.S. Consumers

Gas furnaces are often cheaper than electric resistance heating in regions with low natural gas prices and long, cold winters.

Heat pumps change the equation because of higher efficiency; in many climates, modern heat pumps are competitive or cheaper than gas when considering total cost of ownership and incentives.

Ultimately, the most accurate assessment requires local fuel prices, a home heating load calculation, and consideration of incentives. Consulting a qualified HVAC contractor for a customized cost comparison will provide the best answer for an individual home.