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Dec 27, 2023

Electric heat vs gas heat — which is cheaper?

The choice of electric heat vs gas heat could have a big impact on your energy

The choice of electric heat vs gas heat could have a big impact on your energy bills this winter.

With energy bills putting a crunch on the U.S. this winter, comparing the costs of electric heat vs gas heat can be an important decision for homeowners looking to save money. Colder winter weather and a global energy shock are causing concern for residential heating customers. The U.S. Department of Energy projected that this winter heating bills would jump 28% for natural gas, 27% for heating oil, 10% for electricity, and 5% for propane.

If like most people, you're keen to know how to cut energy costs — is there a difference between electric heat and gas heat, where homeowner bills are concerned?

According to the U.S. Energy Information Administration (EIA), the average cost of electricity in the U.S. is 15.64 cents per kilowatt hour or kWh. The EIA projects that electric heating costs for U.S. homeowners will average $1,359 for winter 2022-2023, a 10% increase from last winter.

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In terms of U.S. regional differences, electric heating costs will average $1,400-$1,700 in all regions but the South, where they will run at approximately $1,250.

The Efficiency Maine Trust provides the following cost breakdown for electric heating systems:

According to the U.S. Department of Energy (DOE), installing a more energy-efficient electric heat pump can reduce energy usage in your home significantly, compared to traditional electric resistance heating such as furnaces and baseboard heaters. The most common type, ducted air-source heat pumps, reduces energy use by approximately 50%. More expensive options like geothermal heat pumps can reduce energy use by up to 60%. This type of upgrade saves you on a monthly basis, but you should include sizable upfront installation costs as part of your bill calculations.

However, the American Council for an Energy-Efficient Economy reports that heat pumps may not provide enough heat in especially cold northern regions, resulting in a need for alternative fuel sources and higher bills. In addition, many homeowners may not be able to use the most efficient geothermal heat pump type, which requires digging a large trench near or under your home, according to the DOE.

The EIA estimates that homes heated by natural gas will spend about $930 this winter, 28% more than they spent last winter. This forecasted increase comes from both higher expected prices and consumption.

The EIA report also shows that gas-heating households in the Northeast and Midwest are projected to pay $1,000-$1,100 for the season, based on colder temperatures and higher demand, while homes in the West and South will pay between $700-$800.

The Efficiency Maine Trust provides the following cost breakdown for gas heating systems:

The most common electric heat systems have higher monthly operating costs compared with the most common natural gas systems, based on the most recent U.S. government statistics.

While geothermal electric heat pumps can save you money over the most cost-efficient natural gas boilers, they involve hefty installation costs and may not be sufficient to fully heat your home, depending on your region. And geothermal systems aren't even an option for homeowners without land for an underground trench.

In the long run, a well-maintained natural gas boiler system provides the most cost-effective option for the average homeowner across the U.S.

No matter your choice, you can also meaningfully lower your heating costs by doing a few important things.

For more energy-saving content, check out our home savings hub.

Ben Demers manages digital content and engagement at Kiplinger, informing readers through a range of personal finance articles, e-newsletters, social media, syndicated content, and videos. He is passionate about helping people lead their best lives through sound financial behavior, particularly saving money at home and avoiding scams and identity theft. Ben graduated with an M.P.S. from Georgetown University and a B.A. from Vassar College. He joined Kiplinger in May 2017.

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