Electric heat vs propane: pros and cons compared

When it comes to furnaces and boilers for home heating, natural gas (NG) is often the first choice for homeowners in the US. However, natural gas is only an option where distribution pipelines exist. This means that for homeowners in many rural areas, NG heating simply isn’t an option.

Many homeowners in this situation will choose propane, which has some of the advantages of natural gas: it’s relatively clean burning, and forced air and boiler equipment options are available. However, compared to NG, propane is more expensive and also decidedly less convenient, mainly because of the need for delivery and onsite storage, which comes with additional cost and maintenance.

Because propane furnaces and boilers still need electricity, homeowners might wonder if it’s better to switch to electric heating instead. This can be a better option in many cases. This article will discuss the pros and cons of propane and electric heating systems to help you decide which might be better for your situation.

Where is propane heating used in the United States?

The US Energy Information Administration (EIA) performs the Residential Energy Consumption Survey (RECS)¹ every five years, which collects very detailed information about household energy consumption, including energy used and price paid for heating.

According to the RECS, propane heating is the 3rd most popular heating fuel in the US, with about 5.2 million households relying on it as the primary heating fuel. Here’s a table of the number of households in the United States that use each heating fuel as their primary heating source:

As you can see, propane trails far behind electricity and natural gas in popularity. As mentioned earlier, it tends to be choice for more rural households, but it’s also more popular in some states. North Dakota, Michigan, Illinois, Iowa, and Wyoming are the top five states for households that use propane as their primary heating fuel.

Propane space heating options

Propane heating systems are similar to natural gas. Forced air furnaces are the most popular (with 4 million households in the US), with boilers and other types of heaters trailing a distant second.

While propane furnaces on the surface look identical to natural gas furnaces, they aren’t. Propane (C₃H₈) has a higher energy content than natural gas, which consists mostly of methane (CH₄). Because of this, the burner assembly and gas regulator on a propane furnace are different from those on a natural gas furnace. Many manufacturers sell either propane furnaces or propane conversion kits for their natural gas furnaces. Kits should be installed by a licensed professional, adding to the cost of the furnace. A limited number of manufacturers sell propane furnaces directly.

A safety warning about ventless propane heaters

There are also smaller propane heating solutions. Wall-mounted propane heaters that provide heat to a single room are available, and are relatively low cost if you only need to heat a small space. Despite the product marketing, only direct vent furnaces, which have two vents for combustion air and exhaust products, are safe to use.

In contrast, ventless propane furnaces burn indoor air for combustion and release the combustion byproducts directly back into the room. While propane combustion appears to be smokeless and clean, it’s not safe. You can read my article on indoor air pollution from gas stoves to learn more, but both natural gas and propane combustion release a slew of invisible pollutants into a home, including particulates, nitrogen dioxide, carbon monoxide, formaldehyde, and benzene. Recent research has shown that as many as 1 in 8 cases of childhood asthma might be traced back to gas stoves in the home.

Using a ventless propane heater would be even worse than this. While a gas stove might be used for only an hour or two at a time, a ventless propane heater might operate for many hours a day. This means that the health impacts of using a ventless propane heater could be several times worse than that of a gas stove. If you use a ventless propane heater in your home, I would strongly suggest reading my article above on indoor air pollution, which has several references linked, and consider switching to a safer direct vent propane or electric alternative.

Electric heating options

There are many options when it comes to electric heat: forced air furnaces, baseboard heating, hydronic heating (ie. radiators and radiant floor heating), and heat pumps.

However, in a sense, there are actually just two types of electric heating systems. The first is electric resistance heating, which is used in every type of electric heater that is not a heat pump. It’s the same technology you’ll find in a toaster: electricity passes through a wire with high electrical resistance, causing it to heat up. It’s even used as backup heat in heat pumps.

In contrast, heat pumps use the refrigeration cycle to move heat from one place to another. Heat pumps are essentially like air conditioners, but they include extra equipment that allows them to work in reverse. This means that a heat pump can work in both heating and cooling modes – a big advantage over an electric furnace.

Electric furnaces vs propane furnaces

An electric furnace is the most popular equipment choice among homes that use electricity as their primary heating method. While they are much less efficient than heat pumps and have higher operating costs, they cost less upfront than heat pumps. They are popular in climates like Florida, where electricity is cheap and the heating season is short.

Forced air furnaces, whether they are electric, propane, or gas, work in similar ways. The furnace has a blower motor (essentially a powerful fan) that sends air over a heating element. The heated air is then pushed through supply ducts to vents throughout a home. Connected to the other side of the blower motor is the return duct, which takes cool air from one or more return vents in the home.

A forced air furnace may have add-ons such as a central humidifier, air purifier, or even UV disinfectant.

According to Modernize, the installation cost of a gas and electric furnace are roughly the same, ranging from roughly $800 to $3,600, depending on equipment and local labor costs. A propane furnace may cost a couple hundred dollars more if you require converting a natural gas furnace to propane.

Any type of furnace requires regular maintenance, consisting of inspecting and cleaning the heating element, inspecting the blower motor, checking for gas and exhaust leaks (in the case of fossil fuel furnaces), replacing the air filter, and other tasks.

This means that when it comes down to comparing propane and electric furnaces (or natural gas furnaces for that matter), it really comes down to the fuel cost. When only considering the fuel cost, propane can often be cheaper. You calculate this yourself if you know your electricity costs and propane costs. One kilowatt-hour of electricity turns into 3,412 British thermal units (BTUs) of heat, while one gallon of propane produces 91,452 BTUs of heat when burned. If you multiply this by your fuel prices, you can determine whether electricity or propane gives you more heat for the buck.

However, this doesn’t take into account the additional cost of a propane tank for your home. More about that later.

Heat pumps are about three times more efficient than electric furnaces

If you did the math above, there’s a good chance that you found that propane is cheaper than electricity purely on a fuel cost basis. For example, I pay about $0.15 per kWh of electricity in Western New York while propane is about $3.20 per gallon. Based on those prices, 1,000 BTUs of heat would cost me $0.042 with electricity versus $0.035 with propane.

However, this math changes dramatically with a heat pump. If you’ve read my introductory article on heat pumps, you’ll know that heat pumps don’t generate heat directly, but instead use the refrigeration cycle to take heat from outside and move it inside. This is far more efficient than electric resistance heating: in mildly cold weather, you’ll get three times as much heat for every kilowatt-hour of electricity from a heat pump than with an electric furnace.

Heat pump efficiency drops when it gets colder, but even when it gets as cold as 5°F, a cold climate heat pump will still generate 1.75 times as much heat per kWh as an electric furnace. The variable nature of heat pump efficiency can get confusing, and it leads to a list of different acronyms like HSPF, COP and SEER. To help you make sense of these, I wrote an article that tries to explain what all this heat pump terminology means.

Try the Electric Dwelling calculator to compare propane, electricity, and natural gas heating costs

We’ve established that a heat pump is by far the most efficient way to heat your home using electricity, but calculating the actual operating cost and comparing it with a furnace gets tricky. This is because there are many variables involved, such as your local climate, the efficiency of the heat pump and furnace, fuel costs, and more.

A proper comparison requires a licensed HVAC contractor, but you can get a rough estimate in a few seconds by using the Electric Dwelling furnace versus heat pump calculator. Just input your zip code (so that it can know your climate) and a few details about the heating equipment, and it’ll give you a reasonable estimate of the operating costs.

Again, the calculator is good for only a rough estimate because there are many more variables involved than this calculator requests. However, its intended purpose is to give people a very quick way to understand the approximate operating costs of different types of heating equipment, and it does a good job of meeting that goal.

Propane heating: storage and delivery costs

If you live in a city with a natural gas distribution system, there would be very little reason to choose propane heating. Propane costs more than natural gas: according to the EIA, the average cost of natural gas in the US is $13.25 per thousand cubic feet, while propane costs an average of $2.42 per gallon. (Note that these prices do vary substantially across the US.)

If you do the math to convert this to a quantity of heat for the price of fuel, it costs about $0.013 per 1,000 BTUs of heat using natural gas versus about $0.027 per 1,000 BTUs with propane – basically double the cost.

The propane storage tank you’ll need also is a significant, ongoing cost for a homeowner. You can either lease a tank, which means you’ll be paying an annual fee to rent a tank that you don’t own, or purchase one outright. According to HomeGuide, it costs between $1,200 to $1,800 for a 500-gallon above ground tank. If you don’t want a big tank in your yard, you can have it installed underground at higher cost: between $1,600 to $2,400 for a 500-gallon tank.

On top of that, you’ll need to schedule regular deliveries so you don’t run out, or manually monitor the tank level and schedule deliveries as you need them, which is an inconvenience that electricity and natural gas don’t have.

Propane tanks also don’t last forever. Underground tanks can last two or three decades; above ground tanks last a little longer. Tanks should also be recertified for safety every five years² (although local regulations vary).

Bottom line: propane furnace could be cheaper than an electric furnace, but a heat pump will probably be best

Assuming that you have a home with existing ductwork and you are comparing the cost of a propane furnace, electric furnace, and a central heat pump, the installed cost of a propane furnace and an electric furnace will probably be somewhat similar, while a heat pump will generally be more expensive.

When it comes to comparing the operating costs of an electric furnace with a propane furnace, that will depend on the price of fuel and electricity. Both electricity prices and propane vary a lot across the country, so you’ll need to do a little math to figure out the cost per BTU of heat delivered. However, based on average electricity and propane costs in the US, it will probably be a little less expensive to heat your home with a propane furnace than with an electric furnace.

However, the math is quite a bit different with an electric heat pump, which delivers roughly three times as much heat per kilowatt-hour of electricity than an electric furnace. Because of this, it will probably be cheaper to heat your home with a heat pump than a propane furnace, even if you have some cold weeks when your heat pump uses backup heat.

This doesn’t take into consideration the additional cost of a propane storage tank, which has its own maintenance requirements. There are other disadvantages to propane, including needing to choose between having a big, ugly propane tank in your yard or paying the additional expense of having it installed underground. A storage tank also needs to be located near a driveway for access by the delivery service, which can impact your landscaping plans.

While a heat pump can be more expensive to install than a propane furnace, there are significant financial incentives available, including a federal tax credit worth up to $2,000 and low- and moderate-income state programs that could be worth up to a whopping $8,000.

Propane also comes with small safety risks that you can’t ignore. Gas leaks are rare but dangerous. Malfunctioning furnaces can also result in carbon monoxide or other pollution inside your home.

And last, but not least: a heat pump also works as an air conditioner! This means that when you install a heat pump, you’re actually installing both a furnace and central air conditioner.

For all these reasons, a heat pump is probably a better choice than a propane furnace for many homes.

References