Natural Gas vs Electricity: Which is More Cost Effective?

Natural gas vs. electricity - which is greener?

If you’re thinking of upgrading or installing new appliances in an effort to save on electricity costs and utility bills, it is very likely that you’re looking at natural gas vs electricity.

One way to save costs is to look at your needs, your use, and the pros and cons of each system.

So which would be the more cost-effective energy source for our home, natural gas or electricity? Let’s take a closer look at natural gas vs. electric.

Natural Gas vs. Electricity

Although electric heat typically has higher Annual Fuel Utilization Efficiency ratings (the measurement used to assess the efficiency of heating appliances), these measurements are not the biggest factor affecting heating costs. While electric heating costs less in fuel, the cost to operate these systems is much more. Learn more below.

The pros of electricity:

  • Heat pumps—devices that can both heat and cool a home in the same way a furnace and air conditioning unit do—make electricity costs an affordable option for some people. Determining when a heat pump costs less than natural gas depends on the size of your home as well as how well insulated and sealed it is. A large, old home will be more expensive than a smaller, well-insulated home.
  • Electric furnaces costs are a more affordable option when paying upfront, and they do not require gas lines, which also reduces installation costs. That being said, gas furnaces provide better long-term value for reliability and efficiency, which saves money in the long run.

Cons of electricity:

  • Electricity is typically more expensive because it is not as energy efficient as gas heating, which can result in higher monthly energy costs.
  • Older electrical resistance equipment such as electric furnaces, electric wall heaters, electric space heaters, and electric baseboard heaters are severely inefficient, adding to the increased use and cost of electricity. Older, out-of-date equipment can contribute to higher electric heating costs.
  • Heat pumps provide a cost-efficient means of heating and cooling a house, however, cost-effectiveness is dependent on natural gas prices. If natural gas prices are low, it can take a number of years for the energy savings of a heat pump to pay for the added installation cost.
  • The average lifespan of a heat pump is shorter than both a cool air conditioner and furnace because it’s running year-round to cool and heat your home. If you’re looking for a more cost-effective system that you don’t have to replace very often, you may want to consider getting an air conditioner with a furnace. This can save on energy and electricity costs in the long run.

Pros of natural gas:

Natural gas is extremely cost-effective. It is also an efficient energy source for heating and powering appliances. There are many benefits to using natural gas appliances and natural gas furnaces:

  • Natural gas has lower operating costs and is typically more cost-effective than electricity for heating purposes. Gas furnaces provide more warmth per unit of energy consumed compared to electric heating systems, which can save money on heating costs. The cost of running a natural gas furnace is much lower, even if you’re running the lowest efficiency furnace.
  • Natural gas provides more efficient and faster heating. Modern gas furnaces have advanced features that offer precise temperature control, which means that you only use the amount of gas necessary to maintain a comfortable temperature. The moment you turn on a natural gas furnace, it starts producing heat. This reduces waste and energy costs. Electric furnaces, on the other hand, take a bit more time to heat up.
  • Natural gas is considered a “green” fuel that helps reduce the ecological damage caused by the use of other fuels such as electricity or wood. It burns cleaner than electricity and other fuels, which means less carbon dioxide, less sulfur dioxide, less nitrogen oxides, and no mercury emissions. That all adds up to cleaner air, a decrease in acid rain, and a safer food supply.
  • Natural gas heating and furnaces are also much more reliable sources of energy. Electric appliances are subject to power outages, while natural gas, which is delivered through pipelines, does not face these types of disruptions. Natural gas costs are also more predictable and consistent which can help businesses and homeowners budget effectively.
  • Natural gas lines are considered one of the safest forms of energy transportation in the U.S. Service from local natural gas companies or utility companies is convenient and ensures that gas supply is consistently available.

Cons of natural gas:

  • Inside the home, burning natural gas can create carbon monoxide gas, which is clear and odorless, although inexpensive detectors are available. As long as they are functioning properly—and are properly maintained—natural gas furnaces and appliances are perfectly safe to have in a home.

Whether you choose electricity or natural gas as your home’s energy source, the important thing (not only for the environment but also for your bank account) is to increase your own home’s efficiency as much as possible by upgrading to high-efficiency equipment.

The Verdict: Natural Gas vs. Electric

If you are looking to save money on utility bills and energy costs, natural gas is the way to go. Natural gas appliances are more reliable and efficient and are guaranteed to save you money in the long run.

Converting your home or business from electricity to natural gas

If you currently run your home on electricity, it is possible to convert to natural gas by installing natural gas piping. In almost any setting, natural gas furnaces, water heaters, range tops, and fireplaces can be installed or upgraded at any time after initial construction.

  1. As natural gas is the number one consumer energy choice for heating homes and businesses, the conversion would be considered an upgrade, which means a higher resale value of your home.
  2. The conversion would pay for itself in a reasonable time through lower utility bills—as low as one-half to one-third of an electric bill. Natural gas has traditionally cost less to use than electricity because it costs utility companies less to produce.
  3. Many areas offer an energy rebate or tax credit to encourage consumers to transition to more energy-efficient systems with higher ratings, such as upgrading a wood burning fireplace to a natural gas fireplace.

Contact RP Gas Piping to Explore Gas Options for Your Home or Business

RP Gas Piping can find out if your home or business has natural gas available to the site and whether it’s possible to install natural gas plumbing so that you can reap the environmental benefits and lower utility bills. We can help you plan and install the new gas piping and meet local codes. If natural gas is not an option at your home or place of business, there are other options you can consider, such as a propane storage tank system. Learn more by contacting us today.

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This article was originally published in 2019 and updated for 2023.