Gas vs. Electric Heat: Which Is Cheaper?

Whether your heating system has failed or you are building a new home and installing a furnace for the first time, the cost of a new heating system can be gulp-inducing. Depending on the type of system you choose and the size of your home, the upfront cost can be anywhere from $2,000 to $10,000 or more. And then, of course, come the ongoing monthly bills to keep that equipment running.

If you're trying to cut costs, you may be torn over which is the cheapest option: gas or electric heat. In general, gas heating is much more expensive to install than electric. However, gas can be more cost-effective over the long haul.

Here's what you need to consider when you’re weighing a gas or electric heating system, and which option wins at each stage.

Cost of installation: advantage to electric

For those on tight budgets, electric heating systems have appeal because of their relatively low cost to buy and install. Whether you opt for a heat pump, baseboard heater or electric furnace, electric heating systems usually have a much lower upfront cost than gas heating systems.

You’ll pay anywhere from $2,000 to $8,000 for an electric heating system including installation. There are also the costs for permits and inspections, which can add between $200 to $500 to your expense.

Gas heating systems use natural gas or propane to generate heat. The upfront costs of these systems can be steep. Typically, gas heating systems cost between $3,800 and $10,000, including installation. Permits and inspections are also pricier for gas heating; you should budget to spend between $250 and $1,500 on those

Naturally, the actual cost of any system varies based on your home's size and design.

"Installation costs are heavily influenced by a home’s layout and infrastructure," said Asif Bux, the owner of Comfort Union, a heating, ventilation and air conditioning company. "Running a new gas line to a crawl space might cost thousands if the infrastructure isn’t already in place. By contrast, pulling an electrical line for an electric [heating] system can be as little as a few hundred dollars, if the existing panel has sufficient capacity."

Operating costs: advantage to gas

After the installation of a new heating system, you face the expense of actually running it to heat your home. And when it comes to operating costs, a gas system has an advantage over electric heating.

As a rule, homeowners spend between $400 to $700 a year to warm their homes with gas heat. Electric systems are much pricier to run, with the annual bills typically ranging between $1,900 and $3,800.

Repairs: tie, gas and electric

The cost of repairing your heating system should be similar for electric and gas. As a rule, you can expect to pay $130 to $500 per visit from a repairman.

Other considerations

When choosing a heating system, the comparative cost isn't the only factor to consider. Other variables to keep in mind include:

Environmental impact

With awareness growing of the environmental consequences of burning fuel, more people are seeking ways to reduce the carbon footprint of their home heating.

Although natural gases are relatively clean-burning forms of fuel, they aren't environmentally friendly; natural gas produces strong greenhouse gases. While the environmental impact of electricity ranges with the way in which it is generated in your state, the Natural Resources Defense Council still says that homes can slash the heating-related climate pollution they create by switching from a gas furnace to an all-electric system.

Safety

Electric systems are typically safer than gas-powered systems. Although electric systems can still create fires, they lack the risk of gas leaks and carbon monoxide poisoning that can impact gas systems.

Upkeep

Gas systems tend to require more care and attention than electric systems, and they wear out more rapidly. "Gas heating systems require more frequent maintenance due to components like burners, heat exchangers, and venting systems that need regular inspections for safety and efficiency," said Bux.

By contrast, Bux says, "electric systems, especially those without resistance heaters, have fewer mechanical parts and lower maintenance needs, reducing ongoing costs."

Efficiency

Electric systems aren't as efficient as gas systems. As a rule, gas systems can heat a home more quickly and to a higher temperature than can electric ones.

Gas vs. Electric: Which Should You Choose?

When it comes to the choice between gas and electric heat, there's no one size-fits-all solution. The system that’s best for you depends on how much you're willing to spend on upfront installation costs and how long you intend to stay in your home.

If you don't think you'll be in your home for more than a few years, an electric system might be worth considering. It's much cheaper to install than a gas system, so you’ll face a lower investment cost than if you opted for gas.

If you have access to solar panels or wind turbines to power your system, an electric system could even prove to be as cheap – or even cheaper to run. If you don’t have access to those alternative sources, though, electric heat will be a lot more expensive in the long run.

If you intend to stay in your current property for several years or more, then gas heating should prove to be more cost-effective. Gas heating systems have much lower operating costs, so your savings on energy could offset their higher initial installation cost.

Regardless of the technology you choose, take advantage of other home technologies that can help minimize what you spend, such as installing an Energy Star-certified smart thermostat.