Is Natural Gas the Best Option for Your Home?

There are many options to heat your home, but one of the most popular options is natural gas. Is it the best option or should you go in a different direction?

While there are several options to heat your home, the most common heating systems in American homes are natural gas furnaces, electric furnaces, and electric heat pumps. According to the U.S. Department of Energy (DoE), 58% of American homes are heated by natural gas, making it the most popular fuel for heating. One prerequisite is, however, that you need to be connected to the natural gas infrastructure unless you have a propane tank. Is gas the best option for heating your home? The short answer is: It depends.

Common Home Heating Systems

For homes that are already connected to gas, there are two major criteria to consider whether natural gas is the best option: Economic and environmental factors. Other factors that may be important to you are maintenance requirements and the time it takes to heat up your home. Gas-powered systems heat your home much faster than electric heat and can achieve higher temperatures, especially in very cold climates.

Electric furnaces are typically cheaper to install than gas furnaces. On the other hand, gas furnaces are cheaper to operate than their electric counterparts. Despite the high nameplate efficiency of most electric heaters, electric furnaces are very inefficient compared to natural gas systems. This is mainly due to the inefficient generation technology in use today but also because of the use of coal as one of the primary fuels to generate electricity.

Besides gas and electric furnaces, a third option to heat (and cool) our homes is becoming more common in the U.S. Heat pumps are using significantly less electricity than electric furnaces and can be used for heating and cooling. This can make them even more cost-effective than a gas furnace and separate A/C system, depending on your utility rates. Depending on your electricity mix, they can even be less CO2 intensive than natural gas furnaces.

Environmental Considerations

If you’re looking at environmental factors, especially at your carbon footprint, it’s important to know the fuel mix that generates the electricity delivered to your home. You can get that information from your utility company. It is also important to consider the type of heating equipment you’re using. Electric heating systems run with different efficiencies. From an electric furnace, the equivalent to a gas furnace, to an electric heat pump, the amount of electricity needed to heat your home varies significantly.

In order to be able to compare the three based on their environmental impact, you also need to look at the fuel mix for the electricity in your home. While there are too many factors to consider, from the extraction of natural gas to generating electricity and the impact of the individual distribution systems, the easiest way is to look at the carbon dioxide (CO2) emissions. This is also referred to as the carbon footprint of your heating system.

If all your power were coming from renewable sources, an electric heat pump would be the cleanest option to heat your home. According to the U.S. Energy Information Administration (EIA), about 82.2% of electricity generation in the U.S. came from fossil fuels in 2018. 27.4% of the electricity came from coal alone.  A DoE estimate suggests that those generators convert only about 30% of the fuel's energy into electricity. Combined with transmission losses, electric heaters are only about 25% efficient regarding the primary energy input.

Natural gas is one of the cleanest and most efficient fossil fuels available. If your electricity is coming from mainly fossil fuels, natural gas is an environmentally friendly option for heating.

Economical Considerations

The factors determining the operating cost of your heating system are the fuel type you’re using, fuel cost, the heat provided per unit of fuel, and the overall efficiency of your heating system.

According to the EIA, the average residential electricity customer in the U.S. spent 12.89 cents per kilowatt-hour (kWh) of electricity in 2018. By definition, electric furnaces are 100%. A 100% efficient electric heater will cost you about $37.78 per million Btu (MMBtu) of heat (c. 293 kWh).

At an average U.S. price of $10.52 per 1,000 cubic feet (MCF) in 2018, natural gas customers spent less than $1.02 per therm of gas or about $10.15 per MMBtu. With a natural gas furnace of an average efficiency rating of 90%, it costs less than $11.28 to provide one MMBtu of heat.

This means, on average, U.S. utility customers spent over three times more for electric heating than for gas heating for the same size home. Modern gas furnaces are even up to 98% efficient. If you have access to natural gas, it’s typically the most cost-effective way to heat your home.

According to the DoE, heat pumps cut electricity use by over 50% when compared with electric resistance heating. Depending on your local utility rates, they may even be cheaper than a gas furnace.

Compare Your Utility Rates

Utility prices matter. Unfortunately, utility companies in the U.S. make it hard for their customers to compare prices. While electric utilities or retail providers typically charge their customers per kilowatt-hour (kWh), natural gas is usually billed per therm or per cubic foot. If you’re being charged in cubic feet you probably pay per hundred cubic feet (CCF).

Using different measurement units makes it harder for customers to compare prices, especially since the pricing doesn’t include the higher energy efficiency of natural gas as compared to electricity. In order to get a good picture, you need to convert the different units to a common unit; typically this would be in MMBtu.

If you live in a state with low electricity rates and high gas prices, natural gas may not be the most economical fuel, especially if you’re in a warmer climate zone. For example, the average electric rate in Florida is $34.03 per MMBtu (2017), while natural gas cost about $20.81 per MMBtu (2018).

Climate Zones

Whether natural gas is the best option for your home also depends on the climate in your area. If you live in a cooling climate and your air condition unit runs most of the year, a natural gas-fired furnace that runs only for a few days a year doesn’t make economic sense.

If you’re in a heating climate however, the higher efficiency of natural gas often makes it a more economical energy source than an electric furnace. In most climates, electric heat pumps are more economical than traditional air conditioning.