Natural Gas vs Electric Heat: How Should You Stay Warm This Winter?

Reading time: 5 minutes

5 minutes read

Category: Home Utilities
Posted on: 10/22/2020
A woman in a sweater is lounging on a couch next to a table with a chessboard and snacks in front of a fire

As temperatures are dropping at this time of year, your heating bill is going up. Natural gas and electricity are the two most commonly used fuel sources for heating homes in the United States. Whether you’re heating your home with gas or electricity, energy prices typically increase during the cold season. 

If you’re thinking about replacing your furnace, you’ve probably compared gas and electric heating systems and wonder how you should stay warm this winter. There are many factors to consider when you’re deciding on what type of furnace you want to install. Both electric and gas furnaces have advantages and disadvantages regarding cost, efficiency, environmental impact, or comfort.

Heating with Electricity vs. Natural Gas

Besides electric furnaces, some homes use other electric resistance heating, such as baseboard heaters, wall heaters, or space heaters. In contrast, heating with gas typically means you have a gas furnace that centrally heats your home. Another form of using electricity to heat your home is electric heat pumps. Heat pumps are significantly more energy-efficient than electric resistance heating equipment. Here are the main areas of consideration when comparing natural gas vs. electric heat:

Installation Cost

If you’re not already connected to the natural gas network, your local utility will have to provide gas service to your home before you can install a gas furnace. This can increase the installation cost for a gas heating system. Your home also needs to have a flue pipe or chimney to move combustion gases out of the house. In most cases, a gas furnace will be comparatively expensive if you’re not already using gas in your home. Electric furnaces are generally easier to install than gas furnaces and cost less, which lowers the initial investment to install them.

Cost to Heat Your Home

Natural gas heating systems are typically less expensive to operate than electric resistance heating systems. This is mainly due to the cheaper energy prices for gas. The actual operating cost is also influenced by the climate in your area and the size of the space you’re trying to heat. Gas furnaces work more efficiently for heating bigger homes and in cold climates.

Energy Efficiency

While electric resistance heaters are considered 100 percent efficient by definition, gas furnaces have greater overall efficiency. According to the U.S. Environmental Protection Agency (EPA), the average efficiency of fossil-fueled power plants was about 33 percent in 2018. About two-thirds of the electricity in the U.S. is generated using fossil fuels, and only one-third of that fuel is actually converted into electricity.

Natural gas is considered the cleanest fossil fuel available, and modern high-efficiency gas furnaces have an Annual Fuel Utilization Efficiency (AFUE) of up to 98 percent. That means 98 percent of the natural gas burned is converted to heat.

Environmental Concerns

The greater overall energy efficiency of natural gas to produce heat means it generates less greenhouse gases such as carbon dioxide (CO2) to heat your home compared to electric resistance heating. While natural gas pipelines can leak and damage the environment, both gas and electric infrastructure negatively impact the environment. However, according to the U.S. Energy Information Administration (EIA), in 2018, about 83 percent of the U.S. electricity was generated from fossil fuels, including coal, natural gas, petroleum, and nuclear. Almost 30 percent of the total electricity generation came from coal, the most polluting fossil fuel.

To evaluate if using natural gas or electricity is better for the environment, you need to take a closer look at where the electricity in your area is coming from. Natural gas has the lowest impact on the environment among all fossil fuels. If the fuel mix does not include any fossil fuels, an electric heating system is the better choice. 

Comfort and Safety Concerns

Gas furnaces provide a more powerful heat; they heat up more quickly, and they are typically able to provide more heat at higher temperatures. The more powerful heat is essential to increase comfort in bigger homes in colder climates. In hot and dry climates, an electric heating, ventilation, and cooling (HVAC) system often suffices to heat and cool your home year-round.

Gas furnaces that don’t function properly can create carbon monoxide (CO) emissions, which can be a safety hazard. This makes some people uncomfortable with using gas as fuel. A carbon monoxide alarm is needed if you’re burning gas to heat your home. Gas furnaces also require more maintenance than electric heating equipment.

Electric Heat Pumps

While electric heat pumps use electricity, they’re not a type of electric resistance heating. Heat pumps transfer heat between your house and the outside air, ground, or water. In heating mode, heat pumps transfer heat into your home. In cooling mode, they transfer heat out of your home. According to the U.S. Department of Energy (DoE), heat pumps use about 50 percent less electricity than electric resistance heating and are typically more energy-efficient than gas furnaces. However, in climates with extremely low temperatures, heat pumps will need an auxiliary heat source to provide sufficient heat to your home when it gets too cold.

Water Heaters

Water heaters are also available as electric or gas systems with similar considerations about whether gas or electric heat is the better choice. Natural gas water heaters are more efficient by burning gas directly, rather than generating electricity, which is then used to run an electric water heater. They cost less to operate but are more expensive to install than electric water heaters.

Another option is point-of-use water heaters. This type of water heater is installed directly at the sink where the hot water is needed. They heat the water directly as you use it and do not require a water storage tank. This can make them more efficient than electric heaters with a storage tank and decreases the waiting time for hot water at the sink.


Based on the current fuel mix of U.S. electricity generation, natural gas is the better choice in fuel efficiency, overall cost, environmental impact, and greenhouse gas emissions. As the U.S. moves towards increasing renewable energy use, electric heating can be more advantageous to heat your home in the future.


Finance Guru

Finance Guru