Cheapest Way to Heat a House with Electricity

Last Updated on September 24th, 2018

Energy costs in the United States continue to increase on an annual basis, making heating and cooling ever more expensive. So it’s not so surprising that people want to know how to save money and perhaps more specifically, which method is the cheapest way to heat a house with electricity?

According to the U.S. Department of Energy, heating and cooling combined accounts for a whopping 48% of energy use on average, making it the largest energy expense.

Electricity as a primary power source for home heating remains popular in the US, with an estimated 36% of households using it as their main heating fuel source.

In this guide, we will be exploring when electrical heating makes financial sense and by comparing some of the most popular electrical heating systems available, we will determine exactly what method is the cheapest way to heat a house using electricity.

Types of Heating Systems Compared 

No matter what type of heating system you use, it’s certainly worth being aware of the price of some of the most popular heating energy sources in the US today.

Natural Gas Systems

Natural gas is one the most popular heating systems for homes in the United States and includes common heating systems such as natural gas furnaces. Depending on your location and the efficiency of your appliance, you can potentially cut your energy bills in half when compared to other energy sources e.g. those that are powered by electricity.

Not just that, but the heat produced by gas systems can potentially provide temperatures that are up to 25-degrees warmer than electrical heating systems.

When compared to electricity, gas also wins the environmentally friendly award too, since electricity production requires a greater amount of energy. Gas also produces far fewer greenhouse gases than any other fossil fuel, including coal, oil and even wood.

Ultimately, natural gas is a reliable and efficient fuel that is the go-to option for states with colder climates. The major disadvantages of natural gas include the fact that it is a finite fuel source that produces pollutants in the form of greenhouse gases. Lastly, installing gas pipelines and infrastructures is an expensive task.

Propane Heating 

Propane is another common type of fuel that is often used to heat homes. Similar to natural gas it is also a fossil fuel and therefore a finite resource.

Depending on the exact propane heater used, propane as an energy source can be an efficient way to heat a home. In fact, propane produces more British Thermal Units than natural gas heating.

Another major benefit of propane is that it is a greener choice than other types of energy. For example, burning propane produces up to 24% less carbon dioxide than burning oil.

Propane tanks are also ideal for long-term storage since they have a long shelf life, which is why many often see propane as a viable backup option.

The downside of propane is that the prices can vary dramatically depending on location and on average still remain a more expensive option. Additionally, storing high-pressure propane tanks is considered less than ideal since they are a potential risk should they ever leak or burst.

Oil Heating Systems

There are various oils used for heating, all of which are derivatives of crude oil. The major advantage of oil heating systems is that they offer a higher BTU than alternatives such as natural gas.

The drawbacks of oil heating are that the production process is notoriously harmful to the environment. Often oil is sourced offshore, a disreputable culprit of oil spills that frequently result in catastrophic environmental damage. Generally, oil is not the cheapest of fuels either, with natural gas on average, being a cheaper option for many.

Not only is oil, in general, more expensive, but running an oil heating system such as an oil furnace requires you to store oil in a tank and efficiently manage replenishment. Oil furnaces also often require maintenance more frequently than other systems, since they have a tendency to produce more waste.

Electricity 

In the US, as much as 36% of homes rely on electricity to heat their homes. Overall, electric heating is more expensive than the more popular natural gas and it also takes longer to reach its maximum heat output.

However, electrical heating systems have a number of advantages that make it an appealing choice for many. These include the low upfront costs of heating systems, typically due to the availability and minimal installation required.

In addition, electric heating is typically much easier to maintain than alternatives and there the installation required is less disruptive, as is often the case with gas furnaces that require the installation of external venting and gas lines.

When Does Electrical Heating Make Sense? 

Your climate is the main deciding factor in judging whether electricity is the best heating option and it often makes sense in warm and milder climates, where high maintenance gas furnaces might not be cost effective. For instance, electric heat pumps are a popular choice in warmer states where there is less demand for prolonged heating.

However, in cold climates, the truth is that using electricity to heat homes is generally more expensive than other options such as natural gas. The major reasons for this are two-fold. Firstly, natural gas heating does not take as long to reach its maximum heat output and natural gas is generally cheaper.

Although it’s certainly worth noting that advances in heating technology have made appliances such as electric heat pumps much more efficient and cheaper to run than was previously the case.

The Cost of Electric Heating

As you are probably aware, the cost of energy increases annually and this year is no different. The official Massachusetts State website makes estimations of annual energy increases and draws price comparisons between different types of fuels, which you may find useful.

Table 1: Cost of Heating for Homes using Equal Amounts of Energy and % Increase 

Although this does not represent the entire country, it does represent a general region where consumers will need a substantial amount of heat during the winter months. As shown, each annual average has gone up from the year previous, but electric heating still remains amongst the highest in price to heat your home.

Most people want to know which is cheaper, gas or electric heat? As you can see, on average gas is considerably cheaper.

The Pros and Cons of Electric Heating Systems

There are many different types of heating systems and when it comes to electricity, the options are especially versatile. Having said that, with any form of home heating, there are both pros and cons. Below are some of your options:

Electric Space Heaters

Pros:  This type of heater is super easy to obtain and requires no professional installation. They come in many different sizes and simply require a wall outlet to plug them into.

Space heaters are a fantastic way to save money if used in the right way. They are certainly not designed to provide whole-house heating, but instead effective zonal heating.

This means they are great for heating the room you are currently inhabiting and you can then move them from room to room thanks to their small, lightweight and portable designs. This is typically more cost-effective than running an entire HVAC system.

Cons: Because they must be plugged into the wall, they are only able to heat limited areas of the home i.e. those with access to a nearby socket.

Additionally, this not the option you should select if you are looking for one device to heat your entire home. It is also not suitable as the primary heat source in colder climates but is certainly suitable in combination with other forms of heating.

Many people choose to turn down the thermostat of their primary HVAC system and use a space heater to supplement the room they are spending the majority of their time in.

Something else to consider is that the external face of the heater can become very hot to the touch, so this can be a burn hazard and must be kept away from flammable items.

Electric Heat Pumps

Pros: Heat pumps can be extremely efficient and make use of refrigeration in order to drive heat from a colder location to a hotter location. For this reason, they are typically much more efficient than natural gas furnaces as rather than producing heat through combustion, they simply transfer the heat from one location to another.

This quality also means that heat pumps are able to offer both cooling and heating. Heat pumps also offer a quiet operation and are considered an environmentally friendly option since they do not cause direct air pollution.

Cons: Heat pumps are not suitable for colder climates and are most often used in the Southeast states. This is because heat pumps lose their efficiency as the temperature drops, meaning they can no longer transfer any heat as there is little available.

This means they have to then rely on a secondary heat source, which is typically expensive to operate and inadequate for colder climates.

Depending on your property, the installation may be a difficult task and so often needs to be carried out by a professional. However, ductless units are also available, which are easier to install. You will need both an outdoor and indoor unit installed.

Electric Furnaces 

Pros: Electric furnace systems are one of the most common forms of electric heating used in the United States. They are generally controlled by a thermostat on the wall, and like gas furnaces, they are normally not visible (an electric furnace is typically concealed in the basement).

There are several benefits of electric furnaces, for instance, they are much safer than gas furnaces, do not require the likes of gas safety checks or carbon monoxide detectors. Typically, they do not require as much maintenance and the upfront costs and installation are generally much cheaper.

In terms of lifespan, electric furnaces also beat gas furnaces too, often lasting twice as long as gas systems that are prone to suffer much more wear and tear as a result of the combustion process.

Cons: Electric furnaces are typically not appropriate for use in colder climates since electricity is more expensive than natural gas. Electric furnaces are also less efficient than their gas rivals as the metallic elements take a lot of time and energy to reach their maximum heat output. This means they are often unable to keep an entire house warm in colder climates.

Electric Baseboard Heating

Pros: These units are relatively cheap, easy to install, and they do not take up much space. They come in different sizes and styles, offering you a lot of diversity.

Electric resistance heating, also called electric baseboard heating is best suited for dry, warm climates.

Due to their low cost, they are ideal for situations where a single room or remodel requires a little more heat, but the installation of a more expensive system cannot be financially justified.

Cons: Baseboard heaters remain one of the most costly methods of home heating. Their design is also very inefficient as many units are designed to be installed underneath windows or on the exterior wall of the home. These two key areas are poorly insulated and so naturally require more heat (and therefore energy) to become warmer.

Like all electric heaters, there is an external component that can become very hot. For this reason, you must make sure to keep pets and small children at a safe distance to ensure their safety.

What’s the Best Electrical Heating System?

As previously discussed, in general, electrical heating is a poor choice due to the efficiency of most electrical heating systems and the cost of electricity throughout the country.

Having said that, sometimes heating a property with electricity can make financial sense. For example, if you live in a warm climate where heating demands will be relatively low, an efficient electric heat pump is a certainly a good option. They are relatively affordable, easy to maintain and energy efficient.

An electric space heater may also be suitable in some circumstances too, for example for zonal heating. This is where you heat a single zone of your home rather than the entire property e.g. the room you are currently using.

You also have the option to set the thermostat on your primary heating system low and supplement your heating with the likes of a space heater. Individuals also find them useful if they happen to have a cold spot located somewhere in the house that’s seemingly unreachable.

For states that are located in the North and Northeast, it would be wise to consider an all-encompassing option, such as a natural gas furnace. Although these are more costly to install and maintain, you will want something reliable, efficient and cost effective to be able to serve you all throughout the winter months.

The Final Decision

Ultimately, the best heating system for your home long term isn’t necessarily always the cheapest system to buy and install up front. You will need to consider important factors including your local climate, annual heating use, budget, and the size of your property.

If you live in a colder climate, such as the northeast, then there is little doubt that the cheapest way to heat your entire home through the winter months is not with electricity. The best option is a natural gas furnace that provides maximum efficiency and the lowest bills when compared to other fuel types.

However, if you live in the southeast, or a warm, dry climate, it makes little financial sense to go to the trouble of buying and installing a brand new gas system that you will rarely use. Instead, an efficient electric heat pump system will provide you with year-round cooling and heating for a fraction of the cost.