Gas vs Electric Heat in Phoenix: Which is Cheaper to Run?

2014 Dec 05
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In the Phoenix area, you have 2 heating options for your home: natural gas and electric.

Long story short, it depends on the type of heater. On average, gas furnaces are cheaper to run than electric furnaces. But electric heat pumps are cheaper to run than both types of furnaces.

Here's the math to show you how we came to that conclusion.

The math to find the cheapest form of heat

For easy comparison, we’re going to find the cost of 1,000,000 BTUs of heat for each type of heater.

Note: A BTU is a measure of heat (it stands for British Thermal Unit, but that’s not important.) And while 1 million BTUs seems like a lot, the average U.S. home uses 25 to 50 million BTUs each winter.

Electric furnace/space heaters

Electric heaters are 95-100% energy efficient. That’s good. But electricity is also expensive. In Arizona, the average cost is 12.37 cents per kilowatt hour (kWh). A kWh is roughly 3412 BTUs.

That equates to $36.25 per 1,000,000 BTUs of heat.

Gas furnace

Gas furnaces’ energy efficiency varies more. They can be as low as 80% and as high as 97%. Since most homeowners get the minimum efficiency for gas furnaces, lets look at that.

Gas prices in Phoenix last year averaged $1.36 per therm. A therm is equal to 100,000 BTUs.

So, assuming an 80% efficient gas furnace, that’s $16.98 per 1,000,000 BTUs of heat.

That’s quite a difference and shows you that higher efficiency doesn’t always mean lower cost to run.

Heat pump

It would look like gas is the clear winner. Even at 100% efficiency, electric heaters can’t compete. But here’s where it gets interesting.

Electric heat pumps can be more than 100% efficient. In fact, even a low-end whole-home heat pump can produce over 3 times more heat than the electricity it uses.

Using the same electric rate numbers, a heat pump with an 8.5 HSPF rating would cost $15.09 per 1,000,000 BTUS of heat.

Other factors to consider

These numbers are all calculated using averages. If you have an electric heater or heat pump, you could also save more by not using them during peak periods.

Also, gas rates trend higher in winter, so you could pay more when you actually need the heat (since the $1.36/therm is a yearly average).

And, if you’re looking for a new heater to purchase, remember to consider more than just cost of operation. Comfort is also important and some people simply prefer the immediate heat produced by gas furnaces over a heat pump.

Need help deciding which is right for your home? Contact George Brazil! We’ve got trained comfort specialists throughout the Phoenix area, including both the West and East Valley.
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