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

2020 Sep 24
Posted in: Heating

Homeowners in the Phoenix area either have gas heating or electric heating systems.

On average, gas furnaces are cheaper to run than electric furnaces. But electric heat pumps are cheaper to run than both types of furnaces.

Below, we’ll look at these 3 systems (electric heat pump, gas furnace and electric furnace) in more detail, so you can get a better idea of what makes one system or fuel type less or more expensive than another.

If you’d prefer to speak with a professional who has all the answers, we’re just a phone call away. We have helped countless Phoenix homeowners decide on a heating system that is cost-effective for their home and needs. Learn more about the heating services we offer or schedule a free estimate! 

The math to find the cheapest form of heat

For easy comparison, we’ve compiled 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). And while 1 million BTUs seems like a lot, the average U.S. home uses 25 to 50 million BTUs each winter.

  • Electric Heat Pump
    • $15.02 per 1,000,000 BTU
  • Gas Furnace
    • $19.00 per 1,000,000 BTU
  • Electric Furnace
    • $37.43 per 1,000,000 BTUs

As you can see, electric heat pumps are the cheapest heating systems to run and electric furnaces are the most expensive. Below, we’ll break down how we got these numbers and explain a little bit more about WHY each of these heating systems are less/more expensive than their counterparts.

The cheapest option: Electric heat pump

Electric heat pumps are the most efficient heating system and therefore the cheapest to run.

In Arizona, the average cost of electricity is* 12.77 cents per kilowatt hour (kWh). A kWh is roughly 3412 BTUs.

So, a heat pump with an efficiency rating of 8.5 HSPF would cost $15.02 per 1,000,000 BTUs of heat.

Now, let’s take a closer look at why heat pumps are so efficient...

Unlike a furnace that actually produces heat, heat pumps merely transfer the warmth that is already in the outdoor air into your home. Because heat pumps transfer heat rather than create it, they are significantly more efficient than both gas and electric furnaces.

According to energy.gov, “Today's heat pump can reduce your electricity use for heating by approximately 50% compared to electric resistance heating such as furnaces and baseboard heaters.”

*This data is from 2020

The moderate option: Gas furnace

While gas furnaces are less expensive to run than electric furnaces, they're still more expensive than a heat pump.

Why? Well, as we mentioned above, heat pumps are more efficient than every kind of furnace because they transfer heat instead of creating heat like both gas and electric furnaces do. 

But, gas furnaces are less expensive than electric furnaces because the cost of electricity is significantly more than gas.

Let’s look at the math: 

Gas furnaces’ energy efficiency can be as low as 80% and as high as 97%.

Gas prices in Phoenix last year averaged $1.52 per therm.* A therm is equal to 100,000 BTUs. So, assuming an 80% efficient gas furnace, that’s $19.00 per 1,000,000 BTUs of heat.

*This data is from 2020

The most expensive option: Electric furnace

Electric furnaces are the most expensive systems to run on a month-to-month basis. 

Even though electric heaters are highly efficient (95-100% energy efficient), electricity is quite a bit more expensive than gas is, making an electric furnace more expensive to run. 

In Arizona, the average cost is 12.77 cents per kilowatt hour (kWh). A kWh is roughly 3412 BTUs.

That equates to $37.43 per 1,000,000 BTUs of heat (for an electric furnace with an efficiency of 100%).

Other factors to consider beyond price

  1. The cost to switch heating systems and/or fuel types is expensive, so we’d suggest sticking with the system and fuel type that you have. For example, if you currently have a gas furnace and you want an electric heat pump, you’ll not only need to pay for a new heating system (heat pump), but you may have to also pay for updates to your home and duct system to support an electric heat pump. If you currently have an electric heating system, you’ll have to pay to have natural gas piped to your home, which is also an expensive undertaking (and natural gas is not available to everyone).

     If you really want to change fuel types or heating system types, we’d suggest speaking with a pro. They will be able to tell you whether or not your switch will be worth it. 

  2. No matter what system or fuel-type you have, you can reduce your energy costs. If you have an electric furnace or heat pump, you could save money by not using your system during peak periods. If you have a gas furnace, you could save money by simply keeping your home’s temperature set a few degrees cooler than you would normally. 

  3. Comfort features. Many homeowners prefer gas furnaces to electric furnaces or heat pumps because they provide immediate warm air (and the air produced by a furnace is warmer than the air produced by a heat pump). Furnaces also tend to last longer than heat pumps do because they are only heating your home, not heating and cooling your home like a heat pump. 

  4. Heat pumps struggle below 40°: Because heat pumps rely on transferring heat that already exists in the outdoor air, a heat pump will struggle to heat your home on cold days (where there isn’t much heat in the outdoor air). Heat pumps usually work best in temperatures higher than 40°. In Phoenix, this is usually not an issue, as it rarely drops below 40°. However, if you live in another part of Arizona that has colder winters, a heat pump may not be the best option for your home.

Bottom line, consider more than just month-to-month operating costs when it comes to your heating system. If you’re on the fence or aren’t sure which fuel type or heating system is right for you, reach out to a professional you trust for advice.

Need help deciding which system and/or fuel type 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, and we’d be happy to help you determine which heat system and fuel type is best for your home and budget. 

Schedule a free estimate!