Electric Heat vs Gas Heat: Which Saves You More Money?
Heating your home with electricity or natural gas comes with different costs. Here's how the two compare and what could save you money this winter.
With energy bills putting a crunch on the US this winter, comparing the costs of electric heat vs. gas heat can be an important decision for homeowners looking to save money.
In this year's winter fuels outlook, published by the Energy Information Administration (EIA), it's forecast that from November through March, heating-oil customers will pay 21% more this winter, while natural gas customers will pay 9% less.
Meanwhile, households heating their home with electricity can expect to pay 4% more. However, actual costs depend on where you live, the efficiency of your heating system and winter weather. Here's how electric and gas heating costs compare and what homeowners can do to save money this winter.
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Heat pumps can keep you warm without the higher costs
Heat pumps are highly efficient and can use 50% to 75% less electricity for heating compared with electric resistance heating, according to the Department of Energy (DOE). That efficiency can translate into lower heating bills, although actual savings depend on your local electricity rates, climate and existing heating system.
Heat pumps aren't just for mild climates, either. Advances in technology have made them a viable option in colder regions, including Maine, which has seen widespread heat pump adoption.
Weather will also play a significant role in heating costs this winter. The EIA expects warmer temperatures in the Northeast and colder conditions in the West compared with last winter. As a result, households in the West that heat with natural gas could see slightly higher bills, even as natural gas spending declines nationally.
The Midwest and South are expected to experience temperatures similar to last winter. However, a strong El Niño could lead to variations from the EIA's forecast.
While energy-efficient heating systems can reduce long-term operating costs, homeowners should also consider upfront installation expenses and available state or utility incentives before making the switch.
Electric heat: cost to run
According to the EIA's Electric Power Monthly report, the average residential electricity price in the U.S. was 18.16 cents per kilowatt-hour (kWh) in August 2026.
However, the cost of electric heating depends heavily on the type of system you use. Heat pumps generally consume less electricity than traditional electric resistance heating systems, such as electric furnaces and baseboard heaters.
The Efficiency Maine Trust provides the following estimates of annual heating costs for different electric systems, based on an assumed electricity price of 26 cents per kWh.
Heating system |
Estimated annual cost |
Geothermal heat pump |
$1,984 |
Ductless heat pump |
$1,814 |
Ducted heat pump |
$2,646 |
Electric baseboard |
$5,715 |
These estimates illustrate how much heating system efficiency can affect annual costs. For example, a ductless heat pump could cost considerably less to operate than electric baseboard heating under the same assumptions.
However, homeowners should consider upfront installation costs when evaluating potential savings. Geothermal heat pumps, which exchange heat with the ground, can be particularly expensive to install. Depending on the property, installation may require underground trenches or vertical boreholes.
Modern cold-climate heat pumps can also operate in freezing temperatures, although some homes may need supplemental heating during periods of extreme cold. The actual cost of operating any system will depend on local electricity prices, weather conditions and the home's insulation and energy needs.
Gas heat: cost to run
Natural gas heating costs depend on local fuel prices, the efficiency of your heating system and how much energy your home uses.
The Efficiency Maine Trust provides the following estimates for natural gas heating systems, using an assumed fuel price of $2.04 per therm.
Heating system |
Estimated annual cost |
Natural gas boiler |
$1,828 |
Natural gas room heater |
$1,889 |
Natural gas furnace |
$2,056 |
These estimates illustrate how operating costs can differ by heating system, even when the fuel price remains the same. Actual heating bills will depend on local natural gas rates, winter temperatures, home insulation and equipment efficiency.
How fuel source affects home values
Switching from natural gas heating to an electric heat pump could also affect your home's resale value. According to the 2025 Cost vs. Value report, homeowners who converted from fossil-fuel heating to an electric heat pump recovered an estimated 72.1% of their project costs at resale, on average.
However, the financial benefits depend on more than resale value. Homeowners should also weigh installation costs, potential energy savings and how long they plan to remain in the home before making the switch.
Which heating source saves me the most money?
Traditional electric resistance heating, such as electric furnaces and baseboard heaters, generally costs more to operate than natural gas heating. However, high-efficiency heat pumps can narrow that gap and, in some cases, make electric heating the more affordable option.
Geothermal heat pumps can offer additional energy savings, although their higher installation costs may outweigh those benefits for some homeowners. Unlike traditional heating systems, geothermal heat pumps require underground piping, which can be installed horizontally or vertically depending on the property.
Over the next decade, however, electricity costs may rise given the enormous strain on the nation's electricity supply. This heightened demand is driven largely by the huge amounts of electricity needed by artificial intelligence, cryptocurrency mining, data centers and clean technology factories.
No matter your choice, you can also lower your heating costs by doing a few important things.
- If you only use certain rooms in your home, try to use spot heating rather than running your whole home system.
- Keep your thermostat setting at 68 degrees for the majority of each winter day. And if you're away from your home often, a smart thermostat allows you to save.
- Consider getting a home energy audit to identify fixes that optimize efficiency and comfort.
- Once you have the audit in hand, apply fixes like caulking, weatherstripping, insulation, and air filter changes.
- If you don't want to pay for an audit, consider a pocket thermal camera that scans your windows, doors and HVAC to find energy leaks.
For more energy-saving content, check out our home savings hub.
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