A propane vs electric cost calculator compares the price of the energy a home uses with the efficiency of its heating equipment. Typical annual heating bills range from about $600 to $3,500, depending on climate, home size, local fuel rates, and whether electricity runs a heat pump or resistance furnace.
For a fair comparison, calculate the cost per unit of heat delivered, not just the price per gallon or kilowatt-hour.
| Item | Low | Average | High | Notes |
|---|---|---|---|---|
| Propane fuel | $1.80/gal | $2.75/gal | $4.00/gal | Delivered residential price varies by region and season |
| Electricity | $0.10/kWh | $0.16/kWh | $0.25/kWh | Check the full variable energy rate on the bill |
| Annual heat pump heating | $600 | $1,400 | $3,000 | Cold-climate home, usage, and seasonal efficiency affect totals |
| Annual propane furnace heating | $800 | $1,800 | $3,500 | Includes fuel, not necessarily tank rental or service |
| Heat pump installation | $5,000 | $10,000 | $18,000 | Central system or ductless equipment; complex work costs more |
| Propane furnace installation | $3,500 | $6,500 | $12,000 | May exclude tank, gas-line, venting, and duct upgrades |
Assumptions: Broad U.S. residential ranges; annual operating examples reflect heating only and exclude financing, taxes, and cooling.
Propane vs Electric Heating Cost for a Typical Home
A typical 2,000-square-foot home in a moderate-to-cold climate may use 50-80 million Btu of delivered heat over a winter. At an average propane price of $2.75 per gallon and a 90% efficient furnace, fuel costs about $33 per million Btu delivered. At $0.16 per kWh, a heat pump averaging a coefficient of performance (COP) of 2.5 costs about $19 per million Btu; electric resistance heat costs about $47.
That comparison puts the seasonal energy bill near $1,650-$2,650 for propane, $950-$1,500 for the heat pump, or $2,350-$3,750 for resistance heat at the stated usage. The actual result can be lower in a mild climate or higher in a leaky, cold-climate home. A heat pump’s COP changes as outdoor temperatures fall, so a seasonal average is more useful than its laboratory rating at one temperature.
With the example rates, a heat pump is usually cheaper to run than propane, while electric resistance is usually the most expensive heating option.
Assumptions: 50-80 million Btu of useful seasonal heat; propane furnace at 90% efficiency; heat pump seasonal COP of 2.5; no fixed utility or tank charges.
How Fuel, Equipment, and Delivery Charges Shape the Bill
Annual heating expense includes more than the price displayed for a gallon or kilowatt-hour. A propane customer may pay tank rental, delivery fees, minimum-fill charges, or a service-plan fee. An electric bill may include a monthly customer charge and delivery charges, but only rates that change with added usage should be counted in a heating-cost comparison. Use the marginal electricity rate when estimating added heat-pump consumption.
| Cost component | Propane estimate | Electric estimate | What to include |
|---|---|---|---|
| Energy input | $1.80-$4.00/gal | $0.10-$0.25/kWh | Use delivered propane price and variable electric rate |
| Useful heat at sample efficiency | $22-$49/MMBtu at 90% | $12-$29/MMBtu at COP 2.5 | Rates change with furnace efficiency and heat-pump performance |
| Fixed or delivery charges | $0-$300/year | $0-$300/year | Include only charges caused by the heating choice |
| Routine service | $100-$250/year | $100-$300/year | Typical checkup or minor service; repairs are extra |
| Fuel storage or connection | $0-$1,500/year | $0-$2,000 one time | Tank lease or purchase versus panel and circuit work |
For a delivered-heat calculation, propane gallons × 91,500 Btu per gallon × furnace efficiency gives useful Btu. Divide annual heat demand by that result to estimate gallons. For a heat pump, divide useful heat demand by 3,412 and then by seasonal COP to estimate kWh. Multiply consumption by the applicable energy rate, then add relevant incremental fees.
Assumptions: A gallon of propane contains approximately 91,500 Btu; 1 kWh equals about 3,412 Btu.
Compare the same amount of useful heat and add only charges that differ between the two systems.
Which Heat Pump Efficiency and Propane Price Change the Result?
The major break-even variables are the local delivered propane price, electricity rate, furnace efficiency, and heat pump’s seasonal COP. At $2.75 per gallon and 90% furnace efficiency, propane heat costs about $33 per million Btu delivered. A heat pump beats that operating cost at $0.16 per kWh when its seasonal COP is above roughly 1.4; at $0.25 per kWh, it needs a COP above about 2.2.
These are approximate thresholds, not equipment guarantees. A heat pump rated at a high COP in mild weather may fall below the break-even point during subfreezing conditions, particularly if resistance backup runs often. A 95% propane furnace uses less fuel per unit of heat than an 80% model, but the higher-efficiency unit can cost more to buy. Compare seasonal system performance and full installed quotes.
Home heat demand matters too. A 1,000-square-foot, well-insulated home may need less than half the seasonal heat of a 2,000-square-foot home with drafts, but square footage alone does not determine load. Insulation, window area, air leakage, thermostat settings, and local design temperature can materially change annual use.
A small shift in electricity rate or winter COP can reverse the operating-cost winner.
Assumptions: Break-even rates use 91,500 Btu per gallon, 90% propane-furnace efficiency, and no fixed charges.
Electric Resistance, Heat Pumps, and Propane Compared
“Electric heat” can describe very different equipment. Resistance furnaces and baseboards convert electricity directly into heat, with about one unit of heat per unit of electricity at the point of use. Heat pumps move heat rather than create it, so a seasonal COP of 2-3 can deliver two to three units of heat for each unit of electricity consumed. Propane furnaces burn fuel on site and typically deliver 80%-96% of its heat output.
| Heating system | Typical efficiency assumption | Cost at example rates | Common budget consideration |
|---|---|---|---|
| Propane furnace | 80%-96% AFUE | $31-$37/MMBtu at $2.75/gal and 90% | Fuel delivery, tank, and venting |
| Air-source heat pump | Seasonal COP 2-3 | $16-$23/MMBtu at $0.16/kWh | Cold-weather performance and backup heat |
| Electric resistance | About 100% at the point of use | About $47/MMBtu at $0.16/kWh | Low equipment complexity, potentially high bills |
At the sample rates, heat pumps offer the lowest operating cost, but a propane furnace may be competitive where electricity is expensive or propane is unusually cheap. Resistance heat may make sense for limited-use rooms or mild climates, yet can be costly as a whole-home primary system. Equipment compatibility, ducts, and backup requirements also affect the comparison.
Do not treat resistance heat and a heat pump as equivalent simply because both use electricity.
Three Household Examples Show the Break-Even Point
These estimates illustrate how system type and climate change annual spending. Each example assumes a normal installation and excludes cooling, financing, and unrelated household energy use. Local rates should replace the sample values before making a purchase decision.
| Home and system | Seasonal heat | Rate and efficiency | Estimated annual energy cost |
|---|---|---|---|
| 1,200-sq-ft home, heat pump | 35 MMBtu | $0.14/kWh; COP 2.8 | About $430 |
| 2,000-sq-ft home, propane furnace | 65 MMBtu | $2.75/gal; 90% efficient | About $1,950 |
| 2,400-sq-ft home, resistance heat | 90 MMBtu | $0.20/kWh; COP 1 | About $5,280 |
The first example uses about 3,660 kWh for heating. The second needs approximately 790 gallons of propane. The third requires about 26,400 kWh. Those totals exclude equipment service and fixed bills, and real consumption can differ substantially with weather and thermostat settings.
Large homes with resistance heat can have high seasonal bills even when the electricity rate is not exceptionally high.
Assumptions: Seasonal heat is useful delivered heat; calculations use 3,412 Btu per kWh and 91,500 Btu per gallon.
Regional Rates and Winter Conditions Shift Heating Costs
Electricity and propane prices vary by state, utility territory, supplier, and delivery distance. As a rough planning adjustment, heating energy costs in high-rate Northeast and coastal markets can run 10%-35% above a national-style estimate, while some lower-cost Midwest or Southern markets can be 5%-20% below it. These percentages are broad comparisons, not guaranteed local price differences.
Cold winters also affect system efficiency. In a mild region, a heat pump may maintain a seasonal COP above 3; in a colder area, a standard system can average closer to 2 or rely more on auxiliary resistance heat. A cold-climate model may hold capacity better at low temperatures, but its purchase price can be $1,000-$4,000 higher than a comparable standard system. Propane use rises as the home’s heating load rises, although furnace efficiency is less directly tied to outdoor temperature.
For a usable calculator result, enter the most recent delivered propane quote, the electric rate for added kWh, and a local seasonal COP estimate. If the utility uses time-of-use pricing, model winter heating at the relevant hours rather than applying an off-peak rate to all consumption.
Local winter performance and actual utility tariffs matter more than a national average price.
Installation and Maintenance Add to Five-Year Ownership Cost
A propane furnace replacement commonly costs $3,500-$12,000 installed. A standard central heat pump replacement often runs $5,000-$15,000, while a multi-zone ductless system may cost $8,000-$20,000 or more. Electrical-panel upgrades, new ducts, difficult access, a propane tank, or a long fuel line can add hundreds to several thousand dollars. Existing compatible equipment can reduce project scope.
Routine annual service often costs $100-$250 for a propane furnace and $100-$300 for a heat pump. Filters, igniters, blower components, refrigerant diagnosis, and controls can add repair expense. A propane tank may be leased for roughly $50-$200 per year or purchased for about $500-$2,000, depending on capacity and installation. Ask whether the quote includes permits, disposal, electrical work, startup, and warranty coverage.
A five-year comparison should total installation, energy, service, and tank or utility charges. For example, a $4,000 installation premium for a heat pump is recovered in five years only if it saves at least $800 annually, before financing and maintenance differences. Incentives may lower upfront expense, but eligibility, amounts, and deadlines depend on current federal, state, and utility rules.
Lower yearly bills do not automatically make a higher-priced system cheaper over its ownership period.
Lower Heating Bills by Matching Equipment to Your Usage
Start with a heat-loss assessment or a recent utility history before choosing capacity. Oversized equipment can cost more upfront and cycle inefficiently; undersized equipment may use expensive backup heat or fail to maintain comfort. Correcting air leaks and adding attic insulation can reduce the heat load, sometimes allowing a smaller replacement system. The savings depend on the home and the cost of the work.
Request itemized quotes that state equipment model, efficiency, seasonal performance assumptions, labor, permits, electrical or gas work, old-unit removal, and warranty. Compare at least three bids using the same scope. Confirm the propane price is delivered and whether a tank lease or minimum purchase applies. For electricity, use the marginal winter rate, not simply the bill total divided by all household kWh.
Keep useful existing ducts and fuel infrastructure when safe and compatible, but do not preserve undersized wiring, unsafe venting, or equipment that needs repeated major repairs just to avoid replacement cost. Avoid paying for premium ratings that do not improve performance in the local climate. A hybrid heat-pump and propane setup can help in some regions, but its controls and installation add cost; calculate the switch-over temperature and fuel rates before assuming it saves money.
The most reliable savings come from accurate load sizing, comparable quotes, and realistic local energy inputs.
Assumptions: Installed ranges represent broad U.S. residential projects with standard access; actual bids vary by equipment capacity, existing infrastructure, labor market, and permit requirements.