Other than using wood, geothermal, district, or no heating — chances are you’re going to use either gas or electricity. Each method has their own unit costs and equipment costs, as well as general efficiency.

In order to give an idea of the operating costs of these methods per year, we’ll assume an average suburban home, in a continental climate, with normal levels and ratings for insulation. This will help us to narrow down the range of answers and hopefully give you a better idea of what to expect for each method. We will also be calculating costs using mid-range efficiencies for the heating equipment with an energy need of 60,000,000 BTU per year of heating energy for the home.

Heating Costs of Gas & Electricity

Gas – $1.10/100,000 BTU

This equates to $735 per year for a furnace with a 90% efficiency rating. Most gas furnaces will achieve higher ratings than this but at a minimum they’ll be operating at 90% for a modern unit.

Electricity – $2.93/100,000 BTU

Electricity is going to give us a pretty blurry yearly heating cost of $703 – $1,875 per year. The reason for this is that the two main methods of electric heating – resistance heating and heat pumps – have huge differences in efficiencies. Electric resistance heating, the same technology in your blow dryer, has a relatively paltry efficiency rating of 100%. That might sound good but given the high unit cost of electricity and how it stacks up to the 150-300% efficiency ratings of heat pumps, it’s really not. Heat pumps are much more efficient and wallet-friendly because they don’t actually generate heat but rather move it from one place to another.

Hopefully this will give you a better idea of what to expect to pay per year for the three main heating methods. For more informative posts, follow the McClay A/C, Heating & Plumbing blog.