Electric Furnace Pros and Cons: Cost, Efficiency, and More
Last edited
Author
Andrew Blok
Electrification and Solar Writer and Editor
Editor
Andrew Giermak
Solar and Electrification Writer and Editor
Choosing a new home heating system can feel overwhelming, especially when you're balancing upfront costs with long-term energy savings and, most importantly, performance. After all, what good is a heating system that doesn’t keep your home warm?
While electric furnaces often come with a lower initial price tag, they might cost you more in the long run compared to more efficient alternatives like heat pumps. In this guide, we’ll break down the pros and cons of electric furnaces to help you decide which system is the smartest investment for your home and budget.
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What’s an electric furnace?
An electric furnace is a heating system that uses electricity to generate heat. Unlike a gas or oil furnace that burns fuel, an electric furnace electricity through electric resistance coils or heating elements. A blower then blows air over the heating element and this heated air moves through your home's ductwork and vents.
A heat pump also uses electricity, but instead of generating heat, it moves heat in from the outdoors or out of your home’s interior to provide heating or cooling in a two-in-one system.
Some people choose electric furnaces because they typically have a lower initial purchase and installation cost compared to gas furnaces or heat pumps. However, they are generally the least efficient primary heating source for many homes and climates because they consume a large amount of electricity to create heat.
Comparing efficiency and cost
Electric furnaces are essentially 100% efficient, which means all of the electricity which goes into the furnace is converted into heat. While that sounds efficient, in cost efficiency, there are reasons why a heat pump usually has a lower operating cost.
Thanks to differences in fuel costs, a gas furnace may cost less to run than an electric one.
A standard air-source heat pump can be two and a half to four times more efficient than and electric furnace, which results in a lower operating cost. Ductless or mini-split heat pumps are often even more efficient, as are geothermal heat pumps which can be five times more efficient than an electric furnace.
An electric furnace may be a fit for your home, region, and climate if you rarely use it. An electric furnace’s cost and inefficiency will probably not be a fit anywhere with long and/or harsh heating seasons and anywhere with higher electric rates.
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Heat pumps vs. electric furnaces
Moving heat in or out of a building is more efficient than generating the heat from a fuel source. Energy-efficient air source heat pumps can put out three or four times the heat energy than the electrical energy it consumes.
Modern ducted air-source heat pumps can reduce electricity use by about 75% compared to heating with a furnace or baseboard heating according to the US Department of Energy. Heating and cooling expenses make up about 52% of a home’s energy expenses, according to the US Energy Information Administration.
A heat pump heats in the winter and cools in the summer. That means you only have one system to maintain and instead of two.
Electric furnace vs. heat pump
| Feature | Difference |
|---|---|
| Energy efficiency | Heat pumps are 3-5 times more energy efficient than gas or electric furnaces. |
| Savings | A less efficient furnace uses more electricity and costs more to run. |
| Single purpose | Having one system for heating and cooling means easier, and less expensive, service, maintenance, and repairs for years. |
How to save money and energy on heating and cooling
If the benefits of home heating and cooling with a new heat pump sound right, but the upfront cost doesn’t, a heat pump lease may work. A lease, such as the Palmetto Comfort Plan, gives you the comfort of an energy-efficient heat pump for no purchase or installation cost and predictable monthly payments.
Installing a smart thermostat, using ceiling fans smartly, inspecting your home’s insulation, and using your windows and window coverings as efficiently as possibly could also cut your energy consumption. You can also download and start your free account on the new Palmetto app to explore your home energy usage and energy-saving tips, big and small. Or, get a free quote for a new HVAC system with Palmetto’s Savings Maximizer or HVAC advisor tool.
See how much you can save with a new HVAC system from Palmetto
Frequently asked questions
Why is an electric furnace’s operating cost high if it's 100% efficient?
An electric furnace cost may initially be lower, but its operating cost is higher than a heat pump. Since heat pumps are about three to five times more efficient than electric furnaces, they cost less to run.
When or where does an electric furnace make more sense?
An electric furnace could be a good option for home heating in some circumstances. Main examples include living in a climate where you rarely need heating in the winter or using the furnace primarily as a supplemental or emergency heat source.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
