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
Finding the right heating system for your home shouldn't be a gamble. While electric furnaces often feature a lower upfront price tag, their long-term energy costs can quickly add up.
We'll break down the pros and cons of electric furnaces versus high-efficiency alternatives like heat pumps, helping you cut through the confusion to find the most comfortable and cost-effective solution for your home.
See how much you can save with a new HVAC system from Palmetto
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 runs electricity through electric resistance coils, or heating elements. It 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 one of the least efficient primary heating sources 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, there are cheaper or more efficient options.
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 an electric furnace. 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.
See how much you can save with a new HVAC system from Palmetto
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 an electric furnace or electric baseboard heaters 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 less service, maintenance, and repairs. |
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, an HVAC lease may work. A lease, such as the Palmetto Comfort Plan, gives you the comfort of an energy-efficient heat pump for no upfront 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.
Is my furnace gas or electric?
To find out what fuel your furnace uses, check its labels, or look for an exhaust vent or gas line. If your gas bill is much higher in the winter than the summer, that can tell you, too.
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.
