Furnace System GuideGas and electric furnaces differ on efficiency rating, install cost, and where each one makes sense. This guide compares them using dated figures from the Energy Information Administration, the AFUE reference, and named cost references. Claims are attributed to their source, and unknowns are left out.
How They Make Heat
A gas furnace burns natural gas or propane and moves the heat into the home's air, venting the combustion gases outside. An electric furnace passes air over electric resistance elements, with no combustion and no flue.
That difference shows up in the efficiency rating. The AFUE reference lists electric heating at 100 percent AFUE, because all of the electricity becomes heat, while standard gas furnaces are rated at 78 to 84 percent AFUE and condensing gas furnaces at 90 to 97 percent AFUE.
A 100 percent AFUE rating sounds like a clear win for electric, but it only describes how much of the purchased energy becomes heat. It says nothing about what that energy costs, which is where gas usually pulls ahead.
Install Cost
Electric furnaces are cheaper to install than gas because they are simpler and need no gas line, flue, or combustion venting.
Filterbuy lists electric furnaces at $2,000 to $7,000 and gas furnaces at $3,800 to $10,000, with high-efficiency gas models reaching as high as $12,000. Carrier lists a similar picture, with electric at $2,000 or more and gas at $3,800 to $12,000 including installation labor that starts at $1,600.
The lower install price is the main argument for electric. It is most compelling in mild climates where the furnace runs little, or where a home has no existing gas service and adding one would be expensive.
Operating Cost and Climate
The efficiency ratings can mislead on running cost, because what matters is the price of the energy each furnace consumes. In much of the United States gas is the dominant heating fuel for a reason.
The Energy Information Administration reports that natural gas and propane furnaces account for almost half of residential space heating, which is about 40 percent of the energy delivered to the residential sector. That market share reflects the low cost of gas heat per unit of heat delivered in most regions.
This is why the gas-versus-electric answer depends on climate. In cold climates that demand a lot of heat, the lower operating cost of gas usually outweighs its higher install price. In mild climates where the furnace runs little, the cheaper electric install can win because the operating-cost gap barely has time to add up.
Efficiency Standards Favor High-AFUE Gas
Federal policy is pushing gas furnaces toward the condensing designs that squeeze the most heat from the fuel. This matters when you compare a new gas furnace to electric.
The Department of Energy finalized a standard requiring residential gas furnaces to reach at least 95 percent annual fuel utilization efficiency starting in late 2028, and states this is achievable by modern condensing furnaces that use secondary heat exchangers to capture excess heat from the exhaust gases. The EIA notes that the historical minimum has been 78 AFUE since 1992, so the new floor is a large jump.
ENERGY STAR reports that certified gas furnaces are up to 18 percent more efficient than baseline models in the North, saving $160 a year, and up to 16 percent more efficient in the South, saving an average of $60 a year. A high-AFUE gas furnace narrows the efficiency gap with electric while keeping the lower fuel cost.