Three modes of electric heat
When people say 'electric heat,' they usually mean one of three very different technologies:
- Resistance heating — baseboard, wall heaters, electric furnaces. 100% efficient at converting electricity to heat. Most expensive operating cost.
- Air-source heat pumps — move heat from outdoor air. Coefficient of Performance (COP) typically 2.5–4 in mild weather, 1.5–2.5 in cold. 'Cold-climate' models now work down to -15°F.
- Ground-source (geothermal) heat pumps — move heat from earth. COP 3–5 year-round. High upfront cost but lowest operating cost.
Cost comparison
Typical US 2026 cost per million BTU delivered:
- Propane at $2.80/gallon, 95% AFUE furnace: ~$32
- Electric resistance at $0.15/kWh: ~$44
- Air-source heat pump at $0.15/kWh, COP 3: ~$15
- Ground-source heat pump at $0.15/kWh, COP 4: ~$11
Heat pumps are cheaper than propane in moderate climates. Resistance heating is the worst option almost everywhere.
Climate matters for heat pumps
Heat pump COP drops as temperature falls. Old models (pre-2015) lost effectiveness below ~30°F. Modern cold-climate heat pumps maintain COP 2+ down to -15°F but still need backup heat in very cold conditions. Propane works at any temperature without degradation.
IRA tax credits favor heat pumps
The Inflation Reduction Act provides substantial tax credits for heat pump installations: Section 25C (Energy Efficient Home Improvement Credit) covers 30% of cost up to $2,000/year for heat pumps; Section 25D (Residential Clean Energy Credit) covers 30% of geothermal cost with no annual cap. State and utility rebates often stack on top.
Hybrid (dual-fuel) systems
Many cold-climate US homeowners now install heat pump + propane backup dual-fuel systems. Heat pump handles 80–90% of annual heating at low operating cost; propane furnace kicks in below the heat pump's efficient range. This combination often beats both pure propane and pure electric on total annual cost in cold climates.
FAQ
Is electric heat cheaper than propane?
Resistance electric: no, propane is usually cheaper. Heat pump: often yes, especially in moderate climates with cheap electricity. Geothermal: yes on operating cost, but very high upfront.
Should I switch from propane to a heat pump?
Depends on climate, current propane cost and IRA eligibility. In moderate-cold climates with average electricity rates, a heat pump (with optional propane backup) usually beats pure propane on lifetime cost. Get a written quote from an HVAC contractor for your specific situation.