Propane vs Electric Heating: Cost Comparison with Heat Pumps (2026)
Electric resistance is more expensive than propane. Heat pumps are cheaper than propane. The type of electric heating matters enormously.
Source: EIA SHOPP residential propane survey. Current data is the final release of the 2025/26 heating season (week ending 30 March 2026). EIA pauses weekly publication April-September; next release expected October 2026. Refreshed 26 May 2026.
Three-Way Heating Cost Comparison (2026 Prices)
| System | Unit Price | Efficiency | Cost / 100k BTU | Annual Cost (75M BTU) | Install Cost |
|---|---|---|---|---|---|
| Propane Furnace (95% AFUE) | $2.67/gal | 95% AFUE | $3.08 | $2,310 | $3,000-$6,000 |
| Electric Resistance | $0.16/kWh | 100% | $4.69 | $3,518 | $2,000-$4,000 |
| Heat Pump (COP 2.5) | $0.16/kWh | 250% | $1.88 | $1,410 | $5,000-$14,000 |
| Heat Pump (COP 3.0) | $0.16/kWh | 300% | $1.56 | $1,170 | $5,000-$14,000 |
| Cold-Climate HP (COP 2.0 @ 0F) | $0.16/kWh | 200% avg | $2.35 | $1,763 | $6,000-$16,000 |
Annual cost based on 75 million BTU heating load (approximately 1,000 gallons of propane equivalent). Electric rate: $0.16/kWh (2026 US average). Install costs vary significantly by region, home size, and existing ductwork.
Why Heat Pumps Change the Comparison Entirely
Heat pumps do not generate heat from electricity - they move heat from outside air into your home. This is why they can deliver 250 to 400% efficiency (a COP of 2.5 to 4.0). A conventional electric resistance heater converts 1 unit of electrical energy to 1 unit of heat. A heat pump converts 1 unit of electrical energy to 2.5 to 4 units of heat by moving it from outdoors.
At COP 3.0 and $0.16/kWh electricity, a heat pump costs $1.56 per 100,000 BTU - less than half the cost of propane at $3.19. In mild and moderate climates, this efficiency is maintained year-round. The catch: heat pump efficiency drops as outdoor temperature falls, which is why cold-climate applications need more consideration.
| Outdoor Temp | Typical HP COP | Cost / 100k BTU | vs Propane ($3.19) |
|---|---|---|---|
| 50F (spring/fall) | 3.5-4.0 | $1.34-$1.56 | 57-65% cheaper |
| 35F (cool) | 2.5-3.0 | $1.56-$1.88 | 41-51% cheaper |
| 20F (cold) | 2.0-2.5 | $1.88-$2.35 | 26-41% cheaper |
| 5F (very cold) | 1.5-2.0 | $2.35-$3.13 | 2-27% cheaper |
| 0F (extreme cold) | 1.0-1.5 | $3.13-$4.69 | Similar or worse |
Recommendation by Climate Zone
Temperatures rarely below 20F. Heat pump maintains COP 2.5+ nearly all season. Saves 40-50% vs propane. Standard heat pump (no cold-climate specs needed).
Some winter days below 20F but infrequent. A quality cold-climate heat pump covers 90%+ of heating hours efficiently. Excellent ROI in 5-8 years.
Frequent temperatures below 0-15F. Best option: cold-climate heat pump (Mitsubishi Hyper-Heat, Bosch IDS) + propane backup. Heat pump covers 85% of hours; propane handles the coldest days.
Sustained sub-zero temperatures limit heat pump economics. Propane remains competitive. High-efficiency propane furnace (95%+ AFUE) with modest heat pump supplement where practical.
Water Heater Comparison: Propane vs Electric vs Heat Pump Water Heater
| Type | Annual Operating Cost | Recovery Time | Install Cost | Federal Tax Credit |
|---|---|---|---|---|
| Propane Tank (50 gal) | $556-$834 | Fast (20-30 min) | $900-$1,500 | None |
| Electric Resistance Tank | $480-$700 | Slow (45-60 min) | $400-$900 | None |
| Heat Pump Water Heater | $200-$350 | Moderate (60-90 min) | $1,000-$1,800 | Up to $600 (IRA) |
| Propane Tankless | $350-$550 | Instant | $1,200-$2,500 | None |