Propane vs Electricity: Cost Per BTU for Home Heating

The propane-vs-electricity comparison needs two adjustments. First, kWh-to-BTU conversion. Second, the heat-pump efficiency multiplier that makes electric heat- pumps competitive with combustion fuels. This page covers both.

The simple kWh-to-BTU conversion

One kilowatt-hour of electricity equals 3,412 BTU by definition. So at a typical US residential electricity rate of $0.16 per kWh (EIA national average, 2026), one million BTU of electric resistance heat costs $46.89. That is 1.6x the per-BTU cost of propane at the current EIA residential propane price. Electric resistance heat (baseboard heaters, electric furnaces, electric water heaters) is the most expensive form of residential heating per useful BTU. Almost any combustion fuel, including propane, is cheaper per BTU than electric resistance.

This is why electric resistance heating is rarely the primary heat source in cold-climate homes. It is the standard for hot-climate homes (where heating load is small enough that the higher per-BTU cost does not add up) and for backup or supplemental heating in cold-climate homes (where a heat pump handles the primary load and electric resistance provides backup for the coldest days).

The heat pump multiplier

Heat pumps change the comparison fundamentally. A heat pump does not generate heat from electricity; it moves heat from outdoor air (or ground, or water) to indoor air. The energy required to move heat is much less than the energy required to generate it. The ratio of heat delivered to electricity consumed is called the Coefficient of Performance (COP). A typical residential air-source heat pump operates at a COP between 2.5 and 3.5 in mild outdoor conditions, dropping toward 1.5 to 2.0 in very cold outdoor conditions. Ground-source heat pumps operate at COP 3.5 to 5.0 because the underground heat source is at a more stable temperature.

At a COP of 3.0 (a typical full-season average for a modern air-source heat pump in a moderate climate), one kWh of electricity delivers 3.0 × 3,412 = 10,236 BTU of useful heat. At $0.16 per kWh, that is roughly $15.63 per million BTU of delivered heat. That is competitive with propane and frequently below it. In milder climates and with higher-efficiency heat pumps, electric heating via heat pump can be cheaper per BTU than propane heating. In very cold climates with mid-tier heat pumps, propane often wins.

Climate zone matters more than fuel choice

The heat-pump-vs-propane comparison is dominated by climate. In a warm climate (Florida, southern Texas, California coastal), a heat pump operates near its peak COP year-round and electric heating costs are dramatically lower than propane per useful BTU. In a cold climate (Maine, Minnesota, Upper Michigan, Wisconsin), a heat pump's COP drops sharply during the coldest weeks (modern cold-climate heat pumps maintain COP above 2.0 down to 0F, but performance degrades). For very cold conditions, propane heating becomes increasingly competitive or cheaper per useful BTU.

A common cold-climate setup pairs a high-efficiency heat pump with a propane backup furnace. The heat pump handles the bulk of the heating load through autumn, spring, and the milder weeks of winter; the propane furnace takes over below an outdoor temperature threshold (typically 15F to 25F depending on the heat pump COP curve and local utility rates). The dual-fuel setup captures the per-BTU efficiency of the heat pump in mild conditions and the per-BTU cost discipline of propane in cold conditions.

Time-of-use pricing complicates electric

Increasing numbers of US utilities offer time-of-use electricity rates with substantial differences between on-peak and off-peak periods. On-peak rates (typically weekday afternoons and early evenings) can reach $0.30 to $0.45 per kWh in some markets; off-peak rates (nights and weekends) can drop to $0.08 to $0.12. For an electric-heated home, the time-of-use exposure matters: electric resistance heating during a winter on-peak window can cost two to three times the off-peak equivalent.

Heat pump installations with thermal storage (water tanks for hydronic systems, or oversized building thermal mass) can shift heating consumption to off-peak hours, reducing the effective electric cost. Propane heating is unaffected by time-of-use pricing (the propane delivery cost is independent of the time it is burned). This is one of the structural advantages of combustion-fuel heating in a time-of-use electricity market.

The total-cost view

Per-BTU cost is one dimension. Total cost of ownership includes equipment cost, installation cost, maintenance, and equipment life. Heat pumps cost $5,000 to $18,000 installed depending on size and ducting requirements. Propane furnaces cost $3,500 to $8,000 installed. A dual-fuel system (heat pump plus propane backup) costs $9,000 to $20,000 installed. Equipment life runs 15 to 20 years for either technology with appropriate maintenance.

For a household making a new-install decision, the federal and state incentives for heat pump installation (Inflation Reduction Act tax credits where applicable, state and utility rebates) often tip the equipment-cost comparison toward heat pumps. The per-BTU operating cost comparison then depends on climate zone and local electricity rates. In moderate climates with average electricity rates, heat pumps typically win on total cost of ownership over a 15-year horizon. In very cold climates with high electricity rates, propane (or dual-fuel) often wins.

Per-month cost comparison

For the same 1,800 square foot home in a cool climate (zone 5) consuming roughly 900 gallons of propane per year:

• On propane: 900 gallons × $2.674 = approximately $2407 per year.
• On electric resistance: 900 × 91,452 / 3,412 = ~24,127 kWh per year × $0.16 = approximately $3860 per year.
• On heat pump (COP 3.0 average): 24,127 / 3.0 = ~8,042 kWh per year × $0.16 = approximately $1287 per year.

The heat pump at the typical COP delivers a meaningful annual operating cost saving versus propane in this example. Electric resistance heating is dramatically more expensive than either. Real-world results vary with climate, electricity rates, heat pump efficiency, and building envelope.

Related

• Propane vs natural gas: price per BTU
• Propane vs heating oil: price per BTU
• Residential heating propane price per gallon
• Winter propane price per gallon
• HD-5 propane specification

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