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Community and Q&A

HP vs Propane vs Oil vs Natural Gas

nynick | Posted in General Questions on

It’s decision time or close to it for my project. It’s comprised of a very old home to renovate with a new detached garage that will have an apartment above. Zone 5a, coastal CT.

I’ve been thinking ducted HPs all along despite my builder’s hesitation. Quite honestly the improper sizing frequently mentioned here along with the vagaries of mis-operation, lousy customer service from manufacturers and problems with performance have me trepidatious. It doesn’t help that it’s a total crap shoot trusting that your installer knows what they’re doing.

Add in the recent increases in kWh and delivery costs from my utility and I’m starting to wonder if HP’s are really the way to go. My last two bills totaled almost 47 cents per kWh, including both supply and delivery. This is up about 20 cents from a year ago.

Propane is about $3.25-$3.40, oil about the same, natural gas about $18. Natural gas is probably out because I’d have to pay so much to pipe it to my home ($22K). I’d love to get way from oil because of the mess, so that leaves HPs and tankless propane/hydronic/hot air.

I currently have a tankless propane furnace/hot air/hot water system in my other house that has a freestanding garage and apartment. It works great. Of course we have a separate A/C system that uses the same ducting for the apartment.

While I’d like to be environmentally responsible, at some point operating cost, reliability, ease of install and service have to enter into the equation. None of these fuel prices are going down. So how can I arrive at the best decision?

Maybe some kind of energy calculator would help, but it seems to me propane is giving electric HPs a run for their money at 46 cents per kWh.

Is there a tried and true way to evaluate these choices on a cost basis?

Thanks in advance.


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  1. paul_wiedefeld | | #1

    The energy costs part is easy, if inexact. Propane’s cost per MMBtu is $/gallon x 1,000,000/(91,500 x COP). Electric HP would be $/kwh x 1,000,000/ (3412 x COP). Oil is the same as propane except substitute 138,000 for the 91500.

    To be clear, it’s not apples to apples since a HP can do AC and a propane furnace/boiler cannot. So the marginal cost of the HP vs the AC only option is the only cost that matters. An easy solution is installing a HP sized for cooling and a propane/oil furnace for max heat loads.

    I disagree with the prices not coming down. They're down substantially over the last year.

  2. Expert Member
    Akos | | #2

    You can't make propane at home where as it is pretty simple to produce the electricity you need to run a heat pump.

    I would look at what the loan cost is on an array that will mostly cover the operating cost of the heat pump and compare from there. If you have a the land designing in ground mount PV or a simple shed with a large roof is a good way to get a fair bit of PV for minimal install cost.

    1. Expert Member
      DCcontrarian | | #4

      Yeah, $0.47/kWh electricity really makes solar look good. Especially if your utility offers net metering.

      I fully expect that in the long run net metering will become less generous, clearly the utilities couldn't function if all of their customers were on net metering, or even a substantial fraction. What seems like a fair arrangement would be that you still pay transmission fees and it's only generation fees that are netted out.

      1. Expert Member
        BILL WICHERS | | #8

        There are other issues with net metering too, but I pretty much agree with your idea for pricing. Net metered users would pay distribution costs at their normal rate for all power either consumed or sent back to the utility. Moving a kwh is moving a kwh after all. Utilities would buy back at their wholesale rate, which is substantially less than the residential rate. This is actually fair, because the residential production is variable, and not as useful or valuable to the utility as a result. Remember that so-called 'spinning reserve', or at least sufficient capacity of rapid start generation, has to be kept ready for nighttime, and if it's idle during the solar production period of the day, that means the cost of that generation has to be amortized over a smaller amount of operating time, which means that time it is operating is more expensive per unit of power produced.

        For the OP: keep in mind that the operating cost of a heat pump varies based on the COP, and that COP varies based on the outdoor ambient temperature. The colder your average outdoor temperatures, the more kwh it will take for the same amount of heating BTUs out. If you're in an area with milder winters, the heat pump will be cheaper to run for the same amount of heating compared to running the same heatpump in an area with colder winters.


  3. jwasilko | | #3 is a great calculator (just remember to hit the 'calculate' button after putting in costs).

    Propane is almost always the most expensive way to heat other than electric resistance. It's very very very expensive.

    1. nynick | | #5

      Using that calculator:
      Natural gas is the clear winner at $2156.
      A ductless HP is $3195 (.34 kWh)
      A ducted HP is $4244 (.34 kWh)
      Propane boiler is $4084 ($3.40)

      Propane doesn't seem to be that expensive when compared to expensive electricity, although solar could offset the cost of electricity. Still, that'd be another $26K after incentives.

      Nothing is easy.

      1. jwasilko | | #6

        For sure...we're lucky that we have unusually cheap electric for new england (around $0.125 all-in) vs natural gas at $2.15-2.25/therm.

        1. nynick | | #9

          If you're paying 12.5 cents including delivery in Maine, you're golden.

          Down here in coastal CT, we pay more than that just for the electricity. Supply almost doubles that cost.

          1. jwasilko | | #11

            We're actually in MA, and are served by a town-owned utility, and they work really hard to keep rates down.

            We've got solar (without 'true' net metering), so we use a time-of-use rate that really helps keep the average rate down. Our peak hours are only noon-7pm M-F (so 35 hours a week), which is usually when we're generating from solar if the weather is good.

        2. nynick | | #12

          You're lucky. I've got Eversource who just raised their electric rate and delivery rates Jan. 1.

  4. walta100 | | #7

    Help me understand your electricity is so expensive.

    Seems like political problem the government you have elected has chosen to over tax and over regulate and driven the prices to silly levels.

    Then the question becomes why do you chouse to stay and suffer such abuse?

    The last time I looked in MO the winter rate was as low as 0.059 Per kWh


    1. nynick | | #10

      I never envisioned a fuel choice question to bring up politics and then blame me somewhat for electing people who over regulate and over tax me. I mean...

      And to consider moving because of that? You should come take a look of where we live before suggesting a move.

      I'm just looking for the best fuel alternative for where we live, not the cheapest place in the country for electricity.

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