Understanding home energy costs
Last month I had a question from my dad: “What's the best heating option for a new home? If you had a choice between natural gas, propane, electric wall heaters or in-floor heating, what would be your choice?”
This seems simple enough, but this is something many homeowners need to think about more. The main thing to understand is the difference between an energy source and a heat distribution system. Energy sources are propane, natural gas, electricity, wood, coal, solar, wind, etc. Heat distribution systems, by contrast, are wall heaters, in-floor heating, forced air ducts, hot water radiators, to name a few. Heat distribution systems just move the heat around your house, but energy sources actually provide that heat. There's not much difference in the cost of running different heat distribution systems, but there is a big difference in the cost of energy sources needed to feed those systems.
One of the biggest hidden sources of cost difference in heating a home is insulation levels, not just the energy source, though energy sources are still very much worth thinking about, too.
Here in Canada, if natural gas is available, it's almost always much, much cheaper than most anything else. With serious inflation showing signs of flaring up, anything could happen, but all else being equal, natural gas is one excellent way to go, now and in the long run. Electricity has a reputation for being expensive for heating (which it is), but most people don't realize how expensive propane can be, too. Direct comparison is difficult, so I have a spreadsheet that calculates the cost of one million BTUs of heat from all different sources at different prices. For many years, natural gas has been roughly 90 per cent less (yes 90 per cent less) than electricity for a given amount of heat when that electricity is run through a typical resistance heater. I see all kinds of people installing propane heating systems and water heaters figuring the economics are similar to natural gas. They're not. Assuming a 14 cent per kilowatt hour total cost for electricity, any price above 95 cents per litre for propane is actually more expensive than electricity. I've seen people charged as much as $1.48 a litre for propane delivered to their home, not realizing how insanely expensive this is.
One thing to consider that hardly anyone ever does is disaster resilience. If you have an extended power failure during winter (some areas of the country had no power for three weeks after the ice storm of 1998) and you have electric heat, you're out of luck because you'd need a massive generator to provide all that electric power. But if you have propane, oil, wood or any other energy source that was actually stored on your property, even a small, portable generator would be enough to run the controls for heating your home. With propane, you've got the energy on your property. With it's tough, underground delivery system, natural gas functions quite a bit like it's stored on your property even though it's not. With electricity you have no energy on your property and you're completely dependent on the vulnerable grid to deliver it.
One of the very cheapest options for heating is an electrically-operated heat pump. Even the cheaper-to-install air-source heat pumps deliver two times more heat energy than they consume in electricity. They provide cooling in the summer, too. You still have the problem of needing a big backup generator to power a heat pump like this during an extended failure, but electricity run through a heat pump is much cheaper than anything else except natural gas at typical prices.
It's not simple figuring out what the best source of heat is for your home, but the exercise is certainly worth it. That and installing lots of insulation.
Steve Maxwell is always looking for the most economical way to do anything. Visit him online at BaileyLineRoad.com for made-in-Canada information on home improvements, power tools and hands-on living.