Gas Furnace vs. Electric Heat: Which is Cheaper in NJ? [2025 Cost Analysis]
Choosing between gas and electric heat is one of the biggest decisions facing New Jersey homeowners. With natural gas rates jumping 15.8% this winter and modern heat pump technology advancing rapidly, the traditional wisdom about which heating system costs less has completely changed.
In this comprehensive 2025 cost analysis, we'll break down the real numbers for Union County homeowners. You'll learn exactly what each system costs to run, install, and maintain over 10 years. We'll use current 2025 New Jersey energy rates and provide examples for a typical 2,000 square foot home.
By the end of this guide, you'll know which heating system makes the most financial sense for your specific situation. No guesswork, no sales pressure, just the facts you need to make an informed decision before winter arrives.
Current NJ Energy Rates (2025)
Natural Gas Rates
Natural gas prices have increased significantly for New Jersey homeowners this heating season:
- Trend: NJ gas rates have increased significantly in recent years
- Increase from 2024: 15.8% higher
- Price stability: Variable, fluctuates with market conditions
Gas rates vary by utility company (New Jersey Natural Gas, PSE&G, Elizabethtown Gas) and change seasonally. Contact your utility provider for current rates, or call Dimatic Control for help understanding your energy costs.
Electric Rates
Electricity rates in New Jersey remain relatively stable compared to natural gas:
- Price stability: More stable than gas rates year over year
- Time-of-use options: Peak/off-peak pricing available from most utilities
- Check your bill: Your kWh rate is listed on your PSE&G or JCP&L statement
Understanding Energy Conversion
To compare costs fairly, you need to understand energy equivalency:
- 1 therm of natural gas = 100,000 BTU of energy = 29.3 kWh of electricity (energy content)
- BUT efficiency matters: The system efficiency determines how much of that energy actually heats your home
Heating Cost Calculator: Real Numbers for Union County
Let's calculate actual heating costs for a typical Union County home using current 2025 rates:
Example Home Specifications
- 2,000 square feet
- Located in Union County, NJ
- Average insulation (typical for 1980s-2000s construction)
- Moderate winter climate
- 7-month heating season (October through April)
- 50 million BTU heating requirement per season
Gas Furnace Operating Costs
Gas furnace efficiency is measured by AFUE (Annual Fuel Utilization Efficiency). Here's what different efficiency levels cost to operate:
High-Efficiency Gas Furnace (95% AFUE)
This is the sweet spot for new gas furnace installations - balancing efficiency with reasonable upfront cost.
- Fuel needed: 526 therms per season
- (50 million BTU ÷ 0.95 efficiency ÷ 100,000 BTU per therm)
- Lowest operating cost
- Baseline for comparison below
Mid-Efficiency Gas Furnace (80% AFUE)
Many homes built before 2010 have furnaces in this efficiency range.
- Fuel needed: 625 therms per season
- ~19% more expensive
- vs. High-Efficiency: Uses ~19% more fuel per season
Electric Heat Operating Costs
Electric Resistance Heating (100% efficient)
Baseboard heaters, wall heaters, and space heaters. Very inefficient for primary home heating.
- Energy needed: 14,663 kWh per season
- (50 million BTU ÷ 3,412 BTU per kWh)
- ~3.4x more expensive than high-efficiency gas
- vs. High-Eff Gas: Costs roughly 241% more per season
NOT RECOMMENDED for primary home heating due to very high operating costs.
Air Source Heat Pump (300% efficiency / COP 3.0)
Modern heat pumps are 3x more efficient than electric resistance heating. They move heat rather than generate it.
- Energy needed: 4,888 kWh per season
- (14,663 kWh ÷ 3.0 COP efficiency multiplier)
- Close to gas — only ~14% more per season
- vs. High-Eff Gas: Slightly higher operating cost, but includes cooling
BONUS: Also provides air conditioning in summer. Real COP varies by temperature but 3.0 is conservative average for NJ climate.
Cost Comparison Table
| System Type | Efficiency | Relative Cost | Includes Cooling |
|---|---|---|---|
| High-Eff Gas | 95% AFUE | LOWEST | No (separate AC needed) |
| Mid-Eff Gas | 80% AFUE | +19% | No (separate AC needed) |
| Heat Pump | 300% COP | +14% | Yes (heats + cools) |
| Electric Resistance | 100% | +241% | No (separate AC needed) |
Winner for Operating Costs:
High-efficiency gas furnace has the lowest heating-only operating cost. Heat pump comes in a close second (just ~14% more per season), while electric resistance should be avoided as it costs over 3x more. Call (908) 249-9701 for a cost analysis specific to your home.
But Wait - Consider These Factors
Operating cost is only part of the story. Smart homeowners also consider installation costs, maintenance, cooling needs, environmental impact, and total cost of ownership. Let's examine each factor.
1. Installation Costs
Gas Furnace
- Upfront cost: Moderate
- Gas line required: Additional cost if not present
Most affordable upfront if gas line already exists. Call for a free estimate.
Electric Resistance
- Upfront cost: Lowest
- No gas line needed
Cheapest upfront but very expensive to operate. Not recommended for primary heating.
Heat Pump
- Upfront cost: Higher (before rebates)
- Rebates: Significant federal + NJ incentives available
- Net cost after rebates is competitive with gas furnace + AC
Includes both heating AND cooling (2-in-1). Call for pricing details.
2. Cooling Costs
Most New Jersey homes need both heating AND cooling. This changes the math significantly:
- Gas furnace: Requires separate AC system (significant additional cost)
- Electric resistance: Requires separate AC system (significant additional cost)
- Heat pump: Provides both heating and cooling in one system (no additional cost)
When you account for cooling needs, heat pump total installation cost becomes competitive with or even cheaper than gas furnace + AC combination.
3. Environmental Impact
- Gas furnace: Burns fossil fuel directly, produces CO2 emissions. Most carbon-intensive option.
- Electric systems: Emissions depend on power source. NJ electrical grid is approximately 50% natural gas, 40% nuclear, 10% renewables. Cleaner than burning gas directly in your home.
- Heat pump: Most efficient option, uses 66% less energy than electric resistance. As electrical grid becomes greener, heat pumps automatically become cleaner without any upgrades needed.
4. Maintenance Requirements
| System | Annual Service | Complexity |
|---|---|---|
| Gas Furnace | Annual tune-up recommended | More components, combustion system |
| Electric Resistance | Minimal | Very simple, few moving parts |
| Heat Pump | Twice-yearly service recommended | Refrigeration system, both seasons |
5. Lifespan Expectations
- Gas furnace: 15-20 years with proper maintenance
- Electric resistance: 20-30 years (simple design, fewer failures)
- Heat pump: 15-20 years with proper maintenance
All three options have similar lifespans when properly maintained, so lifespan isn't a major differentiator.
6. Safety Considerations
- Gas furnace: Requires carbon monoxide detectors, annual safety inspections, proper venting. Small risk of gas leaks or CO exposure if not maintained. Very safe when properly maintained.
- Electric systems (resistance and heat pump): No combustion means no carbon monoxide risk, no gas leak potential, no flame. Inherently safer design.
Total Cost of Ownership: 10-Year Analysis
Now let's look at the complete financial picture over 10 years for a typical Union County home that needs both heating and cooling:
Gas Furnace + Separate AC
- Installation: Moderate (requires two separate units)
- Heating costs: Lowest annual heating cost of the three options
- Cooling costs: Separate AC adds to operating costs
- Maintenance: Two systems to maintain annually
- 10-Year Total: Middle of the three options
Heat Pump System
- Installation: Higher upfront (before rebates)
- Rebates: Substantial federal + NJ incentives available
- Net installation: Significantly reduced after rebates
- Heating + Cooling: One system handles both — no separate AC needed
- Maintenance: Single system to maintain
- 10-Year Total: Lowest of the three options
SAVES significantly over 10 years compared to gas furnace + AC
Electric Resistance + AC (Not Recommended)
- Installation: Lowest upfront cost
- Heating costs: By far the highest — 3x more than gas furnace
- Cooling costs: Same as gas furnace + AC setup
- Maintenance: Minimal (no combustion parts)
- 10-Year Total: Highest by a wide margin
Costs more than double the heat pump over 10 years. Avoid for primary heating.
Winner for Total Cost of Ownership:
Heat pump offers the lowest 10-year total cost thanks to its 2-in-1 capability and substantial rebates. While gas furnaces have slightly lower annual heating costs, the heat pump eliminates the need for a separate AC and qualifies for significantly more rebates, making it the best financial choice over the long term. Call (908) 249-9701 for a personalized cost comparison.
When to Choose a Gas Furnace
Despite heat pumps having lower total costs, gas furnaces remain an excellent choice in certain situations:
Choose Gas Furnace If:
- ✅ You already have a gas line to your home (no expensive connection needed)
- ✅ Very cold climate - though modern heat pumps work well in NJ, gas furnaces work at any temperature
- ✅ Low upfront budget - gas furnace alone has a lower upfront cost than heat pump systems
- ✅ Already have working AC you don't need to replace (no need for 2-in-1 system)
- ✅ Comfortable with combustion heating and annual safety inspections
- ✅ Want fastest heating - gas furnaces heat air faster than heat pumps
- ✅ Prefer lowest operating costs - slightly lower annual heating costs than heat pump
Best for: Traditional homeowners, existing gas infrastructure, limited upfront budget
When to Choose a Heat Pump
Choose Heat Pump If:
- ✅ Need both heating AND cooling - one system does both jobs
- ✅ No gas line to home - avoid costly gas line connection
- ✅ Want lowest total cost - saves significantly over 10 years vs gas + AC
- ✅ Prioritize environmental impact - most efficient option, gets cleaner as grid improves
- ✅ Safety conscious - no combustion, no CO risk
- ✅ Long-term thinker - planning to stay 10+ years to maximize ROI
- ✅ Want to maximize rebates - generous federal and NJ incentives available
- ✅ All-electric home or want to eliminate gas service entirely
Modern heat pumps work efficiently to -15°F, well beyond Union County's typical winter lows of 10-25°F
Best for: New construction, all-electric homes, environmentally conscious, long-term investors, anyone replacing both heating and cooling
When to Choose Electric Resistance
Choose Electric Resistance Only If:
- ✅ Supplemental heat only - not primary home heating
- ✅ Small spaces - garage, workshop, bathroom, enclosed porch
- ✅ Rarely used areas - seasonal use, occasional heating
- ✅ Very low upfront budget - lowest installation cost of all options
⚠️ DO NOT choose for primary home heating
Operating costs are 241% higher than gas furnace and 200% higher than heat pump. The low upfront cost is quickly erased by massive energy bills.
NJ Rebates and Incentives (2025)
New Jersey and federal programs offer substantial rebates that significantly reduce heat pump costs:
Heat Pump Rebates
- Federal Tax Credit: 30% of installation cost (subject to maximum limits)
- NJ Clean Energy Program: Rebates vary by efficiency rating
- PSE&G Customers: Additional instant rebates available
- Income-Qualified Programs: Up to 100% coverage for eligible households
- Total Available: Substantial combined savings from multiple programs
Why Rebates Matter:
When you combine federal tax credits and NJ Clean Energy rebates, the net cost of a heat pump can drop below the cost of a gas furnace + separate AC combination — while providing both heating and cooling in one system. Call (908) 249-9701 for a free estimate that includes all available rebates.
Gas Furnace Rebates
- High-efficiency models (95%+ AFUE): NJ utility rebates available
- Federal tax credit: Available for 97%+ AFUE units
- Total available: More modest than heat pump rebates, but still helpful
How to Apply for Rebates
- Work with qualified contractor (Dimatic Control is pre-qualified)
- Apply BEFORE installation in most cases (some programs allow post-installation)
- Keep all receipts and documentation
- Submit federal tax credit when filing annual taxes
- Receive NJ rebate within 4-8 weeks of application approval
Dimatic Control Handles Your Rebate Paperwork
We're experienced with all NJ energy rebate programs and will handle the entire application process for you. We'll ensure you receive every dollar you're entitled to and that paperwork is submitted correctly the first time.
Learn About Our Heating ServicesUnion County Climate Considerations
New Jersey's climate is well-suited for both gas furnaces and heat pumps. Here's what you need to know about how each performs in Union County:
Union County Winter Temperatures
- Average winter low: 25-30°F (December-February)
- Extreme cold snaps: 5-10°F (occurs just a few days per year)
- Heating season: October through April (7 months)
- Typical daily lows: Above 20°F for 90% of winter
Heat Pump Performance in NJ Climate
Modern cold-climate heat pumps are rated to operate efficiently down to -15°F. Since Union County rarely drops below 10°F even during extreme cold snaps, heat pumps work excellently in our climate.
- ✅ At 30°F: Heat pumps operate at 100% efficiency (COP 3.0+)
- ✅ At 20°F: Heat pumps maintain 90-95% efficiency
- ✅ At 10°F: Heat pumps maintain 80-85% efficiency
- ✅ At 0°F and below: Efficiency drops but system continues heating
- ✅ Backup heat: Most systems include electric resistance backup for extreme cold
Bottom line: Heat pumps work great in Union County's climate 99% of the time.
Gas Furnace Performance
- ✅ Consistent heating regardless of outdoor temperature
- ✅ Heats quickly during sudden cold snaps
- ✅ Proven technology with decades of reliability in NJ homes
- ✅ No performance degradation at extreme low temperatures
Recommendation for Union County Homeowners
- Heat pump: Excellent choice. Works efficiently throughout NJ winter, lowest total cost, includes cooling, substantial rebates available.
- Gas furnace: Also excellent choice. Proven reliable, lowest operating costs, works at any temperature, good if you have existing gas service.
- Electric resistance: Avoid for primary heating. Operating costs are prohibitively expensive for whole-home use.
Both heat pumps and gas furnaces are excellent choices for Union County homes. Your specific situation determines which is best for you.
Making Your Decision: Quick Decision Tree
Use this simple decision tree to determine the best heating system for your home:
1. Do you have a gas line to your home?
- YES → Gas furnace is easiest and lowest-cost option for heating only
- NO → Heat pump is better choice (avoid costly gas line installation)
2. Do you need cooling too?
- YES → Heat pump provides best value (2-in-1 system)
- NO → Gas furnace for heating only (if you rarely need AC)
3. Is upfront budget tight?
- YES → Gas furnace has lower initial cost
- NO → Heat pump offers better long-term value (especially with rebates)
4. Are you environmentally conscious?
- YES → Heat pump is most efficient and cleanest option
- NEUTRAL → Either gas or heat pump works well
5. Planning to stay in home 10+ years?
- YES → Heat pump offers best ROI over long term
- NO → Either option works; consider resale value in your area
Both gas furnaces and heat pumps are excellent choices for Union County homes. The decision comes down to your specific situation: existing infrastructure, budget, cooling needs, environmental priorities, and timeline.
Get Expert Advice for Your Specific Home
Every home is different. While this guide provides general cost comparisons, your actual costs will depend on:
- Your home's size, insulation, and construction quality
- Your specific comfort preferences and temperature settings
- Your current heating and cooling equipment condition
- Your available utility services (gas line, electrical capacity)
- Your budget for upfront investment vs long-term savings
- Available rebates and incentives you qualify for
At Dimatic Control, we provide free consultations where we assess your specific situation and provide customized recommendations. We'll calculate your projected costs for each option, help you understand available rebates, and present all choices without pressure.
Schedule Your Free Heating System Consultation
Let's discuss your specific situation and find the most cost-effective heating solution for your Union County home.
Serving all of Union County, NJ | Licensed & Insured | 30+ Years Experience