Natural Gas Furnace vs Electric Heat Pump: Which Costs Less?

Natural gas is dirt cheap in Canada. When I first began looking at the potential cost of switching to all electric for my heating, hot water, and stove, I found calculators only on US and UK sites and was shocked at their high natural gas and hydro rates. Everyone in Canada whines about gasoline prices, but we’re sitting pretty when it comes to heating and air conditioning our homes.

Nevertheless, as I wrote earlier, my natural gas furnace was dying, and I needed to make a decision that would remain the best choice a decade from now. Accelerating climate change — and neighbours’ advice plus government grants and zero interest loans — pushed me to switching to a hydro-powered air-to-water heat pump, electric hot water tank, and induction stove.

I’ve now had my gas disconnected and had solar power and air-to-water heat pump for a year; I’ve had my electric hot water tank and induction stove for a little more than a year. And I’ve had my air-to-air heat pump for air conditioning and basement heating for a few months. Time to compare natural gas to heat pump heating. Which consumes more power? Which costs more?

A Few Notes

1. My gas bills were on the equal billing month plan. My gas bill was estimated in some months; its monthly billing start date was in the last week of the month, and it ended at some random time. My hydro bills ran from about the first or second week of the month to the following first or second week. Neither were always an even 30/31 days.
2. My natural gas was disconnected in summer 2022. My home consumed no gas from then on, but the heat pump wasn’t installed until the end of September.
3. I’d stopped using my gas stove in early 2022 and hadn’t used my oven for months and months before that because it was old, dying, and emitting too much carbon dioxide and whatever else came out that made me feel not so great.
4. My solar power was limited to 1 kW during the first month because of the delay in Toronto Hydro switching to a bidirectional meter. A squirrel also cost me many days of power generation.
5. My hot water tank waterfalled in August, and I’ve only now been able to replace it with an undamaged energy efficient electric hot water tank that’s the 40-gallon size I’d wanted all along. (We’d switched to a 40-gallon natural gas one decades ago, but the 2022 installer for some reason gave me a 60-gallon electric one.)
6. I spent months in discussions with Toronto Hydro trying to understand my new bills under their business PowerLens site and to resolve billing issues after the bidirectional meter was installed.
7. The second heat pump replaced the window air conditioner that I’d used only when I absolutely had to because its power consumption and noise was a bit beyond my tolerance. The second heat pump being so quiet, far more efficient, and superior in cooling my home meant I used it more. As Autumn sets in, I’m using it for basement heating. It’s replaced the waste heat from the natural gas furnace that had helped keep the basement from freezing.

And So…

Given all the above, at best, this comparison is an approximation.

Since my first full year of heat pump and solar power runs from 1 October 2022 to 30 September 2023, I needed to calculate my consumption and costs for that range in previous year(s).

Natural Gas

In Canada, natural gas is measured in cubic metres. Enbridge serves Toronto, and its meter readers don’t read gas consumption monthly.

I’d tracked my costs through how much my monthly equal billing was, not so much by consumption. And so I hadn’t noticed that though Enbridge compares your consumption for the current month versus the same month the previous year, it isn’t really all that clear with their bills covering anywhere from one month to three and some bills being estimates. I basically lowered my thermostat when Enbridge would adjust my equal billing upwards so that my bills didn’t change too much year to year.

In order to compare my natural gas consumption to all electric, I had to convert cubic metres of gas to kWh. I found UK sites that do this automatically as well as a formula on Google. I did both and found the numbers vary, probably because of they use different calorific factors.

Covert Cubic Metres Natural Gas to kWh

1. Take the volume of gas used in cubic metres, either monthly or annually.
2. Multiply by the volume correction factor of 1.02264.
3. Multiply by the calorific factor. According to Utilities Savings UK website, this factor can vary from 37.5 to 43.0. Their site used 39.3. Other sites used 40. I compared both as I don’t know what it is in Ontario.
4. Divide by kWh conversion factor of 3.6.

My approximate gas consumption for October 1st to September 30th in two previous years was 2400 cubic metres or 27,000 kWh. I used the lower calculation of 26,815 kWh for my comparison.

Hydro

Prior to installing my air-to-water heat pump, I’d used as little electricity as possible.

We began conserving energy back in the 20th century when governments had called for energy conservation and debt had forced the issue. I’m used to turning off computer(s), not turning on lights or using AC unless absolutely have to for health’ sake. As a result, my solar installer when comparing pre- and post-solar installation had to base their quote on a tiny hydro bill transitioning to a much, much larger one. The post-natural gas disconnect means eliminating one bill. Yet seeing another bill inflate by hundreds of a percent still feels like you’re spending a heck of a lot more, especially when you soar past that 1,000 kWh rate threshold.

Toronto Hydro’s tiered plan of the number of kWh used per day has a winter threshold of just under 1,000 kWh/month. It’s 600 kWh in the summer. Only the tiered plan of the number of kWh used per day, not the time-of-use rates, encourages prudent use of electricity. The Ontario Energy Board sets the rates for Ontarians on the Regulated Price Plan.

The solar installer estimated my annual hydro consumption to be just under 8,000 kWh. My Energy Advisor calculated consumption in GJ/year for both natural gas and hydro. To be honest, I sort of understood it. Maybe now that I’ve lived with it and spent some time reviewing my consumption data, I kind of understand it better. But at the end of the day, what matters is money out the door, net solar credits on my Toronto Hydro bills, and comfort.

Comparing Enbridge Natural Gas to Toronto Hydro

To compare, I went from October 1st to September 30th. Combining natural gas and hydro, my total costs for 2020/2021 and 2021/2022 varied from $1,200 to $1,320. Most of that was for the price of natural gas, which, remember in Ontario, is dirt cheap, as are hydro rates.

My total consumption for 1 October 2021 to 30 September 2022 was 30,560 kWh, combining natural gas and hydro.

My hydro consumption plus solar generation minus net solar credits to Toronto Hydro for 1 October 2022 to 30 September 2023 was 11,100 kWh. Because of the froohfahfah with Toronto Hydro, I can only approximate the cost, somewhere between $550 to $850.

Can I Stop Conserving Energy?

Since the 20th century, I’ve believed that the best hydro rates are ones that promote conservation. Time-of-use and the Ultra-Low Overnight rates are about the power grid, not about conservation. Tiered rates entice conservation, for the more power you use, the costlier it becomes.

But what happens when you install solar panels under a net metering system? And, in addition, you have energy efficient heating, air conditioning, and hot water? Do you need to conserve anymore? Or with the use of smart breakers, smart thermostats, and apps that track usage and create schedules, does energy conservation become smarter and not sacrificial?

For example, one afternoon, I saw my hot water tank had used 2.4 kWh, but Toronto Hydro had recorded 1.4 kWh consumption, meaning my solar panels had provided 1.0 kWh for free. Multiply that over the year, and it adds up. My solar system has provided close to 5 MWh of energy in its first year.

At the lower tiered rate of approximately 9 cents, I saved myself about $445 and saved the grid 4,950 kWh.

I Can!

I think I can afford to stop actively conserving energy. Meaning, I can set my thermostat to comfortable levels. I can turn the lights on when I need them on. I can cook and bake easier and quicker. I can use kitchen appliances when I’d like to, not only when absolutely necessary. Hot water laundry is now doable!

That’s what Climate Action should be about! Making one’s home more comfortable and less expensive to run. Making life better.

My passive conservation remains in place: LED light bulbs, Energy Star appliances, upgraded infrastructure that retains heat in winter and cool in summer. These have been a decades-long process to put in place and wouldn’t have been possible without a combination of budgeting; government grants, programs, and zero-percent loans; and Enbridge-supplied programs. A few windows here, a new door there, free insulation from Enbridge for low income, LED bulbs from SaveOnEnergy, etc. etc. I think it’s almost completed. Fingers crossed!

Low-Income Note

For low-income or fixed-income homeowners to fully realize Climate Action, they need to take advantage of all that Enbridge offers first. And only after they’ve maxed those out, then replace their natural gas furnace with an air-to-water or air-to-air heat pump. And, in addition, supplement with either purchased or rented solar panels.

The last piece for me is battery backup. But with neither the budget nor the neuroenergy to pursue it, I’ve given up on solving that problem. For now.