Lower Your Heating Bills – Comparing the Cost of Heat Sources

With today’s constantly fluctuating costs for energy, it is more difficult than ever to determine the best way to heat your home or shop. Being able to compare the costs of different sources of heat can be very helpful in lowering the high prices of dispelling the discomfort of a frigid Winter. To that end, this tutorial will help you understand how to evaluate energy sources and convert their prices into a standard unit for comparison.

Understanding Heat Energy

As with most measurements, there are two different units used for quantifying the amount of heat: BTU and kilocalories. I prefer to work in BTUs, so that is the unit I will use for this discussion. The term BTUs stands for British Thermal Units. It is a very handy unit to use for heating calculations. It is defined as the amount of heat needed to raise one pound of water one degree Fahrenheit. To use a very simple example, if you want to boil a gallon of 72 degree tap water, you would need: 8 (pounds) \times (212-72) (^{\circ}F) = 1120 BTUs of heat.

Another useful unit for representing energy (not just heat) is the kilowatt-hour. A watt is a unit of power, and watt-hour is a unit of energy. To illustrate the difference, power is what you need to push your car up a hill, and energy is how tired you are afterwards. Energy is then the total amount of work you performed, and power is how hard the work is at the moment you are doing it. When using BTUs, BTU is a unit of energy (work), and BTU/hour is a unit of power, which you can also think of as the speed at which heat (energy) is leaving your house. For every BTU of energy that leaves your house, you must replace it if you want to stay cozy. If your house loses 40,000 BTUs/hour, you must supply the heat at same rate. Over 24 hours that would total 960,000 BTUs altogether.

Since electric is such a common and easy source of heat to use, it is very helpful to be able to convert between watt-hours and BTUs. It takes approximately 1500 watt-hours to produce 5,000 BTUs. I find that conversion easy to remember since your typical electric space heater uses about 1500 watts of power, and it produces about 5,000 BTUs. 5,000 BTUs is about what you need to heat a typical bedroom.

Evaluating Energy Sources

When evaluating the cost of a given heat source, the price of that source is not usually given in terms of BTUs, but some other unit. Therefore, we need to convert from the unit given to BTUs. We already briefly looked at electricity as a source of heat. Its cost is given in terms of kilowatt-hours. To convert that to BTUs, we divide the kilowatt-hours by 1500 and mulitply by 5000 to get BTUs. Conversions can get tricky because of the denominators involved, so let’s look at an example.

We’ll convert the cost of electric to heat:

\frac{\$0.10}{kilowatt-hour} \times \frac{1.5  kilowatt-hour}{5,000 BTU}

When multiplying by your conversion, write the units out and make sure they cancel each other. In the example, after multiplying you get:

\frac{\$0.10 \times 1.5 kwhr}{1 kwhr \times 5,000 BTU}

The kwhr (kilowatt-hour) terms cancel each other, and you are left with the figure you want: $0.00003/BTU. Still confused? Don’t worry, in the following analysis, I have done all the math for you.

Cost of Types of Energy


  • Heat energy: 24 million BTUs/cord (hardwood); 18 million BTUs/cord (pine). We’ll use 20 million BTUs/cord.
  • Typical Price: $180 per cord
  • Cost = $9 per million BTU

Wood pellets

  • Heat energy: 8,000 BTU/lb
  • Typical Price: $5.50/40 lbs
  • Cost = $17 per million BTU

Wood Bricks

  • Heat energy: 12,000 BTU/brick
  • Price $4/8 bricks
  • Cost = $42 per million BTU


  • Heat energy: 3,413 BTU/kilowatt hour
  • Cost: $0.10 per kwhr
  • Cost = $29 per million BTU

Heat Pump

Heat pumps are an unusual source of heat, and therefore require some discussion. While they use electricity for the energy source, they differ from electric resistance heating in that they actually exceed 100% efficiency. No, it is not a form of perpetual motion. Instead of creating heat energy, heat pumps simply move or pump energy from an existing source to where you want it. In the summertime, it pumps it out of your house. In the winter, it pumps it from the outside in. As you can imagine, it takes a lot of effort to make Old Man Winter even colder than he is.

For that reason, the actual efficiency of the heat pumping action varies dramatically with the source of the heat’s temperature. If your outside temperature is around 45 degrees, you can achieve an “efficiency” of 400%, but at 32 degrees only about 250%. Technically, efficiency is not the term used to describe the heat pump action. Instead the term COP is used. A COP of 2.5 is really just the same as 250% when doing your energy calculations.

Since the COP varies so much for temperature, you will need to tailor the conversion for your particular circumstance. This Wikipedia article hasĀ  detailed information if you want to delve further. For midwest & mid-atlantic states, we’ll assume a COP of 2.5, which is for an outside temperature of 32 degrees F. If your outside temperature reaches 0 degrees F, your COP actually drops to 1.0 which is no different from resistance heating.

  • Heat energy: 3,413 BTU * 2.5 (COP) / kilowatt hour
  • Cost: $0.10 per kwhr
  • Cost = $12 per million BTU

Geothermal Heat Pump

A geothermal heat pump draws its heat energy from the ground instead of the air as a regular heat pump does. Since ground temperatures stay fairly constant at anywhere from 50 to 70 degrees typically, the COP is much higher, particularly as you go north. For this evaluation, let’s use a COP of 5.0.

  • Heat energy: 3,413 BTU * 5.0 (COP) / kilowatt hour
  • Cost: $0.10 per kwhr
  • Cost = $6 per million BTU


  • Heat energy: 92,000 BTU/gallon
  • Cost: $2.40 per gal
  • Cost = $26 per million BTU

Natural Gas

Gas prices are all over the place depending on where you live, the month it is, and a myriad of other factors. For this comparison, I just grabbed a number I thought was typical.

  • Heat energy: 1,000 BTU/cuft
  • Cost $20/thousand cuft
  • Cost = $20 per million BTU

Kerosene (no. 1 fuel oil)

  • Heat energy: 134,000 BTU/gallon
  • Cost: $3.50/gal
  • Cost = $26 per million BTU

Heating Oil (no. 2 fuel oil)

  • Heat energy: 138,700 BTU/gallon
  • Cost = $3.00/gal
  • Cost = $22 per million BTU


Coal varies both in price and heat energy depending on the type of coal. Personally, I don’t even know if anyone can buy coal anymore. I live in between two major coal belts, and I couldn’t buy it if I tried. For this comparison though, I’ll assume you can get hold of some Central Appalachia coal.

  • Heat energy (Central Applicachia): 12,500,000 btus/ton
  • Cost = $80/ton
  • $6 per million BTU

Some Conclusions

From these figures, liquid and gas sources are all about the same – pretty expensive, although how they compare can vary by the day and the location. If your electric costs are low enough, ordinary electric resistance heating is not a bad option. You can economize by using individual heaters in each room and heating only what you need to heat. Heat pumps are also a real winner, especially if you live in a mild climate or can afford to install a geothermal unit.

For the greatest economy, you can’t beat wood heat. Even buying wood pellets is cheaper than most of the alternatives. Unfortunately, because of archaic insurance requirements, wood heat is not an option for many. If you own a house and your insurance won’t allow a woodstove, you can still use wood heat via an outdoor wood furnace.

The cheapest source of heat is one I haven’t mentioned, because it doesn’t have a per BTU cost at all. It is solar. Solar heating is a vast subject though, so it will have to be covered in a future article. I will also cover some of the other alternatives I have mentioned in more detail at a later date. Until then, try to stay warm!

Please contribute your thoughts and experiences in the comments below.

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  1. Ray C
    Posted December 24, 2011 at 12:05 pm | Permalink

    Bravo! An excellent analysis that provides an easy to follow comparison of the different heating options. Confirms our decision to go geothermal and is consistant with our Eastern PA experience with geo to date. ( I thought your natural gas cost factor looked a little high, though.)

  2. Posted January 15, 2012 at 12:43 pm | Permalink

    Thanks for this detailed analysis. You didn’t cover environmental impacts of these sources though. Correct me if I’m wrong, but doesn’t burning wood have a serious impact on air quality? Presumably coal also suffers from this. Over the past winter holiday, suburban municipalities in the SF Bay Area forbade people from lighting fireplaces due to air quality concerns. Poor air quality is a potent killer statistically.

    • Posted January 25, 2012 at 3:07 am | Permalink

      Peter – thanks for the comments. In practice, I don’t think air quality is much of an issue (for first world countries anyway) with wood burning stoves. There just isn’t enough wood available in urban areas to contribute heavily. In the country, population density is to small for it to make much of a difference. In the SF Bay Area, due to the geography, air quality is often difficult to maintain. Even then, I doubt there are that many people who would be burning wood to create a problem. What you describe sounds like an over-reaction. That is just my opinion.

      As far as causing a health risk, our biggest risk for cancer is our industrial food supply. If a person consumed non-inflammatory foods like grass-fed meat and dairy, along with vitamin A & D, and avoided most processed foods, it would significantly reduce their risk of cancer, even when exposed to potential carcinogens such as smoke.

  3. patricia
    Posted October 29, 2012 at 12:21 pm | Permalink

    Man has been burning wood to keep warm for centuries. We didn’t have “air quality” and environmental concerns until the advent of industrialization and the modern combustion engine. San Francisco for instance, and its neighbor, Los Angeles, are amongthe smoggiest and most polluted places to visit (been there three times and this was in the eighties ). Its a location chock full uf elevated highways and known for traffic related violence as well ,becasue of the high density of automobiles. Ever sit in a Los Angeles traffic jam baking in the heat for hours going nowhere while all those vehicles chugged out nasty pollutants? What a stench! To try to say that people should not burn wood because of air quality concerns is nothing more than seeking a politically safe scapegoat while the real problem is sidestepped. I can see it being an issue if you happen to be an asthma sufferer and some guy with a wood stove’s smoke is drifting right into your house. But even then, asthma is not caused by wood smoke. Only aggravated by it in close proximity.

    If you are a politician and you want to challenge big business, as far as the whole automobile/ fuel and oil industry is concerned, you are going to make some enemies. There are numerous powerful people whove become billionaires from this industry. Easier to sasy ‘ Oh, its the wood burning stuff that is the problem”. Not enough of a majority to be a threat to any politicinan and not enough industry based on it to ruffle powerful feathers. I’ve heard of gov’t, who profits heavily from these industries, silencing the promotion of any solution that would provide an alternative clean fuel source for vehicles or at least severely restricting it because of the threat it represents to the fuel industry and all the stuff that spins off of it. It would take a huge chunk out of the enconomy. A controlled shutdown would be necssary to allow time for those dependnt on that industry for their livelihood to transition to new sources of income. And no one wants to give up something that has made them rich.

  4. Sergey
    Posted September 24, 2014 at 3:51 pm | Permalink

    Hi all.
    Great website.
    Can you guys clarify, if I would use stainless steel as “head-end” of the closed inground loop, its still can get corroded, as copper would(assembly worse case soil)?
    Also if I would go 20 feet vertical but with two smaller loop(3/8″ pipe for example), instead of one single loop 50 foot and 3/4″ pipe.
    Is there is heat output still be degraded due to deepest, or it will not?
    Or for example, if you go deeper, does that means you reaching bigger “heat source” ?
    Appreciate your responses.

    • Posted October 1, 2014 at 9:15 pm | Permalink

      Going to a smaller pipe that is shallower would pose a myriad of problems:
      1) 40′ x 3/8 dia is much less than 50′ of 3/4 dia. With less length, you actually need larger pipe.
      2) You won’t reach stable temps until at least 12′ down. I don’t know the exact depth offhand, but you need most of your pipe deep.
      3) Such a small dia pipe may present flow restriction problems.

      Bottom line, you can add more pipe in a bigger hole, but you still need to get some depth there. For this and your other questions, you should probably go with standard installer recommendations.

  5. Sergey
    Posted September 24, 2014 at 3:53 pm | Permalink

    What vertical close loop sealer you would advice?
    For better heat exchange rate/soil penetration?

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  • By Some Winter Tips on January 11, 2012 at 3:30 pm

    […] you have a geo-thermal heat pump or heat with wood, you’ll need to economize by reducing your whole-house thermostat. You will […]

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