Electricity vs. Natural Gas: The Energy Showdown

by Paul Greenwalt, EIT

This article is part of Wood Harbinger’s newsletter series.

Residential, commercial, and industrial users have choices about the energy sources they use for building systems and processes, such as HVAC and water systems, refrigeration systems, manufacturing/production processes, cooking, and clothes drying. Natural gas and electricity are the two main options for normal operation of building systems and equipment.

Natural gas offers a few major benefits: it’s comparatively cheap, it’s easy to transport, and burns cleanly, compared to other fossil fuels. Electricity’s value is a little trickier to discern, as price varies widely depending on location and the power generation source. You can have extremely clean and relatively cheap electricity or fairly “dirty” (environmentally unfriendly) and expensive electricity, or some combination in between. When choosing between electricity and natural gas, there a several factors to consider and prioritize, such as price, reliability, efficiency, and environmental impact, to name a few.

Price

In Washington state, space heating costs are approximately $2.30/energy-unit for electricity (at 100% efficiency) compared to $1/energy-unit for natural gas (at 80% combustion efficiency). This relationship changes when you introduce newer technology, e.g. more efficient equipment or different heating strategies, or when you change locales, which influences utility costs.

Nationally, natural gas prices are somewhat even across regions of the country; it’s least expensive in the interior, and more expensive on the coasts—East, West, and Gulf. Where natural gas pricing varies the most is between residential and commercial consumers—commercial consumers benefit from volume discounts.

Electricity prices vary broadly around the country, based on the variety of electricity generation sources, which include natural gas, coal‑fired power plants, nuclear plants, diesel, and renewable sources like solar, wind, geothermal, and hydroelectricity. Lucky us in Washington State benefit from a remarkably low $0.0853/kWh, thanks primarily to our use of hydroelectricity.

For both natural gas and electricity, Hawaii is an outlier with staggeringly high energy prices. With this driver, it’s little surprise that the state is a leader in renewable energy sources, generating the most solar energy per capita of any state, and leveraging its geology by using geothermal energy generation. Necessity breeds innovation!

Efficiency

Another factor to consider when weighing the benefits of natural gas or electricity is how efficiently equipment and systems use energy. If your equipment is less efficient, you may end up paying more in the long-run for energy because your consumption is higher than it could be.

Natural gas appliances have traditionally been the more efficient options, with equipment efficiencies approaching 97% in condensing boilers and water heaters. However, electrical appliances have made major improvements in their energy efficiency due in part to programs like LEED and Energy Star. Heat pumps provide heating and cooling with heating efficiencies of 4.0 COP (coefficient of performance—equivalent to saying “400%”) and higher. This would bring down the previously stated heating cost from $2.30/energy-unit-hour to less than $1/energy-unit-hour! This is based on the cost of operation over time. The energy cost stays the same regardless of the end use, but the rate is directly affected by the equipment. More efficient equipment reduces your total energy consumed.

Environmental Impact

While natural gas is most often cheaper and more efficient, it’s not without downsides. It is a nonrenewable energy source and a fossil fuel—albeit the cleanest fossil fuel. However natural gas extraction can be problematic. Some types of natural gas, called “conventional,” gas, are accessible and economic to extract. Other types—”nonconventional” natural gases—pose accessibility issues that require deep drilling or other methods like hydraulic fracturing (fracking) to extract. These extraction methods are controversial due to their impact on the environment. While natural gas may seem a winning option for usage, we must weigh the economic and environmental costs of obtaining it.

Natural gas’s downsides certainly don’t automatically make electricity more environmentally friendly either. To fully evaluate the benefit of electricity over natural gas, one must consider the generation source. As of 2016, natural gas is the most common fuel source for U.S. electricity generation, contributing more than one third of the nation’s electricity. (How does that help us make our choice?!)

Coal is right behind at 30%, nuclear comes in at nearly 20%, and renewables (solar, wind, hydro, geothermal, and biomass) are growing in use at nearly 15%. Environmentally, natural gas is the better choice compared to coal. But with the global shift away from fossil fuels of all kinds, renewably-generated electrical energy steals the spotlight as a beneficial path forward.

Reliability

One of the challenges to more widespread adoption of renewable energy sources like solar and wind is their reliability: solar energy can only be generated when the sun is up and its most effective with direct sunlight. Wind energy depends on it being, well, windy.

But the challenge may not be as great as previously thought. A 2011 NREL study explored the impact of clouds on large solar energy generation systems. Initial data showed that large-scale photovoltaic arrays are not as susceptible to cloudy conditions as smaller scale PV systems. As I wrote in another article, energy storage options will play a crucial role to overcoming reliable generation challenges and helping further establish renewable energy sources as viable and even better alternatives to fossil fuels on all fronts.

By Unanimous Decision….Or Not

As you can tell, the choice between natural gas and electricity is not clear-cut, and which is “better” changes depending on prioritization of several factors. Natural gas may seem the “natural” winner at present, but as electric appliances make gains in efficiency and electricity generation becomes cleaner on a greater scale, the showdown between natural gas and electricity will continue!

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