Electric furnaces utilize 100 percent of the electricity they use, which makes them more efficient, in a sense, than gas furnaces. However, inefficiencies at the power plant can negate their economical and environmental advantages.
As of 2015, the annual fuel utilization efficiency, or AFUE, of gas furnaces typically rates between 90 and 98 percent, making them more efficient than oil furnaces and other fuel-based furnaces. Electric furnaces are rated at 100 percent, but this only measures the electricity they receive; inefficiencies at the power plant lower their effective rating, which makes them less efficient in almost all cases.
Natural gas power plants lose heat while converting natural gas heat to electricity, while coal plants are even less efficient. Since these two fuel sources are the leading sources of power in the United States, it could be argued that electric furnaces are less efficient at converting fossil fuels into heat than their gas-fired equivalents. Those looking to reduce their fossil fuel consumption for environmental reasons may find natural gas to be a better option over electricity.
In addition, the ongoing operational costs of electrical furnaces are higher than gas-powered furnaces. As of 2015, the cost of natural gas is expected to remain relatively stable for the foreseeable future, as is the cost of electricity from a power plant.