Propane vs Electricity

We recommend alternative systems to our customers based on a significant amount of information.  These recommendations are made following in-depth analysis of data, practical applications and installations, warranty information, customer service, long-term serviceability, reliability, and of course value and cost/benefit.  Sometimes the experts provide information that is leaning in one direction or another, and in many cases are extremely confusing due to different ways of measuring, rating, observing, or presenting their  product or service to shine in the best light.  Our objective is to "weed through" all of the noise, and give our customer the "best" solution.

Below is a summary of a very in-depth analysis provided by SC&G which was originally provided as an evaluation of Natural Gas vs. electric appliances and cost of operation. We have converted it to also apply to LP gas to provide the results as noted below.  This analysis is based on September rates from Palmetto Electric and LP gas prices at $2.50 per gallon. There is no natural gas provided to Hilton Head, so, hence our effort to evaluate this other alternative primarily for electric water heaters vs. propane heaters.  No evaluation of the cost of installation or capital costs are included in this "Operating Cost" analysis.  However, a conventional electric water heater may cost $400 to $500, and a on-demand gas water heater may be $1,100 to $1,500 for equipment only not including any difference for electrical hook-up or gas rough-ins.  Also it should be noted that on-demand water heaters should be serviced and inspected  annually by a qualified plumber or technician.

As you will see below the most efficient grouping of appliances is the on-demand  water heater and HP HVAC with strip heat system when considering LP gas,  by a slight amount.    Other operational cost which should be included is the annual inspection and servicing cost of a on-demand heater, and the additional initial capital investment.  

Certainly gas and electric prices are subject to volatility, however, LP prices are likely to fluctuate more significantly than the Palmetto Electric Cooperative contracted rates, although there are several on-island providers of LP gas. Other considerations not factored into this analysis is the annual inspection and cleaning of on-demand systems, increased insulation and higher efficient HVAC systems we typically install in our homes, and more specific individual user requirements of temperature and gallons per minute demand.  

When factoring in all of the considerations  for the Hilton Head environment, we recommend the conventional electric water heater and electric HP HVAC systems.  (Other options not evaluated here are water source heat pumps, solar heating, reclamation systems, heat-pump water heaters.)


1) Electricity prices, including cost per unit and fuel adjustments, are provided by Palmetto Electric customer service representatives.
     Cost of gas is based $2.50 per gallon retail price with tax, labor & delivery. Gas water heater & on-demand water heaters require annual      service, cleaning and inspection.  This service is factored in above at $125 per year.  
2) Units used based on average therm usage for a 2,000 square foot house. Kwh usage estimated based on therm usage and assuming a
    62% efficient gas tank water heater, an 82% efficient gas tankless water heater, a 92% efficient electric water heater, a 90% efficient gas
    furnace, and an electric heat pump with a COP of 2.35 for 1st stage heating. Electric heat pump strips are calculated at a COP of 1.0.
3) Back-up gas or 2nd stage gas heat for Dual-Fuel system and electric strip heat in the HP system are calculated at an outdoor
    temperature of 38 degrees, and based on Charleston, SC 10 year weather data which reveals that 2nd stage heat will be used
    30% of the time.

INFORMATION OF INTEREST (insert your rate in Estimated Cost Column):

Form of Energy Units to obtain one Estimated Cost per Million
million BTU Cost BTU

Natural Gas 10 Therms x $0.93 $9.30
Propane Gas (LP) 11 Gallons x $2.50 $27.50
Electricity 293 KWH x $0.085 $24.91


National Association of Home Builders   Hilton Head Area Home Builders Association   Hilton Head Chamber of Commerce   Project Management Institute   International Code Council   Dun & Bradstreet  

843-681-9543 • Moss Creek Village, Suite 300, 1533 Fording Island Road Hilton Head, SC 29926 •