Gas vs. Electric Heating: What It Means for Commercial Real Estate

Electric Vs. Gas Heating – What is it?  

As colder temperatures begin to creep in, commercial real estate owners are once again faced with heating costs and system performance. Historically, gas has been the dominant player in the U.S. heating market, but as the trend towards electrification grows and pressure for sustainability mounts, commercial real estate owners are faced with a choice. 

Understanding the pros and cons of electric and gas heating isn’t just about keeping your buildings warm, it’s about cost control, reliability and the future of the market. 

For large commercial buildings, choosing the most cost efficient and reliable source of heating is crucial. So what are the advantages and disadvantages of electric vs. gas heating? 

Electric heating offers lower carbon emissions and a low cost of installation, however, it can be unreliable. Heat pumps risk being interrupted during power outages and have trouble maintaining heat in extremely low temperatures.  

Gas heating, while more expensive to install, can offer a more reliable supply of heat and lower monthly costs depending on how large the building is and how cold the winter months are. 

Why Location Could Impact Effectiveness 

Building owners must take into account what market their properties are located in. For example, in markets where electricity is generated from renewable sources or supported by clean energy standards, electric heating can reduce emissions dramatically. Gas, however, is the most cost effective choice in regions with carbon-intensive grids and high power costs. 

Brokers, like Energy CX, can offer insight into fuel mixes in specific energy markets to understand what the best products are and to help building owners make decisions. 

Environmental Impact & Incentives Towards Electrification 

Many states offer incentives for a shift to electrification in the form of rebates and tax credits. In California, they have a statewide initiative, TECH Clean California, through which building owners could receive up to $3,000 for each heat pump system. In New York, customers could see up to $10,000+ in rebates through the NYS Clean Heat Program. 

Because of these incentives, commercial real estate owners could see measurable financial rewards depending on the state. Local utilities often have their own incentive programs for customers who adopt energy-saving measures. 

With a push towards sustainability mounting, commercial real estate owners can make this switch to lower overall carbon emissions and get closer to their sustainability goals. 

Bigger Picture – How Does this Impact the Energy Industry?

As the shift to electric heating becomes more widespread, this transition has potential to impact demand profiles. The New York Independent System Operator, for example, expects that this shift could push winter demand higher than summer demand.

With the added strain on the electric grid, utilities will have to ensure there is capacity for the increased demand to mitigate any outages and accommodate large commercial buildings. 

These potential changes can be daunting, but Energy CX can be used as a valuable resource, helping customers manage their energy costs through custom products like seasonal hedging. 

Whether your goal is reducing costs, improving reliability or advancing sustainability targets, understanding the implications of your heating choices is critical. Energy CX helps commercial real estate owners evaluate these decisions through detailed energy cost analysis, incentive tracking and strategic procurement planning. Book a meeting with us to see how we can help!