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When choosing a heating system for commercial and industrial buildings, the debate between gas and electric heating systems is a critical one. While both options have their advantages, the decision often hinges on factors such as installation costs, running costs, energy efficiency, and long-term sustainability. Understanding the actual cost of going electric—both in terms of upfront expenses and ongoing operations—is crucial for building owners and facility managers.
In this article, we’ll break down the key considerations for both gas and electric heating systems, focusing particularly on electric heating and its associated costs in commercial and industrial settings.
The Appeal of Electric Heating
Electric heating has gained attention for its clean energy potential. Many companies see it as a path to reducing emissions, particularly when combined with renewable sources like solar or wind. Electric heating systems, such as heat pumps, offer flexibility and can adapt to smaller, modular settings, making them appealing in certain contexts. Additionally, electric heating systems offer simplified maintenance and installation compared to traditional gas systems, making them attractive to those looking for long-term, low-maintenance options. These systems are typically Heat Pump Systems or electric radiant systems.
However, in expansive spaces common to commercial and industrial buildings, electric heating may struggle to deliver the required heat output efficiently. Installation costs are often high, and operational costs can vary widely depending on regional electricity prices. Moreover, electric heating systems place greater demand on the grid, and facilities in colder climates may require additional infrastructure to achieve the desired warmth, especially during peak winter months.
The Ongoing Value of Gas Heating
Gas heating systems have been industry mainstays for decades, known for their powerful, consistent heating output. Gas systems, especially direct-fired options, can heat large spaces more efficiently and cost-effectively than many electric systems. For businesses operating in colder climates or in areas with older, less efficient buildings, gas provides reliable, high-output heating with fewer fluctuations in temperature. Often these are typically suspended on floor mounted warm gas systems or radiant heating systems.
Additionally, gas heating systems typically involve lower operating costs. Natural gas prices are generally more stable compared to electricity, which can fluctuate based on energy demand, renewable availability, and other factors. With efficient technology like condensing gas heaters, modern gas systems have also improved their energy use, allowing businesses to control costs without sacrificing performance.
As of late 2024, non-domestic electricity prices typically range from 25 to 35 pence per kilowatt-hour (p/kWh), depending on the business size and contract type. In contrast, gas prices for non-domestic customers remain significantly lower, generally between 6 and 12 p/kWh, even with recent increases. This makes gas heating systems a more cost-effective option for businesses, especially given that electricity can be nearly 3.5 times more expensive per unit of energy. By opting for gas heating, businesses can significantly reduce operational costs while maintaining an efficient and reliable energy source.
Comparing Costs: Upfront and Long-Term
When considering an investment in a new heating system, businesses weigh both the upfront and ongoing costs. Electric heating systems may have lower installation requirements in certain scenarios, particularly in well-insulated or small-to-medium-sized facilities. However, electric systems often come with higher energy bills due to electricity’s per-unit cost and potential for surges during high-demand seasons. Gas heating, with its stable fuel costs and high heat output, often proves more economical over the long term for larger facilities.
For companies that need a dependable solution with predictable costs, gas heating offers a clear advantage. The system’s ability to quickly warm large spaces without significant energy spikes makes it ideal for consistent, long-term use in manufacturing facilities, warehouses, and other large industrial environments.
Grid Capacity and Electrical Supply
A critical factor in transitioning to electric heating in commercial and industrial buildings is the capacity of the electrical grid to meet the increased demand. Electric heating systems, especially in large facilities, place a significant load on the electrical infrastructure.
Challenges with Electric Supply
Reliability of Supply
Electricity supply reliability can also be a consideration, particularly for mission-critical industrial operations. While electric heating systems don’t face the risk of gas shortages, they are vulnerable to power outages, which can disrupt operations unless appropriate backup power systems (like generators or battery storage) are in place.
4. Energy Efficiency and Sustainability
While non-condensing gas-fired unit heaters can achieve efficiencies around 92%, and condensing units can reach up to 102% seasonal efficiencies, natural gas heating is generally less efficient than electric heating. This is primarily due to heat losses during combustion and the substantial energy required to extract, process, and transport the gas. Additionally, gas systems have a larger environmental footprint, producing significant carbon emissions despite being cleaner than coal or oil. Although gas is often viewed as a transitional fuel, it still contributes notably to greenhouse gas emissions, making electric heating a more sustainable choice in the long term.
Final Thoughts
While electric heating offers significant efficiency, sustainability, and ease of installation benefits, the actual cost of going electric for commercial and industrial buildings can be high. The total cost of ownership can only be justified in certain cases and new Net Zero projects, especially for businesses prioritising sustainability or those in regions with a reliable supply of renewable energy.
It’s crucial to assess what needs to be regulated within the space, taking into account the building’s size and specific requirements. Are you primarily heating people, supporting processes, or protecting stock from frost? Many clients are now looking into hybrid solutions that leverage gas for rapid heating and electric systems to maintain consistent daily temperatures, helping to reduce energy costs while optimizing overall performance.
Ultimately, the choice between gas and electric heating depends on the unique needs and goals of a business. While electric heating offers long-term benefits, especially in terms of sustainability and alignment with decarbonisation efforts, gas heating remains a cost-effective and reliable option, particularly in the face of rising electricity prices. Gas systems are often more affordable to install and operate, making them suitable for businesses looking to manage upfront costs. As the energy market evolves, gas can still play a significant role, providing a balance between efficiency and operational cost savings, especially in scenarios where rapid electrification may not be feasible yet.
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