Electric heating: Unit economics
Why the electricity bill, not the price tag, decides everything
What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.Electric heat is cheap to buy and simple, but electricity is the dominant running cost, so the share of heat that reaches the target, and switching to heat pumps where possible, decide the economics.
Key costs
| Measure | Value | Note |
|---|---|---|
| US residential electricity price | 17.30 US cents/kWh (2025)7 | |
| US industrial electricity price | 8.62 US cents/kWh (2025)7 | |
| Electricity to boil 1 litre of water from 15 degrees C | About 1.7 US cents (2025, calculated)7 | 0.099 kWh at 17.30 cents, before heat losses |
| EAF electricity cost per tonne of steel | About 39 USD/t (2025, calculated)57 | 450 kWh/t at 8.62 cents; scrap, electrodes and labour come on top |
| Lifetime saving, heat pump versus resistance storage water heater | About 1,800 USD per household2 | DOE 2024 rule estimate |
| Microwave oven annual electricity | About 71 (cooking) plus about 8.7 (standby at 1 W) kWh per year107 | About USD 14 a year at 2025 prices (calculated) |
| Saving if all 2021 US cooktop sales were efficient induction | More than 125 million USD per year1 | More than 1,000 GWh |
Where the money goes
| Item | Share or amount |
|---|---|
| Electricity in an arc furnace's energy input | Up to about 60% of total energy input (chemical energy up to about 25%)5 |
| Cooking versus standby energy in a microwave just meeting the standby standard | Cooking almost 90% of annual energy10 |
Worked example (calculated, 2025 USD): a household heating about 150 litres of water a day by 40 degrees C needs roughly 7 kWh of heat a day (150 kg x 4.18 kJ/kg K x 40 K = 25 MJ). A resistance tank supplies this with about 7 kWh of electricity plus standing losses, roughly USD 440 a year at 17.30 cents/kWh. A heat pump water heater of more than double the efficiency would cut that by more than half, consistent with DOE's estimate of about USD 1,800 saved over the appliance's life.
Sources
- ENERGY STAR Emerging Technology Award 2021: Residential Induction Cooking Tops US EPA / DOE ENERGY STAR, 2021
- DOE finalizes efficiency standards for water heaters to save Americans over USD 7 billion on household utility bills annually (press release, 30 April 2024) US Department of Energy, 2024
- Article modelling electric arc furnace electrical energy consumption (University of Ljubljana authors), DOI 10.1007/s40831-021-00390-y Journal of Sustainable Metallurgy (Springer), 2021
- Short-Term Energy Outlook, Table 7c: US regional electricity prices (October 2026) US Energy Information Administration, 2026
- Joint comments to DOE on microwave oven test procedures (ASAP, ACEEE, Consumer Federation of America and others, citing DOE's 2013 proposed rule) Consumer Federation of America, 2018