Propane market share trends in residential space heating

Data sources: ICF; American Community Survey (https://data.census.gov)

The U.S. Census Bureau, on Dec. 7, 2023, released its annual update to its five-year estimate American Community Survey (ACS) data. The ACS data holds significance for federal agencies, state and local governments, forming a crucial resource for their operational activities and decision-making processes. Nonprofit organizations also heavily depend on this data when submitting their grant applications. One of the tables published as part of the ACS data captures a census of the number of households that use propane for space heating purposes by U.S. state and county.

Here, we take a high-level look at the national and regional propane space heating customer data. The data behind this analysis is sourced from the American Community Survey website. Over the next few months, we will provide a deeper dive into the regional and state data and provide a more detailed look at the characteristics of propane households based on data from the ACS and the related NREL ResStock databases.

National view

Between 2017 and 2022, the number of households that use propane for space heating purposes increased by 7.8 percent from 5.7 million to 6.1 million across the U.S., and the propane market share increased from 4.7 percent to 4.8 percent. California has the highest number of propane households, closely followed by New York and Michigan. The national average of propane market share in space heating is 4.8 percent.

Regional view

The growth in the number of U.S. households using propane for space heating purposes exhibits an intriguing pattern, when analyzed through the lenses of climate zones across U.S. Census regions. Understanding these trends can shed light on how customer preferences are shaped by the regional climate they experience.

⦁ In the Northeast, where winters can be harsh and heating demands high, ACS data reveals that propane is the favored choice due to its efficiency in extreme cold. Households in this region often opt for propane space heating over alternatives like electricity, which may be more expensive and less comfortable during severe weather.

⦁ According to ACS data, 66 percent of all counties across the Northeast rely significantly¹ on propane for residential space heating needs. Furthermore, between 2017 and 2022, 87 percent of all counties across the Northeast show over 5 percent growth in households that use propane as a space heating fuel. Fuel oil space heating maintains a significant market share in the Northeast, especially in rural areas, where access to natural gas infrastructure is more limited. However, propane is continuing to make inroads into the fuel oil market even as public policy is promoting electrification rather than conversions to propane.

⦁ Conversely, in the South, where milder climates prevail, electric heat pump space heating systems are more popular. The efficiency and cost-effectiveness of these technologies continue to challenge propane in both new and existing markets.

⦁ ACS data suggests that 63 percent of all counties in the South have a significant² market for propane space heating technologies. Between 2017 and 2022, 34 percent of all counties across the South show over 5 percent growth in households that use propane as a space heating fuel.

⦁ The Midwest witnesses a balanced preference between propane and natural gas, with households making choices based on local availability of natural gas and economic considerations. Propane remains a competitive option for homes off the gas main, as it is versatile and reliable across various climates and this geographically diverse region.

⦁ According to ACS data, 91 percent of all counties in the Midwest region rely significantly³ on propane space heating technologies. However, only 47 percent of all counties across the Midwest show over 5 percent growth in households that use propane as a space heating fuel.

⦁ As for the West, where the annual climate ranges from arid to temperate, propane remains a flexible solution for space heating. Its adaptability to varying weather conditions, combined with regional availability, makes propane a popular choice among these households, although changes in public policy continue to be a challenge.

⦁ ACS data suggests that 63 percent of all counties in the West have a significant⁴ market for propane space heating technologies. Between 2017 and 2022, 57 percent of all counties across the West show over 5 percent growth in households that use propane as a space heating fuel.

Overall, changes in propane space heating households are tied to geographic regions and their corresponding climate zones. Customer preferences, driven by the need for efficiency, reliability and regional climate considerations, paint a nuanced picture of energy choices across the diverse landscape of the United States.

^{1 -4} More than 5 percent of existing homes are heated with propane.