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We Need a Plan for Ductless Mini-Split Heat Pumps

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Our organization works to provide consumers with good options for their homes and we are also at the table with policymakers to encourage policies that make good economic and environmental sense. With this blog, we want to share our experience with heat pumps, particularly ductless mini-splits, and perhaps float a couple of trial balloons.

In homes and businesses, gas and oil still dominate the space heating market, but interest in ductless mini-split heat pumps (DMSHPs) is growing. Heat pumps are an efficient way to heat or cool a space and because they run on electricity, DMSHPs have the potential to be fully renewable, making them an important climate mitigation resource. The technology, including efficiency, continues to improve which is one reason why energy experts consider heat pumps, like electric vehicles, an important component of “strategic electrification,” or switching cars and home heating to electricity.

There are at least a couple of reasons to consider heat pumps at a macro scale. Because the grid is getting cleaner each year, we can reduce greenhouse gas emissions by switching from combustion appliances to electric heating sources, like heat pumps. And historically, retail electricity prices are far less volatile than prices for heating oil, propane, and natural gas. Prices for heating fuels have been relatively low in recent years, but we would all like to avoid the high prices we saw in the past.

Given that our organization works in both Massachusetts and Rhode Island, we were anxious to read a major evaluation study conducted for utilities in those states by the Cadmus Group. The study cost several hundred thousand dollars, took over two years, and analyzed data from over 150 homes. Here is a summary of some of the findings highlighted in the report.

Summary of Findings:

  • Many heat pumps have been installed in the region, but not all of them are considered “cold-climate.” There are significant performance differences between the two types and the differences grow as temperatures drop. We need to steer clear of mini-splits that are not built for our cold New England climate (as it is, not as it might be in 50 years).
  • At prices prevalent today – mini-splits provide heat more economically than either electric resistance heat (old-fashioned baseboard) and propane. However, mini-splits are not cost-effective when compared to natural gas. When comparing mini-splits to heating oil, the answer is much more nuanced.
  • Consumers need education on how to operate a mini-split. At very cold temperatures, if oil prices are low, a consumer is better off running the central heating system. But most of the time, the mini-split would be preferred.
  • Mini-splits function more economically when they can heat an entire area without having to run a central gas- or oil-fired system at the same time for the same space. If your house is zoned appropriately and you have 800 or so square feet that a heat pump can serve, you can shut off the central system to that area and save on fuel. This means the layout of a house is very important. And that is a point that consumers, installers, and energy auditors all need to understand.
  • The evaluators found that the heat pumps producing the most savings were those installed in zonal situations. And generally, when a consumer’s oil consumption is high to begin with, there is a greater opportunity to save with a mini-split (or through weatherization). Under the right conditions – meaning zoned heating, a good home layout, consumer education, and a quality installation - mini-splits can be economic in comparison to heating oil.

Where We Come Down in the Short Run:

Surely we want to burn less natural gas, but the evidence shows that there are more cost-effective ways for utility programs to save natural gas (aka methane) than by installing heat pumps.

Example #1:  Air sealing and insulation continue to be the cheapest, most cost-effective measures a consumer can take, regardless of what kind of machine makes the heat.

Example #2:  There are still a lot of old natural gas heating systems out there. Replacing them with 95% efficient condensing gas units will result, state-wide, in less natural gas burned per dollar invested, than heat pumps.

In both examples, the benefit-cost ratios are excellent, which is justification for telling the gas utilities to go out and save more gas before building more pipelines to carry fracked methane.

Some homeowners with gas heat may want to go beyond weatherization and install a heat pump even if the payback is long. That’s great and we encourage it. But you might want to compare that payback to other emission-reducing measures like buying an electric car.

Only about ten percent of homes and businesses heat with electric resistance and fewer heat with propane, but that’s an opening worth exploiting. We should put a bounty on those systems and eradicate them within a few short years.

The Cadmus study made it clear that high-efficiency cold-climate heat pumps are cost-effective versus electric resistance and propane today. Only about ten percent of homes and businesses heat with electric resistance and fewer heat with propane, but that’s an opening worth exploiting. We should put a bounty on those systems and eradicate them within a few short years. By doing so, we would save lots of money for consumers who might otherwise convert to gas heat, keep more dollars in state, and reduce greenhouse gas emissions. And in the process, we will build up the heat pump industry. Utilities will gain more experience with the technology, supply houses and installers will gain more business, and manufacturers will see a growing market.

While the story of heat pumps versus oil heat is more complicated, getting it right is important because oil heats about a third of the homes in Massachusetts and Rhode Island. We ran a couple of pilot programs to help oil consumers purchase heat pumps and found it somewhat staff-intensive to identify homes with appropriately zoned heating systems in order to reach that top tier of heating savings that the evaluators said was possible.

We would like to see a program designed to search out those kinds of homes for mini-split installations.

But from our experience as a small nonprofit, we believe that Mass Save or Energy Wise in Rhode Island could manage a heat pump program for oil heat consumers quite efficiently. As home energy assessments are completed, auditors would note whether an oil-fired system is present, whether the home is a large oil-user, and whether the house is configured favorably for mini-splits. We would like to see a program designed to search out those kinds of homes for mini-split installations. The program should have components to educate heat pump buyers and to reward installers for good work.

To review our recommendations so far, we are talking about directing utility programs to target, in the next couple of years, electric resistance, propane, and the best candidates among the oil heat population. This approach acknowledges what the space heating market is today, but is really about phasing in market transformation. We can put natural gas off to the side for a while, but not for long because over half of our heating BTUs in these states come from methane.

A Bureaucratic Hurdle

In both states, there has been a historical concern about “fuel-switching”, which usually refers to the idea of using dollars paid by electric ratepayers to switch a home from gas, oil, or propane to another source. There’s nothing in the Bible or US Constitution prohibiting fuel-switching. Given the economic and environmental benefits at stake, we think it’s time to get over this hurdle.

The Next Step - Factoring Carbon Emissions into the Equation:

When Cadmus evaluated heat pumps, they weighed the benefits of displacing electric resistance, propane, oil and natural gas with mini-splits. They focused on the economic comparison. But if we added the value of reducing carbon emissions, the equation would change dramatically.

A year ago, Patrick Knight of Synapse Energy Economics wrote a blog for us showing how switching a lot of homes to heat pumps by 2030 is one of the cost-effective ways we can reduce greenhouse gas emissions 40 percent by 2030. Forty percent is a reasonable interim target on the way to 80% by 2050. After all, both states have statutory targets to reduce greenhouse gas emissions 80% by 2050. In Massachusetts, the Global Warming Solutions Act is binding – as the Supreme Judicial Court will tell you.

In 2014, the Mass. Department of Environmental Protection under then-Governor Deval Patrick proposed a new regulatory system for weighing the benefits of energy efficiency, one that included a much higher value for reducing carbon emissions. But Eversource and National Grid opposed the new system and the proposal (docket # 14-86) has stalled at the Mass. Department of Public Utilities.

Since then, there has been legislation proposed in both states that would create a price on carbon emitted by heating sources and rebate the proceeds back to households and businesses in proportion to how many people are in the family or employed by the company. The rebates would be progressive. Low and middle income people would come out better and upper income people would pay more. When the system is in place, things like heat pumps become relatively more attractive financially than things that cause more carbon emissions. At some point, you can imagine heat pumps replacing old gas-fired heating systems and becoming the norm in new construction.

But putting a price on carbon is not an idea just for the sake of heat pumps. It would create a rational playing field for all energy resources. If you like markets and you want less carbon, join the carbon pricing bandwagon.

But for the topic at hand, we have some excellent near-term opportunities to electrify space heating. In the long run, unless and until we put a price on carbon, either by adopting a system like 14-86 or through legislation, mini-splits will have a limited role to play.