Air Source Heat Pumps: Cold climate success may depend on CIP credit
When natural gas is unavailable in cold climates, air source heat pumps (ASHPs) hold potential to improve heating efficiency while cutting energy costs.
With Minnesota’s famously cold climate as a backdrop, CEE researchers are assessing the efficiency and reliability of new generation ASHPs in homes to determine how best to integrate the technology into utility efficiency programs. The project team has begun collecting data at several locations, and early findings suggest that ASHPs are capable of high performance as long as control settings are properly adjusted.
But even the most promising technologies require policies that allow for success. And when it comes to energy efficiency in Minnesota, our most crucial policy framework is the Conservation Improvement Program (CIP). Efficiency efforts recognized and served by CIP-supported resources have a much greater chance of broad success. So as our project team refines the technical approach to ASHPs, they are also assessing the policy implications of improving efficiency and reducing delivered fuel consumption.
And the stakes are high: Over 12% of Minnesota homes heat with electricity and another 16% heat with either oil or propane, together representing more than 500,000 homes. In 2013, Minnesotans paid over $660 million for oil and propane to heat their homes. This is particularly significant, because Minnesota imports all oil and propane it uses from outside our state, resulting in a substantial “dollar drain” from the Minnesota economy. And delivered fuel customers don’t have access to the benefits of CIP that the rest of the state has enjoyed for more than 30 years.
Advances in cold climate ASHPs open the doors to significant energy and dollar savings for Minnesota families and the state economy. In June 2016, CEE engaged ACEEE senior fellow Martin Kushler to provide a summary of relevant policy context and technical analysis in a paper titled “Analysis of the Policy Context and Potential for an Air Source Heat Pump Pilot Program to be incorporated into Minnesota’s Energy Conservation Program Structure for Cooperative Electric Utilities.”
As context, the statewide Conservation Improvement Program (CIP) is funded by utility customers and administered by electricity and natural gas utilities to help Minnesota households and businesses use electricity and natural gas more efficiently. While ASHPs do provide some electricity savings, much of their value comes from displacing less-efficient space heating fuels such as oil and propane — and (with limited exceptions for some low-income customers) there are currently no broad mechanisms for crediting such savings in delivered fuel toward a utility’s CIP goals.
Kushler also cites a prevalent concern about “fuel switching” as another possible impediment to the use of ASHPs under CIP. “Historically in Minnesota,” writes Kushler, “using a CIP program to encourage a customer to switch fuel sources between electric and natural gas utilities is at least discouraged, if not prohibited... [While] CIP provides an excellent policy structure for achieving electricity and natural gas savings, Minnesota has no comparable structure or funding for achieving heating oil and propane savings.” (With regard to the fuel-switching concern, CEE researchers are exclusively testing sites with either delivered fuel or electric heat, and run no risk of taking customers from natural gas utilities.)
In considering possible future programs, Kushler suggests that any useful programming would begin with a net BTU analysis to confirm that energy savings are feasible. For a pilot program, he suggests targeting homes that use delivered fuel or electric power for heating rather than utility natural gas.
Minnesota’s utility co-ops may be best suited to lead the way. Kushler concludes by calling for “one or more electric co-ops” to submit proposals for pilot programs to promote ASHPs within their CIP plan filings. Per Kushler, the proposed programs should contain the following elements:
- The program should be targeted to existing homes that use electricity, propane, or heating oil as their space heating fuel. All income levels would be eligible.
- To help ensure that the program is genuinely focused on energy conservation, the program should include incentives and assistance to facilitate building shell conservation improvements (i.e., insulation and air sealing) in the homes that install ASHPs.
- Cost-effectiveness should be based on total energy savings (electricity and heating fuel) of the package of measures installed in the home, taking into account any increase in electricity use from the ASHP.
- Any net electricity savings from the package would be directly credited toward the co-op’s energy savings goal under CIP.
- As long as the co-op meets the minimum 1% electricity savings from its normal CIP programs, any net savings in propane or heating oil from this ASHP program could be applied to the co-op’s CIP energy savings goal above the 1% level (using a BTU conversion of heating fuel to electricity).
Already, CEE’s preliminary results show that cold climate heat pumps can meet the heating load of a home down to 10 degrees Fahrenheit, with little backup assistance. And researchers are seeing a 50%-90% reduction in propane use at tested properties, which holds potential to eliminate an especially expensive winter purchase of propane.
As the policy context continues to evolve, CEE’s field results will be used to inform policy recommendations and help accelerate the integration of ASHPs into utility programs. With another heating season to be tested this winter, researchers intend to delve deeper, exploring and refining various heat pump controls to improve system performance. A final report will be completed in 2017.
Analysis of the Policy Context and Potential for an Air Source Heat Pump Pilot Program to be Incorporated into Minnesota’s Energy Conservation Program Structure for Cooperative Electric Utilities, Martin Kushler, ACEEE (2016)
CEE Cold Climate Air Source Heat Pumps project page
Field assessment of cold climate air source heat pumps, CEE researcher Nicole Kessler at 2016 ACEEE Summer Study