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Heat Pumps

Saving families money on their heating needs?#

If families are interested in saving money, heat pumps are not really the first place to look. This is a bit contrary to some recent announcements by organizations pushing heat pumps. The report's numbers by Climate Institute are based on the carbon price and heat pump subsidy regime, which can always act to support heat pumps and electricity to make them cheaper.

While there are savings to heat pump technologies, they are very small and dependent on many variables. There is likely a better narrative to be had on them than "they save you money":

Note

Installing heat pumps along with other heating, cooling, high efficient air exchange, and insulation upgrades can be price neutral in the long-run compared to installing natural gas (or even standard electric base-board) heating only.

Why does this matter? Because while there are no cost savings, there are substantial reductions in emissions (if the electricity powering the heat pump is green).

The issue to be solved is the up-front costs of the installs and the machines. More complex heating and cooling systems using new technology are almost always going to have more up-front capital and labour costs. In addition, more equipment means higher maintenance costs.

These up-front costs are usually covered by debt, which means the interest rate on that debt can affect affordability of this option if done through private financial services.

On a broad national scale, when applied to new builds (or equivalent) and higher efficiency products, the benefits of heat pumps are pretty well established to reduce costs and emissions. So, it is usful to look at these policy implications at the macro level when determining why heat pump technologies are being pushed so hard by governments (and some industries).

Natural Resources Canada (NRCan) and the US Department of Energy (DOE) have extensive research on the efficiency of heat pumps working in concert with other forms of heating. The savings on a cost basis for new builds (or equivalent) and high-efficiency heat pumps are well known. And, the benefits on emissions are well established.

NRCan estimates and calculator#

In Canada, NRCan has been supporting the implementation of hybrid systems with collaborations with CanmetENERGY

CanmetENERGY has the modeling for size and costs of heat pumps here:

See below for the March 2023 estimates for savings of an EnergyStar rated heat pump.

Note: these numbers are for installing 10 split heat pumps. Unit costs $10K.

  • Net savings: $13,402 when spending $7,108 a year on operating costs (annual 50,529kWh) over the life of the unit. Importantly, this excludes maintenance costs.
  • CO2 equivalent of 10 heat pumps = 1 standard automobile

At 8°C, the coefficient of performance (COP) of air-source heat pumps typically ranges from between 2.0 and 5.4. This means that, for units with a COP of 5, 5 kilowatt hours (kWh) of heat are transferred for every kWh of electricity supplied to the heat pump. As the outdoor air temperature drops, COPs are lower, as the heat pump must work across a greater temperature difference between the indoor and outdoor space. At --8°C, COPs can range from 1.1 to 3.7.

On a seasonal basis, the heating seasonal performance factor (HSPF) of market available units can vary from 7.1 to 13.2 (Region V). It is important to note that these HSPF estimates are for an area with a climate similar to Ottawa.

NRCan research shows that energy savings are substantial even in Ottawa's cold winters. Recent studies show a 30% reduction in green house gas emissions from a hybrid system involving a heat pump, natural gas, and a smart switching system when compared to natural gas alone over one entire season.

NRCan estimates that the effective range bottoms out at -15°C to -25°C for brand new models.

NRCan Regs:

  • Cooling Seasonal Performance, SEER:
    • Minimum SEER (Canada): 14
    • Range, SEER in Market Available Products: 14 to 42
  • Heating Seasonal Performance, HSPF
    • Minimum HSPF (Canada): 7.1 (for Region V)
    • Range, HSPF in Market Available Products: 7.1 to 13.2 (for Region V)

EnergyStar rated efficient heat pumps are essentially cost neutral:

USA#

The USA standard for HSPF for effective use is 8.8.

The USA Department of Energy has required heat pumps with this efficiency be installed as of Jan 1 of this year.

As such, the President of the USA issued a executive order in June, 2022, to directly support the domestic production of heat pumps and their component parts under the Defense Production Act. This essentially created a massive subsidy for heat pump manufacturing.

The effect of this subsidy on price is undetermined at this point.

These programs are to reduce the total BTUs required to heat the average American home.

IEA#

The International Energy Agency has an overview of why governments are driving the heat investment boom. It is part of the IPCC's program of in-home energy efficiency targets agreed to by most nations.

These investments are also a result of the war in Ukraine's impact on natural gas prices and access in Europe. Though, mostly focused on industrial-scale deployments.

The paper, food and chemicals industries have the largest near‐ term opportunities, with nearly 30% of their combined heating needs able to be addressed by heat pumps. In Europe alone, 15 GW of heat pumps could be installed in 3 000 facilities in these three sectors, which have been hit hard by recent rises in natural gas prices.

Heat pump sales rise to 7 million by 2030 -- up from 2 million in 2021 -- helping achieve the REPowerEU objective of ending Russian gas imports well before 2030. This deployment reduces the consumption of natural gas by 7 bcm in 2025 and 21 bcm by 2030, an amount equivalent to almost 15% of EU pipeline imports from Russia in 2021.