Rocky Mountain Institute study shows that with heat pumps and smart thermostats, we can live better electrically

cover of study
Screen capture Rocky Mountain Institute

They say that we can 'Electrify Everything!' and have it all.

The environmental cri de cœur these days is Electrify Everything! Get our homes, offices and cars off fossil fuels because the electrical grid is decarbonizing. This is a wonderful idea, although this TreeHugger has suggested that it is more important to Reduce Demand! But let’s not be doctrinaire; we need both. As Frank Sinatra famously sang about Love and Marriage, you can’t have one without the other.

That’s why I was excited to learn about the Rocky Mountain Institute’s new report, The Economics of Electrifying Buildings, written by Sherri Billimoria, Leia Guccione, Mike Henchen and Leah Louis-Prescott. They look at the newish heat pump HVAC appliances, water heaters and smart thermostats and find, to my surprise, that they actually cost less to operate than fossil fuel powered equipment.

In many scenarios, notably for most new home construction, we find electrification of space and water heating and air conditioning reduces the homeowner’s costs over the lifetime of the appliances when compared with performing the same functions with fossil fuels. Costs are also reduced for customers in several retrofit scenarios…. New homes and homes currently lacking natural gas service also avoid the cost of gas mains, services, and meters not needed in all-electric neighborhoods.

cover housesRMI houses from cover/Screen capture

Now I will admit that I had trouble getting past the cover, because the RMI often seems to say that we can have it all. Years ago they said we could all have electric cars “made from ultralight, ultrastrong materials [that] can provide radically improved fuel efficiency without compromising performance and safety”, and now, big suburban houses with snout double garages, complicated dark roofs that make solar panel installation difficult to impossible (and not a solar panel in sight), and pickup trucks and SUVs in the driveways as the background image -- because we can have it all. Some might say that the choice of cover imagery is irrelevant but it sets the tone. The implication, the message from this and from Elon Musk and the Future We Want, is that if we just go all carbon-free electric from home to source, then we can just keep living the suburban dream.

Inside, they studied four locations in the USA: Oakland, California; Houston, Texas; Providence, Rhode Island; and Chicago, Illinois. They analyze what happens when you replace fossil fuel-powered equipment with heat pumps, including electric heat pump water heaters.

demand flexibility© RMI houses from cover

A key part of their analysis depends on “demand flexibility”, shifting loads from peak times, when electricity demand is high (and power is expensive) to off-peak times, using smart devices like thermostats.

The value of electric demand flexibility is likely to increase as variable renewables grow on the system, increasing the price spreads in electricity markets—customers’ ability to capture this value with intelligent devices can reduce the lifetime costs of electrification but depends on new rate designs and utility programs.

Hot water is relatively easy to time-shift; the biggest demand is in the early morning, when it has already been heated by cheap overnight power. It can even be controlled remotely by the utilities. Heating and cooling is a little harder, depending on smart thermostats, which work best when people clear out of the house during the day.

house with solar on roofRMI house with solar on roof/Screen capture

Finally, after showing another suburban house on a bulb with solar panels broken up into little pieces by a stupid side-gable on another garage-dominated street, they get down to recommendations.

To capture the near-term benefits of fuel switching where most beneficial, and to prepare for a long-term approach that includes widespread cost-effective electrification, we offer five recommendations for regulators, policymakers, and utilities. [Here are the ones that affect new housing:]

2. Stop supporting the expansion of the natural gas distribution system, including for new homes.

They will have a fight on their hands, given that the country is awash in natural gas thanks to fracking, but this is where we have to go.

3. Bundle demand flexibility programs, new rate designs, and energy efficiency with electrification initiatives to effectively manage peak load impacts of new electricity demand, especially in colder climates that will see increased peaks in winter electricity demand with electrified heating.

They acknowledge increased peaks, that there will be more electricity demand.

5. Update energy efficiency resource standards and related goals, either on the basis of total energy reduction across both electricity (in kWh) and gas (in therms), or on the basis of emissions reductions across both electric and gas programs. Otherwise, successful electrification could penalize utilities for not reducing electricity demand, even when it provides cost and carbon benefits.

This all good news and a wonderful strategy, but let's do the dumb stuff before the smart.

For renovations (and there are many millions of those needed) it is probably the best approach. But for new construction, it seems crazy to talk about heating systems in isolation from the building itself. Rarely in the study do they actually mention how much easier this all would be if the new homes had seriously, radically reduced demand through better insulation, windows and air sealing, how in colder climates there wouldn’t be serious spikes. How much easier time shifting of heating and cooling would be. How much easier it would be to decarbonize if demand was seriously reduced. Or as I keep saying, how much better dumb insulation is than smart thermostats.

There are a few other things they don't discuss much.

So what's wrong with this picture?

ge water heaterGeoSpring hybrid electric water heater from GE/Promo image

They don’t address the problems with heat pump hot water heaters -- that they are noisy (some say no worse than a hair dryer, others say they are worse than window air conditioners) and that in a heating environment they may not provide much benefit because they take the heat from the air, so they are robbing Peter to pay Paul.

They don’t ask whether people in Chicago or Providence who used to have furnaces but no AC are going to burn more electricity in the summer now that they have it because of the new heat pump.

They don’t take into account that more people are working at home and don’t actually set back the thermostat. There are so many variables in the way people live that are not accounted for, that make time-shifting scenarios really difficult to track.

They don’t model the wildly different scenarios that we might see for electricity and gas pricing over the next few years, or whether US electricity can continue decarbonizing. For example, President Trump has declared Canada to be a national security threat. What if he bans Quebec hydro-electricity imports? Then it’s back to coal.

They don’t discuss what being outside is like when every house has an AC condenser running all the time. (They caused wars in our neighbourhood as people who sleep with the windows open have to listen to the neighbour's condenser outside their window.)

They don’t mention that, with the exception of the CO2 heat pumps that only heat water, all of these heat pumps still are full of refrigerants that are still greenhouse gases with ozone depletion potential, and that billions of tons of refrigerant would need to be made if this scenario actually happened.

When they do occasionally address energy efficiency of homes, they don’t ask for much, noting that “electric space heating is less suitable in inefficient buildings: Space heating is closely tied to the energy efficiency of the building.” They also note that their new homes are more efficient than the old ones in their scenarios, which every new home is; they don’t model significantly beyond building code. They note that “especially in colder climates, building insulation and sealing measures will be particularly important to reduce energy from space heating and mitigate the need for costly upgrades to the electric grid to meet increased peak demand.”

Well, yes. They could have done the math and found that, in fact, as I suspect, doing more insulating and sealing were far FAR MORE effective at reducing electricity demand than getting a heat pump water heater or HVAC unit.

It's just not enough to go all electric.

Smart people who I admire tell me that electrifying everything is an important step in the right direction towards decarbonization. But it is not going to be easy and it is not going to be quick, and it is not in our control. And it's not enough.

In their report Reinventing Fire a few years back, the RMI proposed reinventing the car to go all electric; they proposed “radically improved fuel efficiency without compromising performance.” If the RMI is going to propose something as radical as getting rid of gas infrastructure they are going to have to go a lot further than just swapping out heat pumps for furnaces and changing water heaters. They have to go for radical building efficiency.

the future we wantthe future we want/Screen capture

I am totally down with David Roberts and the RMI and the new Electrify Everything! mantra. This is the Future We Want. But we can’t have it all, and it is not going to be solved just by electric cars, solar panels and now heat pumps. Decarbonization of the grid is a fantasy when the entire economy and government is dominated by the fossil fuel industry. As Americans saw with Obama and Canadians are finding with Trudeau, even centrist and left wing governments are beholden to it, and changing this will take decades. As individuals we have no control over decarbonization. There is really only one thing that we can do that we can be sure will make a big difference, which is to radically Reduce Demand!

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