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Replacing a central air conditioner? Get a heat pump instead.

image credit: Jay Stein
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Senior Fellow Emeritus, E Source

Jay Stein, a Senior Fellow Emeritus affiliated with E Source, is one of America's leading energy technologists. Over the course of his over 40-year career he has played numerous roles, including...

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  • Nov 17, 2022
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I’ve got a 20-year old air conditioner and when it fails, which will likely be soon, I’m going to replace it with a heat pump. If you’ve got a central air conditioner in your home, I want you to join me. Here’s why.

Heat pumps are simply air conditioners with a reverse gear. In the summer, they cool down your house and move the heat outdoors. In the winter, they run in reverse, sucking heat from outside (even when it’s very cold) and moving it into your home. For every unit of electricity you put into them, they can move anywhere from two to five units of heat.

If you replace your air conditioner with a heat pump, you’ll most likely reduce your heating season utility bills, reduce climate emissions, and help advance our country’s move away from fossil fuels. Best of all, you’ll get those benefits at little to no more money than you were already planning to spend (assuming you were going to replace your existing air conditioner).

The difference between manufacturing a heat pump and an air conditioner is small, largely consisting of a factory-installed valve and some additional controls. In the field, heat pumps also require a few additional components and controls. The installed cost differential between the two is usually less than $2,000. The recently enacted Inflation Reduction Act offers offers a 30% tax credit on a qualified heat pump, up to $2,000. Chances are good that the IRA’s tax credit, combined with any local incentives, will come close to covering, or even exceeding, any additional costs you might face.

Every day, on average, about 10,000 air conditioners are replaced in the US, and that equipment that will remain in place for another 15 to 20 years. That moment when an air conditioner needs replacement offers an opportunity to add another heat pump to the nation’s fleet at little expense or trouble. I won’t let that moment go to waste, and I urge you to not to either.

The devil’s in the details

Since my proposed action seems simple on the surface, but actually involves quite a bit of complexity, please allow me to flesh out the details. Even though the life of a residential central air conditioner is considered to be about 15 years, ours has lasted so much longer because my wife and I rarely use it. We live in Boulder, Colorado, and mostly cool the house using outdoor air and a whole-house fan. Our air conditioner is so old that if even the slightest thing goes wrong with it, we won’t repair it. We’ll just junk it.

When that happens, or maybe even next spring, we plan to replace it with one of the higher efficiency heat pumps on the market. We’ll probably just replace it with a unit that features the same cooling capacity as the existing unit. That way we won’t need to add any additional circuits to our electric panel, and our existing air ducts won’t need any modification. Both of those actions can be expensive to accomplish, with costs in the range of thousands, or even tens of thousands of dollars.

Instead, we’ll face two different categories of much smaller costs. First will be the heat pump upgrade charge, a new thermostat, and a few specialized components. Those items will likely add up to less than $2,000, which equals the amount of money we expect to save via the Federal tax credit.

The second category is a charge that won’t be an issue for us, but might be for others. The IRA’s newly expanded tax credit comes with a requirement that claimants buy a more efficient heat pump than the government standard. How much more hasn’t been finalized yet. We’re planning on buying one of the most efficient units on the market and will likely easily clear that bar. If you would likely purchase standard efficiency equipment, maybe because you live in an area with little heating and cooling load, you’ll face an additional upgrade charge. Check to see if your local utility or municipality offers incentives that offset at least some of that cost.

On the heating side, we’ll leave our existing 98% efficient natural gas furnace in place for backup, as our new heat pump might not be big enough to keep our house up to temperature on the coldest days. We’ll also replace our thermostat with one that will switch over to the furnace when it gets so cold outside that the heat pump can’t keep up. It’s possible to get a thermostat that switches over to backup when it’s typically cheaper to run our furnace than our heat pump, but we’ll just set things up so we use as little natural gas as possible.

The average household in the contiguous 48 US states that goes through with a plan similar to ours, also known as hybrid heating, will save $253 off its annual heating bill, and reduce its annual global warming emissions by 1.25 metric tons. People with propane, oil, or electric resistance heat will save more, and those with natural gas heat will save less. Those projections come to us from a policy and research team affiliated with CLASP, an international nonprofit whose mission is to improve the energy efficiency of appliances and equipment.

In addition to our personal benefits, there will also be societal benefits. Every year in the US consumers purchase over 6 million central air conditioners. If a sizable portion of these are upgraded to heat pumps that will help expand the business ecosystem that supports heat pump installations and service, and pave the way for future programs that eliminate all fossil-fuel-burning heating systems.

What’s not to like?

While I’m excited about replacing my air conditioner with a heat pump, I have heard a few criticisms of my plan. They mostly center around the idea that it doesn’t go far enough, because it only offsets a portion of fossil-fuel heating energy and leaves gas furnaces and other backup heating systems in place. My take on these arguments is that once again we’re witnessing the ongoing battle of the perfect versus the good, and that we should grab whatever good opportunities to reduce greenhouse gas emissions that present themselves now. Here are the criticisms I’ve heard and my thoughts on them:

Not enough energy savings. The CLASP research team expects that hybrid heating systems will reduce backup heating system energy consumption on average (in the 48 contiguous states) by about 36%. In tests in Michigan, combining heat pumps with propane furnaces reduced furnace energy consumption by about 50%. Some folks advocate for whole-home electrification programs that achieve far more energy savings by motivating homeowners to improve the thermal performance of their walls and windows, junk their old heating systems, cap off their fuel lines, and install heat pumps that are big enough to provide all, or nearly all, of their home’s heating needs.

That concept has been shown to achieve whole-home energy savings, not just heating system savings, of 58% to 79%, depending on which climate zone the home is in. While achieving such energy savings is attractive, it’s also expensive. Analysts from the American Council for an Energy Efficient Economy project that individual projects would cost from $42,000 to $57,000. The IRA does contain some funding to enable low-income households to engage in such extensive retrofits, but for folks just claiming the heat pump tax credit, it’s not nearly enough to drive many such retrofits. While I wouldn’t want to dissuade anyone who wants to do a whole-home electrification retrofit, the old saying, “Half a loaf is better than none,” seems to apply here.

Hybrid heating leaves gas furnaces connected to the natural gas supply grid. Natural gas is largely composed of methane, which is a much more potent greenhouse gas than carbon dioxide. Methane escaping from natural gas production sites and pipelines is one of the leading contributors to overall US climate emissions. I’ve had environmentalists tell me that they objected to the hybrid heating approach because it left natural gas burning equipment in place. They said they wanted to completely replace that equipment so that, ultimately, the gas grid could be shut down, and all the methane emissions associated with it eliminated.

As enticing as their vision may be, let’s not discount the value of methane leaks avoided by hybrid heating systems. Far more methane emissions take place at the production stage of the natural gas supply system (which includes the wells and processing facilities), than in the furnace and distribution piping within the home, according to University of California researchers. That means that even though gas burning equipment is left in place, just reducing gas consumption will ultimately reduce demand at the production stage, significantly reducing methane leakage. That reduction may not be enough to please everyone, but it’s more than enough to not be dismissed.

Heat pumps cost more to run than gas furnaces in some places. The CLASP researchers found that for homes with oil, propane, or electric resistance heat, adding a heat pump will reduce utility bills everywhere in the 48 contiguous states. For people with natural gas heating, the CLASP researchers determined that almost all hybrid heating adopters would save money, but did identify 6 states in which homeowners would experience increased utility bills. Those expected increases were small, ranging from $9 to $66 per year.

Nearly all hybrid heat pumps can be controlled so that their operating costs are less than that of a gas furnace. It’s just a matter of choosing the the right outdoor temperature to switch over from the heat pump to the furnace. That’s because the colder the outdoor temperature, the less efficiently the heat pump operates. The trick is to determine the temperature at which both the heat pump and the furnace exhibit equal operating costs.

The CLASP researchers assumed that the hybrid heating systems they analyzed would switch to backup heat at 41℉ everywhere, which is a reasonable assumption for a nationwide analysis. In the field, heat pumps in the higher operating cost states probably would be operated at a higher switchover temperature. To calculate the switchover temperature based on your local energy costs and selected heat pump, there’s an app for that. You can learn about it a dualfuelhp.com.

In summation, when you look at the enormity of the problem—there are 54 million homes in the US that feature both air conditioners and heating systems according to the CLASP researchers—the inherent complexity and expense associated with completely replacing a sizable portion of those systems with heat pumps is an overwhelming task. Taking advantage of an opportunity now to add heat pumps millions of homes, with little cost and complexity, just seems like too good a deal to pass up. Later on, over time, we can make investments to improve home efficiency, reduce heating loads, and electrify more equipment.

Public policies that can help

If you decide to install a hybrid heating system you might find yourself bumping up against a few obstacles. Don’t worry, they’re all surmountable for a tenacious early adopter. If we want large numbers of homeowners to replace failed air conditioners with heat pumps, it’s going to take action by governments and trade associations to mitigate these obstacles. Here they are: Heat pumps aren’t produced and stocked by the industry in sufficient numbers to be instantly available to homeowners in many areas. Many contractors are not familiar with some of the subtle differences between installing an air conditioner and a heat pump. Many contractors are not well acquainted with the hybrid heating concept.

When air conditioners fail, they usually crap out during the summer, when temperatures are high, and homeowners want them replaced fast. If those homeowners are in northern climates, they may find that their local distributors don’t keep lots of heat pumps in stock. There’s a good reason for that. Those distributors don’t typically sell a lot of heat pumps. The problem is that few homeowners will want to wait around sweltering in the heat for a new heat pump to be shipped from the factory.

The solution to this problem is for manufacturers to make more heat pumps, and fewer air conditioners, and for distributors to stock more of them. One way the federal government can help encourage both of these things is to use the Defense Production Act. The DPA empowers the US president to “allocate materials, services, and facilities” for national defense purposes. In June of this year, President Biden found that a shortage of heat pumps “would severely impair national defense capability,” and called for their domestic production capacity to be expanded.

The US Department of Energy plans to use $250 million authorized by the IRA for this purpose. Exactly what the DOE will do with this money hasn’t been decided yet, but funding manufacturers to retool some of their air conditioner production lines would be a worthy use. Also, the government could guarantee to distributors who stock more heat pumps that it will cover the cost spread between heat pumps and air conditioners for units that don’t sell.

The hybrid heating concept can also be moved ahead by training contractors about some of the subtle differences between installing heat pumps and air conditioners. For example, with heat pumps, the outdoor units should be elevated so they stay above the snow. It would also help to enable contractors to explain hybrid heating to their customers and demonstrate the benefits.

Lastly, governments can market to consumers nationwide on the benefits and logistics of hybrid heating. That way, they’ll be prepared when their air conditioners fail. The more homeowners ask for heat pump replacements, the more distributors will keep them in stock. The campaign the EPA commissioned to disseminate information on its Energy Star program might make a good model. If the government does decide to pursue such a marketing campaign, I’ve got a slogan to propose: An opportunity to install a heat pump is a terrible thing to waste.

This post originally appeared on the Energy Technology Revolution website.

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