Advancing Beneficial Electrification with Heat Pumps

In 2019, New York State implemented one of the nation’s most aggressive policies on climate change, the Climate Leadership Community Protection Act (CLCPA). The CLCPA calls for an 85% reduction of greenhouse gas emissions by 2050. To support the CLCPA, PSEG Long Island, with its program designer and implementer TRC, incorporated new strategies to maximize the existing suite of energy efficiency programs’ savings, including measures that are powered by electricity rather than oil, propane, and gasoline. These new measures included lawn equipment, non-road vehicles, and heat pump pool heaters. Because these measures represent an increase in electric energy consumption, reporting savings in kWh was not appropriate. To align goals to better reflect the environmental impacts of the portfolio, PSEG Long Island’s savings targets changed from kWh reduction to fuel-neutral MMBtu reduction. Utilizing electricity to power equipment is more environmentally friendly than using fossil fuels such as gasoline and heating oil because the electric plants that power the grid use cleaner fuel. As the grid becomes cleaner through the use of more renewable generation sources, electric powered equipment becomes even more environmentally friendly.

To introduce the concept of beneficial electrification and proactively address potential market barriers, PSEG Long Island introduced attendees at its annual energy efficiency conference held in October 2019, to beneficial electrification measures. The conference, geared toward PSEG Long Island customers and energy efficiency trade allies, traditionally draws crowds that exceed the capacity of the venue (over 600). During this conference, TRC introduced a commercial beneficial electrification program while also promoting several opportunities for attendees to learn more about heat pumps and the utility’s newly revamped residential HVAC program.

The conference offered educational sessions on beneficial electrification measures and the importance of rebating these measures to achieve the state’s goals. Building on this momentum in 2020, beneficial electrification equipment was introduced into the residential products program, allowing people to apply for rebates for common beneficial electrification measures, such as lawn mowers and weed trimmers.

The Case for Heat Pumps

The program team started a new energy journey by analyzing equipment replacement scenarios that would result in the most greenhouse gas emissions savings. This led immediately to a review of home heating equipment. The vast majority of Long Islanders, nearly 90%, heat their homes with fossil fuels, 40% with oil.

 
Because of this heating system mix on Long Island, significant MMBtu savings can be realized in oil heating to heat pump conversions.  A heat pump is a heating and cooling technology that displaces heat from one place to another. Like a a refrigerator or an air conditioner, heat pumps can keep a space cool by removing heat. What make heat pumps great beneficial electrification measures on Long Island is that unlike air conditioning, heat pumps warm spaces too, by transferring heat from outside air into a space.  Heat pumps are essentially air conditioners that operate in reverse, and because of advances in heat pump technology, heat pumps can meet the heating demand, even on a cold winter day in the northeast.

Figure 1: Long Island Home Heating Source

While heat pumps have been offered in the electric utility’s energy efficiency portfolio for a number of years, the equipment was rebated under the residential air conditioning program as cooling equipment that can supply supplemental heating. Because kWh savings was the goal, the savings methodology included comparison against an inefficient heat pump baseline, and any displaced fossil fuel was not considered. As PSEG Long Island’s focus shifted to include beneficial electrification and MMBtu savings goals, that displaced fossil fuel savings could be claimed, and PSEG Long Island could invest more budget and rebate dollars in the promotion of air-source heat pumps. Air-source heat pumps are now promoted as a primary heating source. The residential efficiency heat pump programs provide substantial customer rebates and contractor incentives in order to increase participation and achieve the program’s savings goals.

Most notably, heat pumps are typically two to three times more efficient than traditional fossil fuel space heating and provide clean heating and cooling in one piece of equipment.

With improved efficiency over air conditioners during the summer months, and lower operating costs than many boilers and furnaces during the winter months, heat pump technology can save customers money and improve indoor air quality by reducing the need for burning fossil fuels on-site.

 
To drive the adoption of heat pump technology, in 2019 PSEG Long Island enhanced the existing air-source heat pump rebates to alleviate the up-front equipment costs associated with conversions and to encourage customers to install the technology. They also introduced substantial contractor incentives to ensure that equipment was properly sized for the space and properly operated by the customer. To measure the success of the program, TRC developed a methodology to quantify the positive environmental impacts of the new measures, ensuring that the resulting electrification is truly beneficial and doesn’t increase customer costs or carbon emissions.

Fuel-Neutral Calculation Methodologies

Fuel switching technologies yield negative kWh savings; they are adding electric load. Utilities with kWh savings targets could potentially be penalized for introducing environmentally friendly measures to the portfolio mix. To realize accurate energy savings, the PSEG Long Island team developed a methodology to calculate energy savings in a fuel-neutral way. This required a fuel agnostic metric that would reflect the total positive environmental benefit of the measure, combining electric and fossil-fuel savings. PSEG Long Island reports that savings in MMBtus. Using an air source heat pump as an example, the table below shows the comparison between kWh and MMBtu savings associated with a fuel switch.

 
Path to MMBtu Savings Metric for Electrification Programs:

Lawn equipment is another great example of beneficial electrification and where a methodology modification was required. The below algorithm details how if there is negative kWh savings/increase in kWh there is positive overall MMBtu savings. Gasoline consumption is converted to MMBtus. Electric consumption is also converted to MMBtus. Together the gasoline and electric consumptions equate to PSEG Long Island’s BE MMBtu. The MMBtu savings associated with the fuel switch from gasoline to kWh is the sum of the two, yielding overall positive MMBtu savings.

EE kWh=0
BE kWh=546.07
Delta kWh=-546.07
EE MMBTU=0
Existing gallons of gasoline=409.08
BE MMBTU=(409.08*120286/1000000)-(546.07*0.003412)=49.2MMBTU
Total MMBTU=0+49.2=49.2 MMBTU

Barriers to Electrification
Based on extensive market research, the program designers identified the following trends among utility customers:

•    Electric equipment is perceived as more costly;
•    Fluctuations in the cost of fossil fuels are typically not accounted for when comparing fossil-fueled equipment vs electric equipment;
•    There is unfamiliarity with the concept of electrification and its associated benefits i.e. reduced carbon emissions;
•    Customers may distrust the utility’s motives for increasing the percentage of equipment that runs on electric power;
•    There may be resistance to quickly adopting new technology; rather, waiting for it to become more mainstream.

Brochure for the electric utility’s residential HVAC programs, describing the benefits of geothermal heating

PSEG Long Island addressed these potential market barriers by developing educational materials and conducting training sessions for the program’s network of trade allies, who are essential in delivering customers positive program experiences. The goal was to translate New York State policy into layman’s terms, making it clear that beneficial electrification is an effective tool for saving customers money and reducing greenhouse gas emissions.

Another way to improve the affordability of beneficial electrification is on-bill financing and a cost-effective program offering. In 2020, PSEG Long Island integrated its Heat Pump offering with its Home Performance with ENERGY STAR weatherization program. Customers can weatherize their homes to increase the cost-effectiveness and efficiency of their heat pump. Customers also have access to project financing through New York State’s Green Jobs, Green New York (GJGNY) program, which can be paid each month through their monthly utility bill. To make this offering even more attractive, GJGNY mandates that the monthly customer bill should not be higher with the new GJGNY payments. This ensures that customer bill impacts are limited and helps make this program affordable to more people.

Future Outlook

The program, to date, is currently at 161% of its heat pump installation goal despite the business interruptions related to COVID-19. PSEG Long Island is able to claim energy savings for the partial or complete displacement of fossil fuel equipment, and year to date savings exceeds 48,000 MMBtus and 2,456 metric tons of CO2 emissions. These savings are equal to the total annual energy consumption of almost 550 homes in the U.S.

 
Looking forward, TRC and PSEG Long Island will continue to support New York State’s clean energy policies and pave the way for fuel-neutral savings methodologies. The utility plans to rebate 30,000 heat pumps (inclusive of air-source, ground-source, water heaters, and pool heaters) resulting in 1 TBtu worth of savings by 2025.

Through innovative program changes, savings calculation methodology modifications, and customer solutions, we will reach our goals and transform the market.

Katherine Montijo is the Associate Director for TRC where she manages the Design, Tech Support, and Inspector Teams for PSEG Long Island. It is her responsibility to research, recommend, and design energy efficiency and demand reduction programs.

Evelyn Dean is a Program Design Analyst for TRC where she works on the PSEG Long Island programs, developing customer facing applications, online portals, and participating in the proposal writing process.
 

Meaghan Rush is a Program Design Engineer for TRC supporting the PSEG Long Island Energy Efficiency programs. She is responsible for researching, analyzing, screening, and implementing new, or evolving energy efficient technologies.
 

Swapnil Gore has a strong engineering background complemented with a double master’s degree in Energy Analytics & Policy, and Mechanical Engineering. He is TRC’s team lead for the technical support engineering group.

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