Climate Leadership & Community Protection Act Residential Heating Cost Assumptions

New York’s Climate Leadership and Community Protection Act (Climate Act) has a legal mandate for New York State greenhouse gas emissions to meet the lofty net-zero by 2050 goal. In order to meet the goal all energy sectors will have to be electrified as much as possible but that approach will adversely affect energy sector affordability.  Unfortunately, most New Yorkers are unaware of the law and only a handful understand the implications.  This article discusses the assumptions made for conversion costs for electrified residential heating and provides a table that can be used to estimate conversion costs.

I have summarized issues with the Climate Act and  written extensively on implementation of it because I believe the solutions proposed will adversely affect reliability and affordability, will have worse impacts on the environment than the purported effects of climate change, and cannot measurably affect global warming when implemented.   The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

The Climate Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda”.  Starting in the fall of 2020 seven advisory panels developed recommended policies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Over the summer of 2021 the New York State Energy Research & Development Authority (NYSERDA) and its consultant Energy + Environmental Economics (E3) prepared an integration analysis to “estimate the economy-wide benefits, costs, and GHG emissions reductions associated with pathways that achieve the Climate Act GHG emission limits and carbon neutrality goal”.  The integration analysis implementation strategies have been incorporated into the draft Scoping Plan.  Next year the Scoping Plan will be released for public comment.

On November 18, 2021 updated key results, drivers, and assumptions were posted on the Climate Act resources page:

• Integration Analysis – Benefits and Costs Presentation [PDF]
• Integration Analysis – Initial Results Presentation [PDF]
• Integration Analysis – Key Drivers and Outputs (“Key Drivers”) [XLSX]
• Integration Analysis – Inputs and Assumptions Summary (“Inputs Summary”) [PDF]
• Integration Analysis – Inputs and Assumptions Workbook (“Inputs Workbook”) [XLSX]

Unfortunately, those documents are the only documentation provided by New York State on the Climate Act webpage and it is insufficient to fully evaluate the Scoping Plan numbers.  The Inputs Summary document is a set of slides that only outlines the assumptions. The Inputs Workbook and Key Drivers spreadsheets are large, complicated and do not include explanations of the contents sufficient to decipher how the direct net costs of residential home heating were derived. The Inputs Workbook spreadsheet has 49 tabs with data and the Key Drivers spreadsheet has 68 tabs with data.  Many of the results listed in the presentations are documented in tables in these spreadsheets but there isn’t a summary table that totals all the component costs.  Furthermore, I have been unable to find a description of the general methodology much less a detailed flow description explaining how the numbers were derived in the presentation documentation tabs.

The remainder of this article discusses assumptions necessary to derive costs of electrified residential heating.  I also calculate the costs to convert existing residences to all electric heating using numbers in this documentation.

Electric Home Heating Considerations

The Integration Analysis estimates that the buildings sector is the largest source of GHG emissions.  In all the future scenarios building emissions reductions are driven by rapid electrification, increased energy efficiency, and improved building shells.  For home heating electrification means conversion to heat pumps and improvements to building shells to minimize the energy needed to heat homes.

How Stuff Works explains that “heat pumps use a small amount of energy to move heat from one location to another”.  There are two kinds of heat pumps: air source that extract energy in the atmosphere and ground source that extract energy from underground.  The advantage of ground source heat pumps is that below ground energy stays relatively constant throughout the year whereas atmospheric energy available in New York winters is so low that a backup heat source is required.  Ground source heat pumps are more expensive and need space for the installation so air source is the preferred retrofit alternative.  The Key Drivers spreadsheet lists the expected sales of each type of residential heating equipment over every year from 2020 to 2050 but does not provide documentation how the authors decided to apportion air source and ground source installations.

The Integration Analysis lists three types of building shell improvements (basic, deep and reference) but the description refining what they mean by those types is unavailable.  Because heat pumps are the preferred heating technology, I suspect that “deep” building shell improvements are equivalent to the international standard for passive buildings. It includes the following measures:

• Improved thermal insulation
• Reduction of thermal bridges 
• Considerably improved airtightness 
• Use of high quality windows 
• Ventilation with highly efficient heat recovery 
• Efficient heat generation (which in this case means heat pumps.

Note, however, that even the passive house website notes that “Not all buildings can be renovated to the Passive House Standard without great difficulty and cost”.  If a house cannot be renovated to meet those standards then are they condemned to using electric resistance heat which is not energy efficient?

Heating Climate Considerations

The Integration Analysis admits that a backup heat source will be required because of the New York climate.  In my opinion the more important consideration is how the climate will affect building shell implementation.  As far as I can tell the Integration Analysis specifies New York’s climate zones using the International Energy Conservation Code. As shown below there are only three climate zones.

In my opinion, there is a better, more detailed climate zone map for building zone upgrades.  The United States Department of Agriculture plant hardiness map has nine zones for New York.  It uses the average annual extreme minimum temperature for its classification which is a pretty good indicator for building shell standards when using heat pumps.  Note that the average minimum is above zero for only two of the nine zones, corresponding roughly to Integration Analysis climate zone 3.  It appears that New York Climate zone 5 should correspond to NYSDA zones 6a and 6b.  It appears to me that too many counties are in zone 5 and that they should be classified as New York Climate Zone 6.  If the average annual extreme minimum temperature is less than equal to -10^oF (USFDA zones 3b, 4a, 4b, 6a, and 6b) then I believe the deep shell upgrades are necessary for safety and comfort of residences that convert to heat pumps.

Home Heating Electrification Costs

This estimate of electrification conversion costs for an individual home is based on data in the Inputs Workbook spreadsheet, Tab: Bldg_Res Device Cost.  The Electrified Home Heating Integration Analysis Device Cost Assumptions table lists device costs for three categories of residential households: large multi-family, small multi-family and single family.  Costs are listed for the three types of building shell upgrades and for air source heat pumps, electric resistance backup heat, and ground source heat pumps.  The Integration Analysis Inputs Assumptions Workbook Residential Home Heating Electrification Costs table looks at the resulting combination of costs per household, building shell type, and type of existing heating system.  I assumed in the table that ground source heat pumps would not require backup heat but if you disagree simply add that cost.  There is a lot of information on this table so I will explain how to determine potential costs for my situation below. 

I live in a single-family residence heated with an efficient natural gas furnace.  In my opinion one of the disadvantages of heat pump technology is that the output heat is relatively low compared to a combustion sourced furnace.  The temperature at the register for a heat pump system is around 90^oF whereas in my house the temperature is around 120^oF.  However there some cold rooms in my house even when the furnace if providing hot air despite my best attempts to adequately insulate and reduce air infiltration.   My house is in plant hardiness zone 5b so I believe that in order to maintain safety and comfort throughout the entire winter my house would need improved thermal insulation, spots where there are thermal bridges would have to be fixed, airtightness improved, my double-glazed windows replaced with triple glazed windows, a heat recovery exchange system would have to be installed and that means a deep shell installation.  I live in a suburb where I don’t believe that a ground source heat pump has enough yard space for installation so the Climate Act option is an air source heat pump. 

According to the Integration Analysis the cost per device to replace my existing efficient gas-fired furnace is $3,085.  In order to provide backup heat, the cost of electric resistance heat also has to be added to the cost of the air source heat pump.  The cost differential is in the deep shell, single family, ASHP column on the efficient gas furnace row.  The expected cost to replace my natural gas furnace with an air source heat pump would be $57,869.  Note that for a “basic shell” upgrade the cost is “only” $19,142, $38,727 less. 

Discussion

For this article I am only going to list a couple of examples where the documentation has to be improved in order to provide meaningful comments on the integration analysis home heating electrification costs.

The cost estimate for an individual house conversion is relatively simple but there still are questions because of the inadequate documentation.  The replacement cost for an existing efficient gas-fired furnace is $3,085 but my last replacement furnace was significantly higher than that so it is likely that does not include the cost of installation.  Over the years my house has had upgraded insulation in the attic and walls, upgraded windows, and vinyl siding to replace the original cedar shake siding.  It is not clear from the documentation how existing houses would be upgraded.  Is the existing insulation ripped out, what level of existing window performance has to be replaced, are basements insulated, and how do you retrofit heat recovery system are all questions that spring to mind.  Without documentation for those points and many other issues it is impossible to verify the example $45,136 individual single family deep shell device cost.

The cost estimates for the entire state are much more complicated.  In the Key-Drivers spreadsheet there are tabs with building shell metrics.  Scenarios 2-4 note that in 2020 there were a total of 8,301,996 buildings with 48,551 basic shell residences, 37,699 deep shell residences, and 8,215,747 reference shell residences.  For scenario 2 (tab S2_Building Shells) in 2050, the integration analysis projects 8,684,001 residences, with 5,714,918 basic shell residences, 2,285,000 deep shell residences and only 684,080 reference shell residences.  On the other hand, according to the Inputs Workbook spreadsheet, Tab: Bldg_Housing Unit Summary there are 3,384,880 housing units in zones 5 and 6 that I believe all need to have deep shell upgrades.  Documentation explaining the rationale for basic and deep shell upgrade numbers is needed.

In order to calculate total state home heating electrification costs the existing building stocks for each type of heating source and type of building shell is needed.  Some sort of an implementation curve for converting home furnaces and building shells must be determined.  The big driver for costs is how many need a basic shell and how many need a deep shell.  The spreadsheets contain some of those numbers but the justification for the choices is lacking.

Finally, there is one especially troubling data issue. There isn’t a spreadsheet table available that lists the net present value of net direct costs shown in the following slide.  While the graphics in many of the presentation slides are backed up with spreadsheet tables this, arguably one of the most important sets of numbers, has no spreadsheet table for documentation.

Conclusion

This article provides a table with the Integration Analysis costs for heating and building shell technology that can be used to estimate the cost for an individual home heating electrification upgrade.  In my circumstance the replacement of my existing natural gas-fired furnace with an upgraded building shell, air source heat pump, and backup electric resistance heater would be between $19,142 and $57,869 depending on the building shell upgrade.  Using The Integration Analysis Inputs Assumptions Workbook Residential Home Heating Electrification Costs table and the Initial residential stock parameters in the Input Workbook spreadsheet and assuming that 70% of the heat pumps are air source and 70% of the building shells are basic I estimate that the total cost for residential electrification is on the order of $155 billion.

One of the controversial issues at the recent Climate Action Council meeting discussing the draft scoping document was consumer affordability and home heating costs were front and center in that discussion.  The authors of the Integration Analysis claimed that they could not provide direct costs to the consumer because more information is required to apportion the costs.  That does not excuse the fact that the existing documentation for the net direct societal costs described in the presentations to the Climate Action Council is incomplete.  If that information were available and documented then stakeholders could start to estimate potential costs. The net present value of net direct costs for Scenario 2 is $340 billion.  All of the assumptions and calculations for that number should be fully documented in the Scoping Plan.  There have been hints at the Climate Action Council meeting that there would be stakeholder sessions for specific components of the Scoping Plan.  Because of the importance of affordability, I strongly recommend that sessions on each of the components be considered.  Sessions exclusively on the costs for buildings, electric generation, and transportation should be included and a mechanism for technical questions and answers be implemented.