Climate Leadership & Community Protection Act Residential Heating Cost Assumptions Update

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 ambitious net-zero goal by 2050. Late last year before the  Draft Scoping Plan was released I published an article that included a table that could be used to estimate the costs to replace existing home heating systems with all electric systems using their assumptions  This post updates that information using the latest version of the integration analysis used in the Draft Scoping Plan and highlights another analysis of home heating electrification costs.

I have written extensively on implementation of the Climate Act because I believe the ambitions for a zero-emissions economy outstrip available technology such that it will adversely affect reliability and affordability, risk safety, affect lifestyles, will have worse impacts on the environment than the purported effects of climate change in New York, 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.

Climate Act Background

The Climate Act establishes a “Net Zero” target by 2050. The Climate Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda”.  The Climate Act requires the Climate Action Council to “[e]valuate, using the best available economic models, emission estimation techniques and other scientific methods, the total potential costs and potential economic and non-economic benefits of the plan for reducing greenhouse gases, and make such evaluation publicly available” in the Scoping Plan. Starting in the fall of 2020 seven advisory panels developed recommended strategies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Those recommendations were translated into specific policy options in an integration analysis by the New York State Energy Research and Development Authority (NYSERDA) and its consultants.  The integration analysis was used to develop the Draft Scoping Plan that was released for public comment on December 30, 2021. The public comment period extends through at least the end of April 2022, and will also include a minimum of six public hearings. The Council will consider the feedback received as it continues to discuss and deliberate on the topics in the Draft as it works towards a final Scoping Plan for release by January 1, 2023.

The Integration Analysis estimates that the buildings sector is the largest source of existing 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 that means conversion to heat pumps and improvements to building shells to minimize the energy needed to heat homes.  I refer readers to the previous article for additional background information.

Home Heating Electrification Cost Update

This estimate of electrification conversion costs for an individual home is based on data in the 2021-12-29-IA-Tech-Supplement-Annex I-Inputs-Assumptions spreadsheet, Tab: Bldg_Res Device Cost.  The data are consolidated and the calculated values are available in a spreadsheet. The Scoping Plan 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 only data that changed in this table from the mid-November spreadsheet were the basic and deep shell device costs for large and small multi-family homes.  The Scoping Plan 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 I determined 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 90oF whereas in my house the temperature is around 120oF.  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.   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 used in Draft Scoping Plan the cost per device to replace my existing efficient gas-fired furnace is $3,085 more than another gas-fired furnace.  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, or $38,727 less.  These numbers did not change from the previous article.

My previous article went on to estimate total costs for electrification and determined that the total cost for residential electrification was on the order of $155 billion.  Using the same methodology with the 2021-12-29-IA-Tech-Supplement-Annex I-Input-Assumptions spreadsheet data, the total cost for residential electrification drops down to $135 billion because of the basic and deep shell device costs for large and small multi-family homes.  Note that this highlights the importance of the building shell upgrades as a main driver of cost.

The previous article noted issues with the documentation that were not addressed in the more recent Scoping Plan documentation.  I noted that there wasn’t enough descriptive information to be able to determine the rationale for basic and deep shell upgrades necessary for a typical homeowner.  I also noted that there wasn’t a spreadsheet table available that lists the net present value of net direct costs.  I explained that while the graphics in many of the presentation figures and charts are backed up with spreadsheet tables this, arguably one of the most important set of numbers, has no spreadsheet table for documentation.  This problem still exists.

Smarter NY Energy Residential Electrification Costs

There is an assessment of costs to convert to electric heating at the Smarter NY Energy website that was completed in September 2021. According to the assessment description:

It is still unclear whether CLCPA implementation will force you to pay big surcharges for putting in a new natural gas, propane gas or heating oil furnace, or actually force you to convert to a heat pump. Either way, the cost is likely to be huge.

Pragmatic Environmentalist Update: In Governor Hochul’s 2022 State of the State book released in January 2022, Part VI-B:  Decarbonize New York’s Buildings, explains that the strategy to cut emissions from buildings will be “anchored by a robust legislative and policy agenda”.  This includes changes to building codes to “commit to zero on-site greenhouse gas emissions for new construction no later than 2027 and enact nation-leading building codes legislation”.  I interpret this to mean that in the 2022 legislative session we will see laws proposed to force New Yorkers to convert to electric heating first for new construction and eventually for all homes.

Proponents of heat pumps like to say that it only costs $7,000 to install a new heat pump. But that’s incredibly misleading. A single head heat pump might heat/cool a room or two. But an entire house? Get ready to shell out upwards of $20,000+ for a complete conversion. It is no simple thing.

Results reported from three different heat pump conversion programs run by the New York State Energy Research Development Agency (NYSERDA) and the Massachusetts Clean Energy Center (MCEC) confirm that typical homeowners would need to pay $20,00-$25,000 for a whole house conversion to heat pumps. A high efficiency gas furnace might cost ⅓ to ½ of this. Now consider that NY already has the 9th highest electric rates in the country source.

And cost doesn’t even address how uncomfortable many people feel using a heat pump in cold temperatures. Perhaps that’s why the Boston Globe reported that despite significant incentives, less than 500 homes had been converted to Heat Pump in MA in 2020, despite a goal of 100,000 per year.

The analysis of results from three different heat pump conversion programs is especially interesting in this context.  Joe Uglietto from Diversified Energy Specialists, Inc. authored the report.  He found that the MassCEC Whole-Home Air-Source Heat Pump Pilot Program included 53 existing building projects, the average conditioned square footage of home was 1,590 sq. ft., and the average project cost was $21,479.  In the MassCEC Residential Air-Source Heat Pump Rebate Program 2014-2019 He estimated that 622 homes were given rebates that could provide 80% or more of the residences annual heat load.  and the average conditioned square footage of home was 1,502 sq. ft. with an average project cost of $20,428.  In the NYSERDA Residential Air-Source Heat Pump Rebate Program 2017-2019, 386 whole house installations were completed with an average conditioned square footage of home was 1,663 sq. ft. with an average project cost of $16,272. 

There are several considerations for comparison with the Scoping Plan estimated costs.  An air source heat pump in the Scoping Plan is estimated to cost $14,678 which is less than the cost than in these programs.  However, I believe that all three programs included the cost of installation and because of the lack of documentation I don’t know if the Scoping Plan includes that cost.  The author notes that in all three programs the existing systems were retained because “The existing heating system is typically retained as a supplementary heat source to compensate for the inadequacy of air-source heat pumps on cold days.”  In the Scoping Plan the existing systems are removed and replaced with a supplemental electric heating system but this analysis notes that there is a cost for removal of the existing system.  Again, I do not know if that cost is included in the Scoping Plan.  Finally, note that the average conditioned space in these studies is 10 to 20% smaller than the median size of homes in Massachusetts and New York.  That suggests that these estimates are smaller than could be expected for the New York for most homes.

Conclusion

This article updates my previous estimates for electrifying an existing residence using the integration analysis data.  The table and spreadsheet can be used to estimate the costs to convert residences to electric heating consistent with the Climate Act mandates.

Because of changes in just basic and deep shell device costs for large and small multi-family homes the total estimated costs dropped from $155 billion to $135 billion.  Due to a lack of understandable documentation, it is not clear how these numbers relate to the total net direct costs of on the order of $300 billion.  Understanding that is important because these costs are over one third the total costs and just cover residential single, small multi-family and large multi-family electrification costs.  It does not seem likely that this category would account for one third of the total costs.

The Smarter NY Energy assessment of costs to convert to electric heating analysis suggests the Scoping Plan estimates are low.  In order to be credible the Climate Action Council needs to address the inconsistencies noted in this analysis.

Author: rogercaiazza

I am a meteorologist (BS and MS degrees), was certified as a consulting meteorologist and have worked in the air quality industry for over 40 years. I author two blogs. Environmental staff in any industry have to be pragmatic balancing risks and benefits and (https://pragmaticenvironmentalistofnewyork.blog/) reflects that outlook. The second blog addresses the New York State Reforming the Energy Vision initiative (https://reformingtheenergyvisioninconvenienttruths.wordpress.com). Any of my comments on the web or posts on my blogs are my opinion only. In no way do they reflect the position of any of my past employers or any company I was associated with.

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