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How do you reduce greenhouse gas emissions from one of the largest sources — buildings — without breaking the bank or the grid? To answer that question, the utility Puget Sound Energy (PSE) turned to DNV, a global risk management and assurance consultancy, to examine the benefits of heat pumps.
While heating, ventilation, and air conditioning technologies have vastly improved in efficiency over time, the intervals at which people replace these systems aren’t that frequent, so it may take decades to upgrade a carbon-intensive but otherwise properly functioning HVAC system. Utility programs to incentivize the replacement of older systems with more efficient ones can speed up the process, but in colder regions, that typically means simply replacing a system fueled by oil or natural gas with a more efficient but still fossil-fueled system. Electric heat was simply too inefficient and expensive for colder climates — until recently. Fortunately, the heat pumps on the market today have matured to the point where they are effective in places with colder climates, like Washington state. But they still need a little push for widespread adoption.
When data met heat pumps
PSE supports approximately 1.1 million electric customers and more than 900,000 natural gas customers and is at the forefront of heat pump deployment across the Evergreen State. The utility, which has worked with DNV on energy projects since 2010, wanted more data on potential customer and system impacts of dual-fuel heat pumps. “I was already in conversation with the customer on a potential project related to load forecasting when a question came up around dual-fuel heat pumps,” said DNV Principal Consultant Kevin Cracknell. “My response was that DNV has the data and expertise to help.”
So DNV and PSE devised a pilot program that provided incentives for two types of heating and cooling systems: dual-fuel heat pump systems and cold-climate heat pump systems. The pilot targeted customers who were either interested in adding a hybrid heat pump system to their natural gas furnace or replacing their electric forced hot-air furnace with a cold-climate heat pump.
What are dual-fuel heat pumps?
Dual-fuel systems have a standard heat pump, which can provide heating down to about 35 degrees Fahrenheit, paired with a natural gas furnace, which turns on when temperatures drop below 35°F. The cold-climate systems are rated to provide 100 percent heating until temperatures drop to about 5°F.
With average winter temperatures between 30 and 40 degrees Fahrenheit, PSE’s territory is an ideal place to deploy heat pumps. But electrification comes with challenges. If the majority of PSE’s 900,000-plus gas customers made the switch to electric heat pumps, the impact on the grid could be significant. Because the impacts on energy savings and peak load from heat pumps hadn’t been closely studied, PSE needed to fully understand the implications before it considered expanding the program. “When it comes to energy efficiency programs, utilities need information backed up by sound science. The DNV team provided critical information on heat pumps to PSE so they can move the energy transformation forward,” said Geoff Barker, a principal consultant at DNV and the sponsor of this project.
To get a clear picture of typical consumption patterns, DNV completed a preliminary analysis using unique localized data, including residential saturation surveys, daily gas data, and interval advanced metering infrastructure (AMI) data. The data was available through DNV’s existing end-use data development work as well as load research completed to support PSE’s gas and electric utility rate cases. Using this data, DNV examined consumption patterns on the basis of outside temperature, home size, and heating technology. DNV’s preliminary analysis enabled PSE to confidently validate assumptions on energy use and changes in load, which got the utility team excited for a more detailed study.
Then PSE engaged DNV to evaluate how much money energy program participants saved and how the new equipment changed peak demand during the heating season. Both these statistics are important — participants need to see at least a small dent in their energy bills to make their investment worthwhile, and the utility needs to make sure the grid can handle the increased demand. Measuring energy savings was relatively simple. DNV analyzed billing data to estimate annual heating savings and hourly peak demand, modeled consumption data, and then estimated annual savings using weather-normalized daily consumption and peak-demand impacts.
A sample of dual-fuel heat pumps were also submetered to determine when the heat pumps or gas furnaces were being used and at what outdoor temperatures. To measure the difference between the modeled and actual consumption, the submeter data was also compared with the consumption data in the AMI billing analysis.
From an energy savings perspective, results were positive: The pilot program showed that all the program participants reduced the total amount of energy used to heat their homes. For participants who switched from an electric furnace to a heat pump, all the energy savings were due to the greater efficiency of the cold-climate heat pump. Results were mixed for participants who switched from a gas furnace to a heat pump and for those who installed a hybrid system. While their electricity use increased, that was countered by a reduction in gas consumption, and thus a reduction in their overall home energy use.
Just as important to PSE was the program’s effectiveness. DNV explored the experiences of the customers who switched to hybrid systems, the contractors who installed the equipment, and PSE staff to understand all aspects of the program. Unlike the energy savings evaluation, this analysis depended on interviews and surveys, and provided PSE with insights on how to improve the program moving forward.
The good news is that all participants were very satisfied with the new equipment. Customers rated their experience with the program very highly, and a majority of them would recommend a similar heat pump system to their friends and family. For energy savings, the average satisfaction rating for customers with a cold-climate heat pump was 4 out of 5. For owners of a hybrid system, it was slightly lower, 3.9 out of 5, likely because the overall savings were a bit less than expected.
What’s next for heat pumps in Washington state? DNV identified several areas where the program could be improved, including the need for more clarity on how to optimally run the hybrid heat pump systems (some participants had their gas heating kick in at temperatures as high as 50°F, and others let it run at any temperature). PSE plans to provide incentives for hybrid heat pump systems for the next 5 years and will continue to evaluate the energy savings, peak demand, and carbon emissions impacts over the next few years.
Additionally, future participants and their systems will provide more data, which will help increase understanding of how hybrid heat pump systems impact energy consumption — giving the industry a greater understanding of this emerging opportunity. PSE plans to provide incentives for hybrid heat pump systems for the next 5 years and will continue to evaluate the energy savings, peak demand, and carbon emissions impacts of the systems over the next few years.
“The collaboration with DNV has allowed us to gather valuable data that will help shape the future of home heating in our region.”
Jesse Durst, senior market analyst at PSE
PSE’s pilot heat pump program is laying the foundation for significant decarbonization in Washington state, ensuring that its customers are saving energy, reducing greenhouse gas emissions, and keeping warm all winter long. But the impact of this pilot program goes beyond the state’s borders. The data and insights DNV has amassed are a solid foundation for utilities, contractors, and customers to understand the value of heat pumps as an effective tool for decarbonization.
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