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Space Heating with Heat Pumps: The Need for Alternative Rate Designs in Massachusetts

Client: Green Energy Consumers Alliance (GECA)

Author: Joshua R. Castigliego, Elisabeth Seliga, Elizabeth A. Stanton, PhD

December 2023

On behalf of the Green Energy Consumers Alliance (GECA), Researcher Joshua R. Castigliego, Assistant Researcher Elisabeth Seliga, and Senior Economist Elizabeth A. Stanton prepared a white paper that presents a preliminary assessment of costs to customers heating with air-source heat pumps, and discusses the need for alternative electric rate designs to make heating electrification cost effective in Massachusetts. An “operating cost gap” is a measure that can be used to determine whether switching from one heating system to another would be a cost-effective choice for a given household. The “cost gap” is the difference between current and expected future operating costs and can be used to compare different heating systems. A household looking to electrify its heating system by switching from a gas-fired furnace to electric heat pumps will include this operating cost gap in its decision-making. AEC’s analysis finds that an average-sized Massachusetts home heating with air-source-heat pumps (ASHPs) versus gas-fired heating results in an operating cost gap, under current gas and electric rate schedules, between $166 and $605 over the 6-month heating season between November and April.

Alternative rate designs have the potential to close the operating cost gap between heating technologies, which would make ASHPs a cost-effective heating option relative to fossil-fuel heating systems like gas-fired furnaces. By exploring and implementing alternative rate designs, Massachusetts would be able to make ASHPs more attractive to consumers, which would stimulate the widespread adoption of electric heat pumps and support its decarbonization efforts in the buildings sector.

AEC's Heating Electrification Assessment Tool (AEC-HEAT) was utilized in this analysis to estimate the heating component of a residential customer's energy usage

Link to White Paper

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tags: Joshua-Castigliego, Elisabeth Seliga, Liz-Stanton
categories: Electric Rate Designs, Heating Electrification
Thursday 12.14.23
Posted by Liz Stanton
 

AEC's Heating Electrification Assessment Tool (AEC-HEAT)

Client: Green Energy Consumers Alliance (GECA)

Author: Joshua R. Castigliego, Elisabeth Seliga

December 2023

On behalf of the Green Energy Consumers Alliance (GECA), Researcher Joshua R. Castigliego and Assistant Researcher Elisabeth Seliga developed a spreadsheet-based tool—AEC's Heating Electrification Assessment Tool (AEC-HEAT)—that (1) compares heating costs for various resource types and (2) evaluates the impact of new space heating electrification on regional peak electric use during the winter heating season.

AEC-HEAT houses two Dashboard tabs (i.e., Heating Costs Dashboard and Load Profile Dashboard) to provide users with an interface to evaluate impacts associated with space heating electrification. Users can customize the tool by selecting parameters from drop-down menus or inputting their own data values. AEC-HEAT is currently equipped to perform assessments specific to Massachusetts but has the ability to evaluate other jurisdictions pending data availability. AEC-HEAT's User Guide and Methodology document provides an overview of the tool as well as the methodological approach, parameters, and data requirements.

AEC-HEAT was utilized in the analysis for AEC’s December 2023 white paper, Space Heating with Heat Pumps: The Need for Alternative Rate Designs in Massachusetts.

Link to AEC-HEAT [Excel Workbook]

Link to User Guide and Methodology

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tags: Joshua-Castigliego, Elisabeth Seliga
categories: Heating Electrification, spreadsheet-based tool
Thursday 12.14.23
Posted by Liz Stanton