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Your climate disaster zone is ruining your skin.
If you’ve been avoiding making your annual skin screening appointment for, like, years, rest assured that some things never change: Dermatologists are still obsessed with telling you to wear sunscreen, and your mole probably isn't cancerous (you should get it tested, anyway). But while paper robes with confusing openings aren’t going anywhere, conversations about climate change don’t typically make it into the examination room.
Some doctors think maybe they should. Our skin is our largest organ as well as the one that interacts most immediately with our environment, serving as the first line of defense against harmful microbes; a barrier against UV radiation and pollution; and a regulator of our body temperature via sweat glands. It is, as a result, on the frontline of how our bodies handle their increasingly extreme environments.
Though the International Journal of Women’s Dermatologydevoted an entire 2020 issue to climate change, which ran over 120 pages, looking at dermatology through a climate lens is still gaining traction in the medical community.
“When I lecture about climate change, I invariably get lower grades and more negative comments, including hate mail,” Dr. Misha Rosenbach, an associate professor of dermatology at the University of Pennsylvania, co-founder of the American Academy of Dermatology’s climate change and environmental issues expert resource group, and the co-author of the Women's Dermatology introduction told me, speaking in the capacity as an individual. “And every time I give a lecture, someone will stand up and say it’s a hoax from China — like literally, without fail, no matter what venue, some doctor says it’s a hoax.”
At the same time, the dermatologic response shouldn’t be limited to “wear more sunscreen” and “limit your time in wildfire smoke.” Since our skin is our primary defense against the external world, it is also being impacted in as many ways as there are expressions of climate change. Here are just a few, broken down loosely by American geography.
The northeastern United States is warming faster than the rest of the country, and unlike the southern U.S., where climbing temperatures will make regions far less habitable, winters and shoulder seasons in the East are becoming, well, pretty pleasant!
But the good weather also means people are spending more time outside. And remember the ozone layer? Though the Montreal Protocol in 1987 helped eliminate the chemicals that were causing its depletion and consequently exposing people to higher levels of UV radiation, its full recovery isn’t expected “until 2050,” the World Health Organization warns. Skin cancer rates, partially as a result, have been rising: Between 2000 and 2010, the overall rates of basal cell carcinoma rose 145 percent and squamous cell carcinoma rose 263 percent, the American Academy of Dermatology reports.
More time outside also means more exposure to pollutants generally. “I grew up in Harlem,” Dr. Lynn McKinley-Grant, the current president of the Skin of Color Society and an associate professor of dermatology at Howard University College of Medicine, told me. “The people who grew up there have a lot of these diseases that affect the skin like sarcoidosis and lupus” — an inflammatory disease that can cause small growths on the skin, and an autoimmune disease that can cause rashes — and “there are some people who have had mycosis fungoides,” a skin cancer that often begins its presentation with a rash.“It’s something we’ve seen for a while,” McKinley-Grant went on, “unrelated to the sun but related environmentally to things that affect us.”
“Urban air stagnation events” — four or more days of low wind speeds and little precipitation, when pollutants can settle — are also a risk, the International Journal of Women’s Dermatology’s introduction adds. Those pollutants can trigger autoimmune skin diseases like lupus, and a blistering disease called pemphigus vulgaris also has “increased hospitalizations if there’s high pollution in the environment,” Rosenbach told me.
There are small annoyances, too: Apparently more CO2 also means more poison ivy.
Pollen seasons across the country are getting worse due to climate change, but particularly so in places like Wisconsin, Minnesota, North Dakota, and parts of Canada — something any sufferer of seasonal hay fever will tell you can quickly develop into a nasty dermatology concern.
Speaking of nasty, research also shows that increased rainfall in the Great Lakes region due to climate change is resulting in a runoff of “metals, pesticides, pathogens, and fecal indicator bacteria” into recreational waters. “Summertime bacteria concentrations in an inland lake in Wisconsin,” for example, exhibited “positive, significant correlations” with the amount and duration of seasonal rainfall. Swimmer’s itch also appears to be on the rise due to warming temperatures. Fun!
Then there’s Lyme disease, which causes a rash that, if addressed quickly with antibiotics, can head off the development of more serious post-treatment Lyme disease syndrome. The concern is, ticks are now moving into areas where they haven’t been seen before — “dermatologists in Canada went their whole careers without ever encountering Lyme disease,” Rosenbach said — as well as emerging earlier in the season and hanging around through the late fall. “And that ... can mean that you’re not expecting Lyme disease [when] it walks in the door,” Rosenbach said. “And if you don’t recognize that, you can have severe consequences.”
Alaska, meanwhile, gets to enjoy thinking about a “worst-case scenario” of smallpox re-emerging from the melting permafrost.
When a fire burns through the West, it doesn’t just burn trees — there are cars, houses, and other not-great-to-breathe-in materials being incinerated and ending up in the air. Our skin doesn’t love that. Last year, a study that looked at the 2018 Camp Fire near San Francisco found that instances of eczema rose in local health clinics compared to 2015 and 2016. “Fully 89% of the patients that had itch during the time of the Camp Fire did not have a known diagnosis of [eczema], suggesting that folks with normal skin also experienced irritation and/or absorption of toxins within a very short period of time,” one of the authors said.
Skin is also affected by pollution, which disproportionately affects Black and Latino neighborhoods. Due to historic redlining, these areas are often “low-income, densely populated urban areas adjacent to industrial activities and lacking green spaces,” conditions that compound “health impacts such as chronic dermatitis exacerbations and carcinogenic skin damage,” the International Journal of Women’s Dermatology found. One study that looked at pemphigus flares — that’s the blistering autoimmune disease — “found an association between UV index and hospital admissions only in the subset of Hispanic/Latino patients,” despite using a representative U.S. sample.
The high heat in the West is also a concern since being unable to properly cool off via sweat can cause heat-related illnesses, currently the leading cause of death from extreme climate events in the United States. “The laborers who are out there working in the sun, not only do they get skin cancer, but they end up getting very dehydrated,” McKinley-Grant said, citing studies that have found high rates of kidney failure in agricultural workers and construction workers who labor in high heat conditions.
If you’re taking a dermatology board exam and the question mentions that a patient went camping in Costa Rica, “everyone knows the answer is leishmaniasis,” Rosenbach said. “The key word is ‘Costa Rica.’”
Leishmaniasis is a parasitic disease spread by sand flies that can cause skin sores and impact internal organs, but it’s taught to aspiring doctors as being a tropical and subtropical disease. Yet parts of the United States are now subtropical too, including Texas and Oklahoma — where, indeed, endemic leishmaniasis cases have begun to appear. But if dermatologists aren’t looking for leishmaniasis in patients with no travel history, they could miss a crucial diagnosis.
Speaking of new diseases, “chikungunya and dengue are now reported within the southern United States, with Zika on the horizon,” one of the papers in the Women’s Dermatology special issue found. And with more powerful storms and flooding slamming southern coasts, “there is terrible dermatitis,” said McKinley-Grant, who has seen firsthand how unidentified infections arose in patients in North Carolina after they waded through waters up to their waists. In extreme environmental conditions such as we live in now, infections of any kind “need to be addressed immediately,” McKinley-Grant went on to stress, even if they seem as innocuous as a bug bite.
Skin problems are actually the “most common issues” medics see after major storms, Rosenbach said. Part of the reason is simple things, “like laceration from flying debris,” he went on. Part of it is that when water rises, “humans and animals are in closer contact, you get animal bites and things like that.” And part of it is that when “you get standing water [...] it releases some of these vector-borne things.”
Oh yeah, and then there are jellyfish. Seabather eruption, an itchy skin reaction caused by jellyfish larvae, “has become increasingly common potentially because of increased ocean temperatures,” the Women’s Dermatology paper found. “This eruption can occur in up to 16% of patients swimming during peak seasons in southeast Florida.”
If you go to the hospital for a broken hip, a doctor might suggest a home safety search. Someone will come to your house, tape down your carpets, and move low-hanging objects in order to prevent future trips and falls.
Rosenbach envisions a future where doctors would do the same for something like repeated childhood asthma hospitalizations. “What if someone at your house was like, ‘Hey, you have a gas-burning stove, and you have mold here, and you’re actually losing a lot of heat through these single pane windows and no insulation. And what we should do is, get rid of your gas stove, rip out this mold, and make your environment better and have some air filters, or whatever,” he mused. “Imagine you could go and make these changes, and suddenly this kid never had asthma anymore, never [needed to be] admitted to the hospital.”
Rather than play whack-a-mole with medical symptoms, then, Rosenbach is thinking like a dermatologist — that is, we ought to cut out the real cancer, which is our dependence on fossil fuels.
Admittedly, that’s daunting to tackle if you’re more immediately concerned with the weird rash you keep getting at the beach. But beyond “eating less meat, flying less, electrifying everything,” from a health-care standpoint, “I don’t think a lot of people think about talking about climate change with their medical team,” Rosenbach said. “And if they do, it pushes the medical team to educate themselves and educate the field.”
Good news for oversharers — talking about your weird rash with friends and acquaintances is also praxis. “No one should be afraid to say, ‘I saw my doctor and they said I got Lyme. I got bit by the tick in February, because of climate change! That’s kind of crazy!’” Rosenbach added. “Just having those conversations and showing people that these are real-time impacts that they’re experiencing I think is important.”
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The uncertainty created by Trump’s erratic policymaking could not have come at a worse time for the industry.
This is the second story in a Heatmap series on the “green freeze” under Trump.
Climate tech investment rode to record highs during the Biden administration, supercharged by a surge in ESG investing and net-zero commitments, the passage of the Infrastructure Investment and Jobs Act and Inflation Reduction Act, and at least initially, low interest rates. Though the market had already dropped somewhat from its recent peak, climate tech investors told me that the Trump administration is now shepherding in a detrimental overcorrection. The president’s fossil fuel-friendly rhetoric, dubiously legal IIJA and IRA funding freezes, and aggressive tariffs, have left climate tech startups in the worst possible place: a state of deep uncertainty.
“Uncertainty is the enemy of economic progress,” Andrew Beebe, managing director at Obvious Ventures, told me.
The lack of clarity is understandably causing investors to throw on the brakes. “We’ve talked internally about, let’s be a little bit more cautious, let’s be a little more judicious with our dollars right now,” Gabriel Kra, co-founder at the climate tech firm Prelude Ventures, told me. “We’re not out in the market, but I would think this would be a really tough time to try and go out and raise a new fund.”
This reluctance comes at a particularly bad time for climate tech startups, many of which are now reaching a point where they are ready to scale up and build first-of-a-kind infrastructure projects and factories. That takes serious capital, the kind that wasn’t as necessary during Trump’s first term, or even much of Biden’s, when many of these companies were in a more nascent research and development or proof-of-concept stage.
I also heard from investors that the pace of Trump’s actions and the extent of the economic upheaval across every sector feels unique this time around. “We’re entering a pretty different economic construct,” Beebe told me, citing the swirling unknowns around how Trump’s policies will impact economic indicators such as inflation and interest rates. “We haven’t seen this kind of economic warfare in decades,” he said.
Even before Trump took office, it was notoriously difficult for climate companies to raise funding in the so-called “missing middle,” when startups are too mature for early-stage venture capital but not mature enough for traditional infrastructure investors to take a bet on them. This is exactly the point at which government support — say, a loan guarantee from the Department of Energy’s Loan Programs Office or a grant from the DOE’s Office of Clean Energy Demonstrations — could be most useful in helping a company prove its commercial viability.
But now that Trump has frozen funding — even some that’s been contractually obligated — companies are left with fewer options than ever to reach scale.
One investor who wished to remain anonymous in order to speak more openly told me that “a lot of the missing middle companies are living in a dicier world.” A 2023 white paper on “capital imbalances in the energy transition” from S2G Investments, a firm that supports both early-stage and growth-stage companies, found that from 2017 to 2022, only 20% of climate capital flowed toward companies at this critical inflection point, while 43% went to early-stage companies and 37% towards established technologies. For companies at this precarious growth stage, a funding delay on the order of months could be the difference between life and death, the investor added. Many of these companies may also be reliant on debt financing, they explained. “Unless they’ve been extremely disciplined, they could run into a situation where they’re just not able to service that debt.”
The months or even years that it could take for Trump’s rash funding rescission to wind through the courts will end up killing some companies, Beebe told me. “And unfortunately, that’s what people on the other side of this debate would like, is just to litigate and escalate. And even if they ultimately lose, they’ve won, because startups just don’t have the balance sheets that big companies would,” he explained.
Kra’s Prelude Ventures has a number of prominent companies in its portfolio that have benefitted from DOE grants. This includes Electric Hydrogen, which received a $43.3 million DOE grant to scale electrolyzer manufacturing; Form Energy, which received $150 million to help build a long-duration battery storage manufacturing plant; Boston Metal, which was awarded $50 million for a green steel facility; and Heirloom, which is a part of the $600 million Project Cypress Direct Air Capture hub. DOE funding is often doled out in tranches, with some usually provided upfront and further payments tied to specific project milestones. So even if a grant has officially been awarded, that doesn’t mean all of the funding has been disbursed, giving the Trump administration an opening to break government contracts and claw it back.
Kra told me that a few of his firm’s companies were on the verge of securing government funding before Trump took office, or have a project in the works that is now on hold. “We and the board are working closely with those companies to figure out what to do,” he told me. “If the mandates or supports aren’t there for that company, you’ve got to figure out how to make that cash last a bunch longer so you can still meet some commercially meaningful milestones.”
In this environment, Kra said his firm will be taking a closer look at companies that claim they will be able to attract federal funds. “Let’s make sure we understand what they can do without that non-dilutive capital, without those grants, without that project level support,” he told me, noting that “several” companies in his portfolio will also be impacted by Trump’s ever-changing tariffs on imports from Canada, Mexico, and China. Prelude Ventures is working with its portfolio companies to figure how to “smooth out the hit,” Kra told me later via email, but inevitably the tariffs “will affect the prices consumers pay in the short and long run.”
While investors can’t avoid the impacts of all government policies and impulses, the growth-stage firm G2 Venture Partners has long tried to inoculate itself against the vicissitudes of government financing. “None of our companies actually have any exposure to DOE loans,” Brook Porter, a partner and co-founder at G2, told me in an email, nor have they received government grants. If you add up the revenue from all of the companies in G2’s portfolio, which is made up mainly of sustainability-focused startups, only about 3% “has any exposure to the IRA,” Porter told me. So even if the law’s generous clean energy tax credits are slashed or the programs it supports are left to languish, G2’s companies will likely soldier on.
Then there are the venture capitalists themselves. Many of the investors I spoke with emphasized that not all firms will have the ability or will to weather this storm. “I definitely believe many generalist funds who dabbled in climate will pull back,” Beebe told me. Porter agreed. “The generalists are much more interested in AI, then I think in climate,” he said. It’s not as if there’s been a rash of generalist investors announcing pullbacks, though Kra told me he knows of “a couple of firms” that are rethinking their climate investment strategies, potentially opting to fold these investments under an umbrella category such as “hard tech” instead of highlighting a sectoral focus on energy or climate, specifically.
Last month, the investment firm Coatue, which has about $70 billion in assets under management, raised around $250 million for a climate-focused fund, showing it’s not all doom and gloom for the generalists’ climate ambitions. But Porter told me this is exactly the type of large firm he wouldexpect to back out soon, citing Tiger Global Management and Softbank as others that started investing heavily during climate tech’s boom years from 2020 to 2022 that he could imagine winding down that line of business.
Strategic investors such as oil companies have also been quick to dial back their clean energy ambitions and refocus their sights on the fossil fuels championed by the Trump administration. “Corporate venture is very cyclical,” Beebe told me, explaining that large companies tend to make venture investments when they have excess budget or when a sector looks hot, but tighten the purse strings during periods of uncertainty.
But Cody Simms, a managing partner at the climate tech investment firm MCJ, told me that at the moment, he actually sees the corporate venture ecosystem as “quite strong and quite active.” The firm’s investments include the low-carbon cement company Sublime Systems, which last year got strategic backing from two of the world’s largest building materials companies, and the methane capture company Windfall Bio, which has received strategic funding from Amazon’s Climate Pledge Fund. Simms noted that this momentum could represent an overexuberance among corporations who just recently stood up their climate-focused venture arms, and “we’ll see if it continues into the next few years.”
Notably, Sublime and Windfall Bio both also have millions in DOE grants, and another of MCJ’s portfolio companies, bio-based chemicals maker Solugen, has a “conditional commitment” from the LPO for a loan guarantee of over $200 million. Since that money isn’t yet obligated, there’s a good chance it might never actually materialize, which could stall construction on the company’s in-progress biomanufacturing facility.
Simms told me that the main thing he’s encouraging MCJ’s portfolio companies to do at this stage is to contact their local representatives — not to advocate for climate action in general, but rather “to push on the very specific tax credit that they are planning to use and to talk about how it creates jobs locally in their districts.”
Getting startups to shift the narrative away from decarbonization and climate and toward their multitudinous co-benefits — from energy security to supply chain resilience — is of course a strategy many are already deploying to one degree or another. And investors were quick to remind me that the landscape may not be quite as bleak as it appears.
“We’ve made more investments, and we have a pipeline of more attractive investments now than we have in the last couple of years,” Porter told me. That’s because in spite of whatever havoc the Trump administration is wreaking, a lot of climate tech companies are reaching a critical juncture that could position the sector overall for “a record number of IPOs this year and next,” Porter said. The question is, “will these macro uncertainties — political, economic, financial uncertainty — hold companies back from going public?”
As with so many economic downturns and periods of instability, investors also see this as a moment for the true blue startups and venture capitalists to prove their worth and business acumen in an environment that’s working against them. “Now we have the hardcore founders, the people who really are driven by building economically viable, long-term, massively impactful companies, and the investors who understand the markets very well, coming together around clean business models that aren’t dependent on swinging from one subsidy vine to the next subsidy vine,” Beebe told me.
“There is no opportunity that’s an absolute no, even in this current situation, across the entire space,” the anonymous climate tech investor told me. “And so this might be one of the most important points — I won’t say a high point, necessarily — but it might be a moment of truth that the energy transition needs to embrace.”
On the energy secretary’s keynote, Ontario’s electricity surcharge, and record solar power
Current conditions: Critical fire weather returns to New Mexico and Texas and will remain through Saturday • Sharks have been spotted in flooded canals along Australia’s Gold Coast after Cyclone Alfred dropped more than two feet of rain • A tanker carrying jet fuel is still burning after it collided with a cargo ship in the North Sea yesterday. The ship was transporting toxic chemicals that could devastate ecosystems along England’s northeast coast.
In a keynote speech at the energy industry’s annual CERAWeek conference, Energy Secretary Chris Wright told executives and policymakers that the Trump administration sees climate change as “a side effect of building the modern world,” and said that “everything in life involves trade-offs." He pledged to “end the Biden administration’s irrational, quasi-religious policies on climate change” and insisted he’s not a climate change denier, but rather a “climate realist.” According toThe New York Times, “Mr. Wright’s speech was greeted with enthusiastic applause.” Wright also reportedly told fossil fuel bosses he intended to speed up permitting for their projects.
Other things overheard at Day 1 of CERAWeek:
The premier of Canada’s Ontario province announced he is hiking fees on electricity exported to the U.S. by 25%, escalating the trade war kicked off by President Trump’s tariffs on Canadian goods, including a 10% tariff on Canadian energy resources. The decision could affect prices in Minnesota, New York, and Michigan, which get some of their electricity from the province. Ontario Premier Doug Ford estimated the surcharge will add about $70 to the monthly bills of affected customers. “I will not hesitate to increase this charge,” Ford said. “If the United States escalates, I will not hesitate to shut the electricity off completely.” The U.S. tariffs went into effect on March 4. Trump issued another 30-day pause just days later, but Ford said Ontario “will not relent” until the threat of tariffs is gone for good.
There was a lot of news from the White House yesterday that relates to climate and the energy transition. Here’s a quick rundown:
The EPA cancelled hundreds of environmental justice grants: EPA Administrator Lee Zeldin and Elon Musk’s so-called Department of Government Efficiency nixed 400 grants across environmental justice programs and diversity, equity, and inclusion programs worth $1.7 billion. Zeldin said this round of cuts “was our biggest yet.”
Transportation Secretary Sean Duffy rescinded Biden memos about infrastructure projects: The two memos encouraged states to prioritize climate change resilience in infrastructure projects funded by the Bipartisan Infrastructure Law, and to include under-represented groups when planning projects.
The military ended funding for climate studies: This one technically broke on Friday. The Department of Defense is scrapping its funding for social science research, which covers climate change studies. In a post on X, Defense Secretary Pete Hegseth said DOD “does not do climate change crap. We do training and war fighting.”
Meanwhile, a second nonprofit – the Coalition for Green Capital – filed a lawsuit against Citibank over climate grant money awarded under the Inflation Reduction Act but frozen by Zeldin’s EPA. Climate United filed a similar lawsuit (but targeting the EPA, as well as Citibank) on Saturday.
A new report from the Princeton ZERO Lab’s REPEAT Project examines the potential consequences of the Trump administration’s plans to kill existing EV tax credits and repeal EPA tailpipe regulations. It finds that, compared to a scenario in which the current policies are kept in place:
“In other words, killing the IRA tax credits for EVs will decimate the nascent renaissance in vehicle and battery manufacturing investment and employment we’re currently seeing play out across the United States,” said Jesse Jenkins, an assistant professor and expert in energy systems engineering and policy at Princeton University and head of the REPEAT Project. (Jenkins is also the co-host of Heatmap’s Shift Key podcast.)
REPEAT Project
The U.S. installed nearly 50 gigawatts of new solar power capacity last year, up 21% from 2023, according to a new report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie. That’s a record, and the largest annual grid capacity increase from any energy technology in the U.S. in more than 20 years. Combined with storage, solar represents 84% of all new grid capacity added in 2024.
SEIA and Wood Mackenzie
Last year was “the year of materialization of the IRA,” with supply chains becoming more resilient and interest from utilities and corporate buyers growing. Installations are expected to remain steady this year, with little growth, because of policy uncertainty. Total U.S. solar capacity is expected to reach 739 GW by 2035, but this depends on policy. The worst case scenario shows a 130 GW decline in deployment through 2035, which would represent $250 billion in lost investments.
“Last year’s record-level of installations was aided by several solar policies and credits within the Inflation Reduction Act that helped drive interest in the solar market,” said Sylvia Levya Martinez, a principal analyst of North America utility-scale solar for Wood Mackenzie. “We still have many challenges ahead, including unprecedented load growth on the power grid. If many of these policies were eliminated or significantly altered, it would be very detrimental to the industry’s continued growth.”
Tesla shares plunged yesterday by 15%, marking the company’s worst day on the market since 2020 and erasing its post-election stock bump.
Turns out, when you reduce electricity rates for heat pump owners, more people buy heat pumps.
One of the most significant actions a person can take to fight climate change is to swap out their fossil fuel-fired furnace or boiler for electric heat pumps. But while rebates and other subsidies can help defray the up-front cost of the switch, the price of electricity relative to natural gas is still a major deterrent in many places. Lower emissions for higher monthly bills is not much of a tradeoff.
Could the solution be as simple as utilities giving heat pump users a discounted rate in the winter?
There’s a growing consensus among climate and clean energy experts that this is a crucial and urgent step toward decarbonizing, at least in the near term. A number of recent reports make the case not just that discounted rates for heat pump users will help spur adoption of the technology, but also that these customers are currently being overcharged.
The reason why is that today, most utilities operate in “summer peaking” systems, where electricity demand is highest on the hottest days of the year. Utilities spend lots of money on infrastructure like power plants, substations, transformers, and wires to make sure they can deliver power reliably on those days. But in the winter, a lot of that stuff sits unused. So it doesn’t increase overall system costs for people to use more electricity in the winter.
In fact, “it’s less expensive to offer electricity in the winter in summer peaking systems,” Matthew Malinowski, who directs the buildings program at the nonprofit American Council for an Energy-Efficient Economy, told me. And yet a lot of utilities charge customers a flat rate, no matter the time of year. “It seems only fair to charge people less for the electricity they use in the winter,” Malinowski said.
Some utilities are already starting to do this. Malinowski and his colleagues published a study on Tuesday that used real utility rates to examine the current cost of operating heat pumps in four cold-weather states. Their modeling illustrates how heat pump-specific rates can make the technology much more attractive compared to natural gas-fired heating. (Households switching from fuel oil or propane heating to heat pumps will almost always save money.)
The first state they looked at, Maine, has famously had a lot of success getting residents to switch to heat pumps. It turns out favorable rates may have been a big part of that. The cost of electricity there is not much higher than natural gas, so when a household there switches to heat pumps, its annual bills remain roughly the same. Additionally, Maine’s biggest utility recently ran a pilot program where it offered customers the option to sign up for a “heat pump rate,” giving them discounted electricity in the winter and slightly higher than normal electricity in the summer. The study estimated that an average household in Maine using this rate would save just over $200 per year compared to one that heats with natural gas.
Just 6% of households in Maine used heat pumps a decade ago, before the state began offering incentives. As of last year, that number had grown to 26%, although many homes still use natural gas boilers and furnaces as back-up systems.
The other three states the study focuses on — Minnesota, Colorado, and Connecticut — have much higher electricity rates relative to natural gas, and simply switching to a heat pump would not be economic. But Minnesota has a winter pricing program similar to Maine’s. The utility Xcel offers a deeply discounted rate to customers who heat their homes with electricity through the colder months, whether they use heat pumps or less efficient electric resistance systems. The report estimates that heat pump users who opt-in to this rate will save about $400 per year compared to if they heated their homes with natural gas.
Xcel is also the largest utility in Colorado, where it does not yet offer a winter discount rate. There, the authors calculate that heat pumps currently cost about $500 more per year than natural gas heating. But a new law in Colorado requires utilities to submit new heat pump-specific electric rates to regulators for approval by 2027. If Xcel offered the same discount as it does in Minnesota, that would bring heat pump operating costs roughly on par with gas heating.
Colorado isn’t the only state actively pursuing heat pump-specific rates to spur adoption. In Massachusetts, which the study did not look at, a small utility called Unitil began offering a discounted heat pump rate on March 1 of this year, and regulators are requiring National Grid, which serves about 15% of the state, to offer one beginning next winter.
Meanwhile, in Connecticut, electricity prices are so much higher than gas prices that the authors conclude that “rate interventions are ultimately not enough” to make heat pumps competitive. “The state needs deep investment in making electric power more affordable to its residents,” they write, such as “taking on some costs of grid maintenance and upgrades, putting a price on carbon, or implementing clean heat standards.”
One caveat to the study is that it uses electric rates in 2024 but meteorological data from 2018. Since the world was notably warmer last year than in 2018, the authors’ cost estimates are likely conservative. In reality, heat pumps may already be more affordable than the study makes them seem.
Another is that heat pump-specific rates are only really a solution for the next five to 10 years. As more households adopt heat pumps, the electric grid will begin to shift toward a winter-peaking system, and there won’t really be a case to charge heat pump users less. Massachusetts regulators have acknowledged they will need to monitor this and re-evaluate heat pump rates regularly as the situation evolves.
“We’re just responding to the situation today,” Malinowski told me. “Heat pump penetration is very small, and those users are overpaying based on the service they're demanding of the grid, and what they're providing to the grid, which is revenue during off-peak times when electricity is cheaper to provide.”