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Five findings from an extremely thorough study by the National Renewable Energy Lab.
Some Americans install heat pumps because they care about climate change. But most people aren’t going to make the switch until it makes sense economically. Pinpointing where and for whom heat pumps are a good investment is surprisingly tricky because U.S. housing is so diverse, with a wide range of building sizes and ages, situated in different local climates with different utility rates.
But for the first time, researchers at the National Renewable Energy Lab have sorted through much of this complexity to get deeper to the truth about the costs, benefits, and challenges of deploying heat pumps in the U.S.
Ultimately, they found that heat pumps are a cost-effective choice in roughly 65 million U.S. homes, or about 60% of the country — and that’s before taking into account available subsidies. But there are substantial economic barriers to widespread adoption.
It’s hard to overstate how detailed the study is. The authors started with a model of 550,000 statistically representative households — basically housing archetypes that typify different combinations of building size, age, occupancy level, local climate, heating usage patterns, and existing heating systems. Each one represents about 242 real-world households. Then the authors looked at how switching to a heat pump would affect greenhouse gas emissions and energy bills across all of these different homes in a wide range of scenarios. They considered heat pumps with lower and higher efficiency ratings, and whether or not the building owner pursued insulation upgrades. They looked at different scenarios for how quickly the grid would decarbonize, how sensitive the results were to energy prices, and how subsidies from the Inflation Reduction Act affect the economics.
The paper has many interesting findings beyond the top-line result. Here are five things that stood out.
Eric Wilson, a senior research engineer at NREL and the study’s lead author, told me one of his motivations was to try to settle the question of whether heat pumps reduce emissions.
“I see a lot of people saying, well, the grid is still dirty in this state, and maybe it makes sense to wait five years to put in a heat pump because it could increase emissions,” he said.
But he found that in each of the 48 contiguous U.S. states, switching to a heat pump reduces emissions today, even if that heat pump is one of the cheaper, less-efficient models. Heat pumps are just so much more efficient than other options that they still reduce emissions despite today’s relatively dirty grid.
On average, each home could cut between 2.5 to 4.4 tons of carbon over the approximately 16 years the equipment lasts, meaning widespread adoption could result in a 5% to 9% drop in national economy-wide emissions. The effect is much more pronounced in some states, like those in the Northeast, where a lot of homes currently use fossil fuels for heating. A household in Maine that installs a high efficiency model, combined with completing insulation upgrades, would reduce emissions by an average of 11 tons per year — or about the equivalent of taking two cars off the road for a year.
The study breaks down the costs of switching to a heat pump in a few different ways.
First, there’s the up-front costs of upgrading to a heat pump, which are relatively high. A lower-rated, less efficient heat pump system may be a cheaper option than a new furnace or boiler for about 43% of households. But a higher-performing heat pump is almost always more expensive, costing an extra $8,000 to $13,000 before government subsidies (more on them later). That alone might keep heat pumps out of reach for many households.
Next, there's the potential for bill savings — which is significant. Using state average electricity and gas rates in the winter of 2021 to 2022, the study found that 86% of households can save money on their utility bills by switching to a medium-efficiency heat pump, and a whopping 95% of households will see their bills go down if they install the highest efficiency system.
So in theory, if homeowners do have the extra cash to put down, there’s a chance they could make up for high up-front costs in bill savings over time. But how good a chance?
Putting this all together, the authors looked at what percentage of households that upgraded to heat pumps would see a positive cash flow, calculated as the “net present value,” from the initial investment. Here, the results were less rosy. In many cases, high up-front costs cancel out potential savings. For example, despite the near-certain bill savings from buying one of the most efficient heat pump models, only 21% of households would see an overall economic benefit from the switch.
Still, more than half of all homes would see a positive cash flow by switching to a cheaper, minimum-efficiency heat pump.
Distribution of energy bill savings, upgrade costs, and unsubsidized net present value, relative to a reference equipment replacement scenario, using energy prices from winter 2021 to 2022 Courtesy NREL / Wilson et al., Heat pumps for all? Distributions of the costs and benefits of residential air-source heat pumps in the United States, Joule (2024), https://doi.org/10.1016/j.joule.2024.01.022
These findings underscore the importance of bringing down the cost of more efficient heat pump models, which are out of reach for many Americans but can provide significant energy bill savings. The authors suggest that policymakers can help by deploying incentives more strategically and pursuing research on “lower-cost, higher performance, and easier to install equipment.” There also may be opportunities for bulk purchasing and aggregating installations across an apartment building or neighborhood.
When it comes to bill savings, the study found that those who have systems that run on propane, fuel oil, or electric resistance heaters will pretty much always lower their bills by switching to a heat pump, no matter how efficient it is. But those who use natural gas are far more likely to lower their bills if they can afford to switch to one of the pricier, better-performing heat pumps — which cuts into the value proposition.
The following maps show the percentage of homes in each state that would see a positive cash flow from switching to a heat pump, looking at those switching from natural gas, electric resistance, or fuel oil and propane, illustrating how the value proposition is most challenging for those using natural gas.
Percentage of homes that currently have air conditioning that will see a positive cash flow from switching to a heat pump from natural gas, electricity, and fuel oil and propane. Courtesy NREL / Wilson et al. 2024
The authors also note that fixed charges on natural gas bills can play a significant role in the economics of switching to a heat pump. Most natural gas utilities charge customers a fixed amount each month, regardless of how much gas they use. If a homeowner switches to heat pumps but continues using gas for cooking, they’ll still have to pay the full fee, which can be as high as $34 a month, whereas homes that fully electrify can avoid these fees.
The results I described in the previous two sections include homes both with and without existing air conditioning systems of some kind. (With the exception of the maps, which only consider homes that have air conditioning already.)
But since heat pumps provide both heating and cooling, the economics are actually quite different for those households who already have air conditioners versus those who don't. If a household already has A/C, heat pumps appear more favorable, because a family would be able to replace two systems — an air conditioner and a furnace — with just one. If there is no pre-existing air conditioner, the heat pump will not only have higher up-front costs, but it’s more likely to increase energy bills, since the family might start using the heat pump for cooling in addition to heating.
Here are the same maps included in the previous section, but looking just at homes that do not have air conditioning.
Percentage of homes that do not have air conditioning that will see a positive cash flow from switching to a heat pump. The first column is homes that currently use natural gas, the second column is those that us electricity, and the third is those that use fuel oil and propane. Courtesy NREL / Wilson et al. 2024
There are basically zero cases where a house with natural gas heating, and no A/C, will save by switching to a heat pump. However, that result doesn’t take into account the benefits of getting air conditioning for the first time.
“They didn't include the new value that someone has, especially in a warming world and a world with more heat waves, of now having an air conditioner in your home,” Kevin Kircher, an assistant professor of mechanical engineering at Purdue University, told me. “So if you add that in, I think the economics look better.”
None of the results in the previous sections take into account the various subsidies that states and the federal government offer for heat pumps. For example, the Inflation Reduction Act included a $2,000 tax credit for heat pumps and an additional $11,500 in rebates for low- and moderate-income households. Both will increase the percentage of households for whom the investment will pencil out.
The study also doesn’t take into account the potential for homes to use smart controls that optimize their systems, or the opportunity for households to participate in demand response programs which will pay them to turn down their thermostats by a few degrees when the grid is taxed. Kircher, the Purdue professor, recently published a study of a real-world house in a cold climate where smart controls reduced heating energy costs by 23-34%.
Finally, one big takeaway from the study was that the results are very sensitive to the price ratio between natural gas rates and electricity rates, and there are reasons to believe that may become more favorable. For example, as more renewable energy is deployed, electricity could become more affordable. Meanwhile, if the U.S. increases exports of liquified natural gas, the cost of domestic natural gas could go up. The study cites a 2022 survey of oil and gas executives which found that 69% expect ‘‘the age of inexpensive U.S. natural gas to end by year-end 2025.”
“Big modeling like this entails a lot of assumptions about the future that are really hard to pin down with any real precision,” said Kircher. “But I think there's cause for optimism there.”
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On environmental justice grants, melting glaciers, and Amazon’s carbon credits
Current conditions: Severe thunderstorms are expected across the Mississippi Valley this weekend • Storm Martinho pushed Portugal’s wind power generation to “historic maximums” • It’s 62 degrees Fahrenheit, cloudy, and very quiet at Heathrow Airport outside London, where a large fire at an electricity substation forced the international travel hub to close.
President Trump invoked emergency powers Thursday to expand production of critical minerals and reduce the nation’s reliance on other countries. The executive order relies on the Defense Production Act, which “grants the president powers to ensure the nation’s defense by expanding and expediting the supply of materials and services from the domestic industrial base.”
Former President Biden invoked the act several times during his term, once to accelerate domestic clean energy production, and another time to boost mining and critical minerals for the nation’s large-capacity battery supply chain. Trump’s order calls for identifying “priority projects” for which permits can be expedited, and directs the Department of the Interior to prioritize mineral production and mining as the “primary land uses” of federal lands that are known to contain minerals.
Critical minerals are used in all kinds of clean tech, including solar panels, EV batteries, and wind turbines. Trump’s executive order doesn’t mention these technologies, but says “transportation, infrastructure, defense capabilities, and the next generation of technology rely upon a secure, predictable, and affordable supply of minerals.”
Anonymous current and former staffers at the Environmental Protection Agency have penned an open letter to the American people, slamming the Trump administration’s attacks on climate grants awarded to nonprofits under the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. The letter, published in Environmental Health News, focuses mostly on the grants that were supposed to go toward environmental justice programs, but have since been frozen under the current administration. For example, Climate United was awarded nearly $7 billion to finance clean energy projects in rural, Tribal, and low-income communities.
“It is a waste of taxpayer dollars for the U.S. government to cancel its agreements with grantees and contractors,” the letter states. “It is fraud for the U.S. government to delay payments for services already received. And it is an abuse of power for the Trump administration to block the IRA laws that were mandated by Congress.”
The lives of 2 billion people, or about a quarter of the human population, are threatened by melting glaciers due to climate change. That’s according to UNESCO’s new World Water Development Report, released to correspond with the UN’s first World Day for Glaciers. “As the world warms, glaciers are melting faster than ever, making the water cycle more unpredictable and extreme,” the report says. “And because of glacial retreat, floods, droughts, landslides, and sea-level rise are intensifying, with devastating consequences for people and nature.” Some key stats about the state of the world’s glaciers:
In case you missed it: Amazon has started selling “high-integrity science-based carbon credits” to its suppliers and business customers, as well as companies that have committed to being net-zero by 2040 in line with Amazon’s Climate Pledge, to help them offset their greenhouse gas emissions.
“The voluntary carbon market has been challenged with issues of transparency, credibility, and the availability of high-quality carbon credits, which has led to skepticism about nature and technological carbon removal as an effective tool to combat climate change,” said Kara Hurst, chief sustainability officer at Amazon. “However, the science is clear: We must halt and reverse deforestation and restore millions of miles of forests to slow the worst effects of climate change. We’re using our size and high vetting standards to help promote additional investments in nature, and we are excited to share this new opportunity with companies who are also committed to the difficult work of decarbonizing their operations.”
The Bureau of Land Management is close to approving the environmental review for a transmission line that would connect to BluEarth Renewables’ Lucky Star wind project, Heatmap’s Jael Holzman reports in The Fight. “This is a huge deal,” she says. “For the last two months it has seemed like nothing wind-related could be approved by the Trump administration. But that may be about to change.”
BLM sent local officials an email March 6 with a draft environmental assessment for the transmission line, which is required for the federal government to approve its right-of-way under the National Environmental Policy Act. According to the draft, the entirety of the wind project is sited on private property and “no longer will require access to BLM-administered land.”
The email suggests this draft environmental assessment may soon be available for public comment. BLM’s web page for the transmission line now states an approval granting right-of-way may come as soon as May. BLM last week did something similar with a transmission line that would go to a solar project proposed entirely on private lands. Holzman wonders: “Could private lands become the workaround du jour under Trump?”
Saudi Aramco, the world’s largest oil producer, this week launched a pilot direct air capture unit capable of removing 12 tons of carbon dioxide per year. In 2023 alone, the company’s Scope 1 and Scope 2 emissions totalled 72.6 million metric tons of carbon dioxide equivalent.
If you live in Illinois or Massachusetts, you may yet get your robust electric vehicle infrastructure.
Robust incentive programs to build out electric vehicle charging stations are alive and well — in Illinois, at least. ComEd, a utility provider for the Chicago area, is pushing forward with $100 million worth of rebates to spur the installation of EV chargers in homes, businesses, and public locations around the Windy City. The program follows up a similar $87 million investment a year ago.
Federal dollars, once the most visible source of financial incentives for EVs and EV infrastructure, are critically endangered. Automakers and EV shoppers fear the Trump administration will attack tax credits for purchasing or leasing EVs. Executive orders have already suspended the $5 billion National Electric Vehicle Infrastructure Formula Program, a.k.a. NEVI, which was set up to funnel money to states to build chargers along heavily trafficked corridors. With federal support frozen, it’s increasingly up to the automakers, utilities, and the states — the ones with EV-friendly regimes, at least — to pick up the slack.
Illinois’ investment has been four years in the making. In 2021, the state established an initiative to have a million EVs on its roads by 2030, and ComEd’s new program is a direct outgrowth. The new $100 million investment includes $53 million in rebates for business and public sector EV fleet purchases, $38 million for upgrades necessary to install public and private Level 2 and Level 3 chargers, stations for non-residential customers, and $9 million to residential customers who buy and install home chargers, with rebates of up to $3,750 per charger.
Massachusetts passed similar, sweeping legislation last November. Its bill was aimed to “accelerate clean energy development, improve energy affordability, create an equitable infrastructure siting process, allow for multistate clean energy procurements, promote non-gas heating, expand access to electric vehicles and create jobs and support workers throughout the energy transition.” Amid that list of hifalutin ambition, the state included something interesting and forward-looking: a pilot program of 100 bidirectional chargers meant to demonstrate the power of vehicle-to-grid, vehicle-to-home, and other two-way charging integrations that could help make the grid of the future more resilient.
Many states, blue ones especially, have had EV charging rebates in places for years. Now, with evaporating federal funding for EVs, they have to take over as the primary benefactor for businesses and residents looking to electrify, as well as a financial level to help states reach their public targets for electrification.
Illinois, for example, saw nearly 29,000 more EVs added to its roads in 2024 than 2023, but that growth rate was actually slower than the previous year, which mirrors the national narrative of EV sales continuing to grow, but more slowly than before. In the time of hostile federal government, the state’s goal of jumping from about 130,000 EVs now to a million in 2030 may be out of reach. But making it more affordable for residents and small businesses to take the leap should send the numbers in the right direction, as will a state-backed attempt to create more public EV chargers.
The private sector is trying to juice charger expansion, too. Federal funding or not, the car companies need a robust nationwide charging network to boost public confidence as they roll out more electric offerings. Ionna — the charging station partnership funded by the likes of Hyundai, BMW, General Motors, Honda, Kia, Mercedes-Benz, Stellantis, and Toyota — is opening new chargers at Sheetz gas stations. It promises to open 1,000 new charging bays this year and 30,000 by 2030.
Hyundai, being the number two EV company in America behind much-maligned Tesla, has plenty at stake with this and similar ventures. No surprise, then, that its spokesperson told Automotive Dive that Ionna doesn’t rely on federal dollars and will press on regardless of what happens in Washington. Regardless of the prevailing winds in D.C., Hyundai/Kia is motivated to support a growing national network to boost the sales of models on the market like the Hyundai Ioniq5 and Kia EV6, as well as the company’s many new EVs in the pipeline. They’re not alone. Mercedes-Benz, for example, is building a small supply of branded high-power charging stations so its EV drivers can refill their batteries in Mercedes luxury.
The fate of the federal NEVI dollars is still up in the air. The clearinghouse on this funding shows a state-by-state patchwork. More than a dozen states have some NEVI-funded chargers operational, but a few have gotten no further than having their plans for fiscal year 2024 approved. Only Rhode Island has fully built out its planned network. It’s possible that monies already allocated will go out, despite the administration’s attempt to kill the program.
In the meantime, Tesla’s Supercharger network is still king of the hill, and with a growing number of its stations now open to EVs from other brands (and a growing number of brands building their new EVs with the Tesla NACS charging port), Superchargers will be the most convenient option for lots of electric drivers on road trips. Unless the alternatives can become far more widespread and reliable, that is.
The increasing state and private focus on building chargers is good for all EV drivers, starting with those who haven’t gone in on an electric car yet and are still worried about range or charger wait times on the road to their destination. It is also, by the way, good news for the growing number of EV folks looking to avoid Elon Musk at all cost.
From Kansas to Brooklyn, the fire is turning battery skeptics into outright opponents.
The symbol of the American battery backlash can be found in the tiny town of Halstead, Kansas.
Angry residents protesting a large storage project proposed by Boston developer Concurrent LLC have begun brandishing flashy yard signs picturing the Moss Landing battery plant blaze, all while freaking out local officials with their intensity. The modern storage project bears little if any resemblance to the Moss Landing facility, which uses older technology,, but that hasn’t calmed down anxious locals or stopped news stations from replaying footage of the blaze in their coverage of the conflict.
The city of Halstead, under pressure from these locals, is now developing a battery storage zoning ordinance – and explicitly saying this will not mean a project “has been formally approved or can be built in the city.” The backlash is now so intense that Halstead’s mayor Dennis Travis has taken to fighting back against criticism on Facebook, writing in a series of posts about individuals in his community “trying to rule by MOB mentality, pushing out false information and intimidating” volunteers working for the city. “I’m exercising MY First Amendment Right and well, if you don’t like it you can kiss my grits,” he wrote. Other posts shared information on the financial benefits of building battery storage and facts to dispel worries about battery fires. “You might want to close your eyes and wish this technology away but that is not going to happen,” another post declared. “Isn’t it better to be able to regulate it in our community?”
What’s happening in Halstead is a sign of a slow-spreading public relations wildfire that’s nudging communities that were already skeptical of battery storage over the edge into outright opposition. We’re not seeing any evidence that communities are transforming from supportive to hostile – but we are seeing new areas that were predisposed to dislike battery storage grow more aggressive and aghast at the idea of new projects.
Heatmap Pro data actually tells the story quite neatly: Halstead is located in Harvey County, a high risk area for developers that already has a restrictive ordinance banning all large-scale solar and wind development. There’s nothing about battery storage on the books yet, but our own opinion poll modeling shows that individuals in this county are more likely to oppose battery storage than renewable energy.
We’re seeing this phenomenon play out elsewhere as well. Take Fannin County, Texas, where residents have begun brandishing the example of Moss Landing to rail against an Engie battery storage project, and our modeling similarly shows an intense hostility to battery projects. The same can be said about Brooklyn, New York, where anti-battery concerns are far higher in our polling forecasts – and opposition to battery storage on the ground is gaining steam.