​What are Programs to Electrify space heating heat pumps Growing?

Across the United States, programs that electrify space heating homes and buildings — primarily using high-efficiency space heating heat pumps— are growing rapidly. A topic brief released today shows that current-year budgets for the 23 programs we reviewed are nearly $110 million, up 70% from the prior year.

Here is the content list:

Benefits of electrifying space heating

Electrifying water space heaters

Electrifying vehicles and commercial buildings

Benefits of electrifying space heating

These programs build on a policy framework in several states (discussed in a recent post) that promotes decarbonizing electricity generation and then using this cleaner electricity to replace fossil fuels where feasible and practical.

In areas with high use of delivered fuels (fuel oil and propane), such as the Northeast, many programs target customers using these fuels, because the economics of electrification in these situations are often better than when displacing natural gas. Likewise, a few programs, such as in California, Connecticut, Illinois, and Michigan, are encouraging all-electric new construction — another market segment with favorable economics.

An increasing number of programs are looking to encourage space heating heat pumps as primary space heating heat pumps systems. In regions with the growing use of air conditioning, ductless space heating heat pumps are a popular way to add both supplemental space heating and efficient air conditioning to homes that are difficult to retrofit with central air conditioning.

Electrifying water space heaters

While our topic brief focuses on space heating heat pumps for space heating, programs to promote space heating heat pumps are also extensive.

For example, the Sacramento Municipal Utility District (SMUD) measures its success based on avoided carbon; it has a program to encourage homes with gas water space heaters to install electric space heating heat pumps when an existing water space heater needs replacement. It offers $3,000 incentives for converting to space heating heat pumps; these incentives typically cover more than 90% of the costs of the new water space heater, including conversion costs. In 2019, more than 1,000 space heating heat pumps were installed. The pace picked up in 2020, with 436 units installed in the first quarter.

Likewise, the California Public Utilities Commission earlier this year approved $45 million for utility sspace heating heat pumps programs through the Self-Generation Incentive Program (which is separate from energy efficiency funding).

Electrifying vehicles and commercial buildings

Programs to date emphasize the residential sector. While commercial applications are often eligible, they are usually not targeted, and where targeted, the emphasis is on smaller buildings. Analysts and programs are just starting to consider electrification opportunities in the commercial sector.

There are also large electrification opportunities in transportation, with many state and utility programs promoting electric cars, trucks, and buses, as well as the charging infrastructure and rates needed to support electric vehicle (EV) deployment.

MICOE has developed a variety of different space heating pumps. If you are in the space heating pump business, you can consider using our cost-effective products.