As Inflation Reduction Act funds get disbursed, are states making the most of their policies and programs to deliver efficient electrification through heat pump adoption? As RAP and CLASP’s webinar series on “Federal Dollars, State Policies and Heat Pumps: The Future of Heat” continued last month, panelists working on heat pump policy in the Northeast region answered this question with a unanimous yes.
CLASP’s Vivian Cox and RAP’s Louisa Eberle moderated the discussion with David Lis of Northeast Energy Efficiency Partnerships (NEEP); Hank Webster, formerly with the Connecticut Department of Energy and Environmental Protection; and Peter McPhee of the Massachusetts Clean Energy Center. We’ve picked out some highlights to recap here.
Heat Pump Market Penetration in the Northeast
Lis shared highlights from research from his forthcoming paper on heat pump market adoption in the Northeast.
“Heat pump programs are ubiquitous in the Northeast, with every state offering some form of incentive,” he said, and “heat pumps account for roughly 30% of the residential HVAC market, with states shifting towards incentivizing systems that support a home’s full design load.” But the market for commercial and some large multifamily applications, he noted, “is probably five to ten years behind, requiring a broader perspective and scope of solutions.”
Lis emphasized that heat pumps are getting consistently more affordable. He observed that “a lot of the inroads that the heat pump market has made relate to the positive economics of displacing delivered fuels — like fuel oil and propane — which are comparatively more expensive and historically have played a big role in the Northeast.” However, systems running on relatively cheaper fossil gas have been harder to displace. In addition to complementing IRA incentives to equitably reduce upfront costs, “states will need to ensure that operating a heat pump costs less than a fossil system.”
Many states are working to improve this value proposition, he explained. The Massachusetts Department of Public Utilities, for example, has directed its major utilities, National Grid and Unitil, to offer heat pump rates featuring lower volumetric rates that reflect their lower cost of providing electricity during the winter.
Lis pointed out that “bringing new types of workers and talent to deliver heat pump solutions is a big opportunity.” So is “instilling better practices into the existing workforce for designing, siting, and installing systems to ensure that they operate well and are giving consumers satisfaction.”
The New England Heat Pump Accelerator
Webster discussed the New England Heat Pump Accelerator, a coalition of five New England states (Connecticut, Massachusetts, Maine, New Hampshire and Rhode Island) promoting the regional adoption of heat pumps and heat pump water heaters in single-family and multifamily residential buildings.
The Accelerator will provide $450 million over five years. It is organized around three “hubs.” The Market Hub, will support workforce training and develop mid-stream incentives that encourage distributor/contractor relationships and increase the stocking of heat pumps on shelves.
The Innovation Hub will support community quick start grants intended to overcome barriers unique to certain building types or existing HVAC systems, especially those prevalent in low- and moderate-income and environmental justice communities. The Innovation Hub will also support large-scale, innovative heat pump deployment projects in each state.
And the Resource Hub will collect, develop, and promote research and educational resources to advance the understanding by consumers, contractors, and stakeholders of how beneficial heat pumps can be.
“We have all learned from successes and challenges in our own state programs, and this is an opportunity to advance those heat pump programs that are on the leading edge,” Webster said.
Learning and Coordinating in the Bay State
McPhee’s work at the Massachusetts Clean Energy Center convenes industry, accelerates early-stage companies, explores policy solutions, and enables market and workforce development necessary for his state meet its net zero by 2050 goals.
McPhee described the huge array of building decarbonization programs and proposals in Massachusetts, including: Mass Save, the state’s cornerstone energy efficiency program that includes heat pump incentives; existing building energy codes and solar and storage policies; a proposed clean heat standard requiring the progressive decarbonization of the heating sector; and investigations of additional policy proposals such as building performance standards and appliance efficiency standards. Massachusetts is addressing affordability through the Massachusetts Community Climate Bank — which offers lower cost capital and longer payment terms to support low- and moderate-income households — and tariff on-bill financing, also known as “inclusive utility investment,” a financing approach that puts the costs of an investment onto the meter and enables payback over time through customer bills.
The breadth of Massachusetts programs crystallizes a recurring challenge: how to efficiently coordinate across agencies to avoid cross-purposes or duplication. “To be honest, that is hard work,” McPhee explained; it requires long-term planning and adopting durable policies that may last decades. He also laid out three levels of coordination:
- “Informational alignment” collects resources in a single place for consumers. “We have figured this part out pretty well,” McPhee noted, directing interested Massachusetts residents and others to the Clean Energy Lives Here website, an information hub.
- “Alignment of consumer requirements” ensures that targets, timelines, and covered equipment for programs at the utility, state, and federal levels “are not working against each other. We have started to figure this out, but admittedly have a ways to go,” McPhee said.
- “Alignment of program administration” may be the most challenging. While not always feasible, “if we are able to streamline incentives from three separate programs by three separate entities into a single offering, for example, then we’ll be able to make the customer experience more streamlined and ensure that programs operate more efficiently under one roof.”
“Rowing in the Same Direction”
The engagement happening between and within Northeastern states illustrates the value of bringing people together to learn and find solutions. As noted by Webster, “we have all these opportunities – from federal tax credits to home energy rebate programs — all great ways to save energy and money. But a big chunk of the challenge, though, is to make sure that we are all rowing in the same direction.”
Watch or listen to Federal Dollars, State Policies and Heat Pumps: The Future of Heat in the Northeast.
