Cape Cod Targeted Heating and Cooling

AssistanceOverview for Cape Cod Commission – Ad Hoc Working Group

March 6, 2015DPU / DOER / MassCEC / Cape Light Compact / National Grid

2

Cape Cod Situation• 5-7 year moratorium on new natural gas

interconnections for parts of Cape Cod• Parts of Cape Cod & Islands have no access

to natural gas• Increased electricity prices• Residents seeking cost-effective alternatives

for space and water heating

Approach: DPU convened relevant agencies, utilities, and organizations to develop a coordinated strategy to meet customer needs for alternatives during moratorium

Natural Gas Moratorium Towns

Additional Cape & Islands Towns

Background & Approach

3

Alternative Heating Strategy1. Outreach: immediately engage with Cape Cod customers, organizations, and

trade groups• First phase targets residential customers, commercial customers in second phase

2. Informational resources: create and offer consumers neutral data on alternative heating options

3. Existing incentives: promote existing efficiency and renewables rebates and financing options

4. Renewable heating: MassCEC promotes deployment of renewable heating technologies, including

Timeframe: Throughout duration of moratorium

4

TechnologiesOptions for space heating, cooling and Domestic Hot Water

5

Natural GasSpace heating and Domestic Hot Water

• Standard technology• Not currently available to most Cape Cod customers• Conversion moratorium projected to be in place for 5-7 years (National Grid)

6

Electric ResistanceSpace heating and Domestic Hot Water

• Standard technology• Easy and cheap install and maintenance, but highest energy cost of all

technologies due to low efficiency

7

Fuel OilSpace heating and Domestic Hot Water

• Standard technology• Requires ongoing oil delivery, but available Cape-wide

8

Propane, then Natural GasSpace heating and Domestic Hot Water

• Specific scenario in which residence first converts to propane and then to natural gas when moratorium is lifted (assumed 7 years)• Cheap and easy conversion from Propane to Natural Gas ($300)

• Only relevant for towns where natural gas distribution is available

Air Source Heat PumpSpace heating and cooling

• Mini-split systems are easy and quick to install (no ductwork)• Lowest upfront cost of the renewable heating options• Also provides A/C

• Effectiveness depends on building lay-out (number and size of rooms)

9

10

Ground Source Heat PumpSpace heating and cooling

• Very high installation cost, though significant incentives available• Need for expert installer (limited installer pool locally), right underground

conditions for well drilling

• Also provides A/C

11

Pellet BoilerSpace heating and Domestic Hot Water

• Boiler and heat distribution technology is similar to Natural Gas and Fuel Oil, making it a good retrofit candidate• Central heating system with automated pellet feed• Requires bulk pellet delivery (~3x per year) - currently limited on the Cape • Need to have space for fuel storage

12

Heat Pump Water Heater Domestic Hot Water

• Very efficient electric water heater• Mass Save rebate available• Best when it can be placed in basement or garage

13

Solar Thermal and PVSpace heating, Domestic Hot Water and electricity

• Solar PV: offsetting electric consumption, making it a good combination with heat pumps• Solar thermal: supplemental source of heating for domestic hot water

and/or space heating• High upfront cost, very low operational costs, and incentives available

14

DataCost scenario’s and Greenhouse Gas emissions

15

Analysis of Residential Customer CostsFinancial analysis conducted for alternative technologies• Typical existing home on Cape Cod• Installation costs as Cape Cod specific as possible• Operational costs (20 years) based on current energy rates and EIA projections

• Available state and federal incentives• Sensitivity scenarios • Electric and gas rates and heat pump costs• Duration of moratorium

Disclaimer: the analysis included here is generic and

for illustration purposes only. Actual costs will vary based on project specifics.

16

Customer Scenarios• Comparisons• Upfront and Lifetime costs• Greenhouse Gas emissions

New Build: type of heating/cooling system needs to be decided

Retrofit: existing heating system needs to replaced

With/Without cooling With/Without cooling

Heating distribution system needed Heating distribution system already exists

Include Domestic Hot Water heater Replace existing Domestic Hot Water heater

17

Upfront cost for heating, hot water and cooling New home, including A/C, including incentives

Ground Source

Heat P

ump/Solar P

V

Biomass/Solar C

ombi

Fuel O

il/Solar C

ombi

Ground Source

Heat Pump

Air Source

Heat P

ump/Solar PV

Biomass/Solar H

ot Water

Fuel O

il/Solar H

ot Water

Biomass Pelle

ts

Fuel O

il

Propane/N

atural Gas

Natural Gas

Air Source

Heat Pump

Electr

ic Resis

tance $-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

18

Upfront cost for heating, hot waterRetrofit of existing home, no A/C, including incentives

Ground Source

Heat P

ump/Solar P

V

Air Source

Heat Pump/So

lar PV

Ground So

urce Heat

Pump

Biomass/Solar C

ombi

Fuel

Oil/Solar C

ombi

Air Source

Heat Pump

Biomass/Solar H

ot Water

Fuel O

il/Solar H

ot Water

Biomass Pelle

ts

Fuel O

il

Propane/N

atural

Gas

Natural Gas

Electr

ic Resis

tance $-

$10,000

$20,000

$30,000

$40,000

$50,000

19

Lifetime cost for heating, hot water and coolingNew home, including A/C, including incentives

Electr

ic Resi

stance

Fuel

Oil

Fuel

Oil / So

lar Hot W

ater

Fuel

Oil / So

lar Combi

Ground Source

Heat P

ump

Biomass / S

olar Hot W

ater

Biomass / S

olar Combi

Biomass

Propane /

Natural

Gas

Natural

Gas

Ground Source

Heat P

ump / Solar

PV

Air Source

Heat P

ump

Air Source

Heat P

ump / Solar

PV $-

$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000

20

Electric ResistanceFuel OilFuel Oil/Solar Hot WaterFuel Oil/Solar CombiGround Source Heat PumpBiomass/Solar Hot WaterBiomass/Solar CombiBiomass PelletsPropane/Natural GasNatural GasGround Source Heat Pump/Solar PVAir Source Heat PumpAir Source Heat Pump/Solar PV

-70% -60% -50% -40% -30% -20% -10% 0%

Lifetime cost compared to Electric ResistanceNew home, including A/C, including incentives

21

Electric ResistanceFuel OilFuel Oil/Solar Hot WaterFuel Oil/Solar CombiGround Source Heat PumpBiomass/Solar Hot WaterBiomass/Solar CombiBiomass PelletsPropane/Natural GasNatural GasGround Source Heat Pump/Solar PVAir Source Heat PumpAir Source Heat Pump/Solar PV

-80% -60% -40% -20% 0% 20% 40%

Lifetime cost compared to Fuel OilNew home, including A/C, including incentives

22

Electric Resistance

Fuel Oil/Solar Hot Water

Ground Source Heat Pump

Biomass/Solar Combi

Propane/Natural Gas

Ground Source Heat Pump/Solar PV

Air Source Heat Pump/Solar PV

-60% -40% -20% 0% 20% 40% 60% 80% 100%

Lifetime cost compared to Natural GasNew home, including A/C, including incentives

23

Lifetime cost for heating, hot waterRetrofit of existing home, no A/C, including incentives

Electr

ic Resi

stance

Ground Source

Heat P

ump

Fuel

Oil

Fuel

Oil/Solar

Hot Wate

r

Fuel

Oil/Solar

Combi

Air Source

Heat P

ump

Biomass/So

lar Hot W

ater

Biomass/So

lar Combi

Biomass Pell

ets

Propane/N

atural

Gas

Ground Source

Heat P

ump/Solar

PV

Air Source

Heat P

ump/Solar

PV

Natural

Gas $-

$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000

24

Lifetime cost compared to Electric ResistanceRetrofit, no A/C, including incentives

Electric ResistanceGround Source Heat PumpFuel OilFuel Oil/Solar Hot WaterFuel Oil/Solar CombiAir Source Heat PumpBiomass/Solar Hot WaterBiomass/Solar CombiBiomass PelletsPropane/Natural GasGround Source Heat Pump/Solar PVAir Source Heat Pump/Solar PVNatural Gas

-70% -60% -50% -40% -30% -20% -10% 0%

25

Lifetime cost compared to Fuel OilRetrofit, no A/C, including incentives

Electric Resistance

Fuel Oil

Fuel Oil/Solar Combi

Biomass/Solar Hot Water

Biomass Pellets

Ground Source Heat Pump/Solar PV

Natural Gas

-60% -40% -20% 0% 20% 40% 60% 80%

26

Lifetime cost compared to Natural GasRetrofit, no A/C, including incentives

Electric ResistanceGround Source Heat PumpFuel OilFuel Oil/Solar Hot WaterFuel Oil/Solar CombiAir Source Heat PumpBiomass/Solar Hot WaterBiomass/Solar CombiBiomass PelletsPropane/Natural GasGround Source Heat Pump/Solar PVAir Source Heat Pump/Solar PVNatural Gas

0% 20% 40% 60% 80% 100% 120% 140% 160% 180%

27

Annual Greenhouse Gas emissionsSpace heating and Domestic Hot Water

Biomass Pell

ets/So

lar Combi

Biomass Pell

ets/So

lar Hot W

ater

Biomass Pell

ets

Ground Source

Heat P

ump

Air Source

Heat P

ump

Fuel

Oil/Solar

Combi

Natural

Gas

Propane

Fuel

Oil/Solar

Hot Wate

r

Fuel

Oil

Electr

ic Resi

stance

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Tons

CO

2/ye

ar

28

Customer outreachStrategies

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Alternative Heating Strategy1. Outreach: immediately engage with Cape Cod customers, organizations, and trade groups:

• Cape Cod Commission ad-hoc committee, • building contractors/realtors associations, • municipal officials, etc.

2. Informational resources: create and offer consumers neutral data on alternative heating options• Central web landing page and customer triage (Cape Light Compact) - http://www.capelightcompact.org/ccoptions/ • Informational handout (Cape Light Compact, National Grid)• Renewable heating concierge service (MassCEC)

3. Existing incentives: promote existing efficiency and renewables rebates and financing options4. Renewable heating: MassCEC promotes deployment of renewable heating technologies, including

• Coordinating with local groups organizing bulk purchasing • Supporting targeted marketing • Identifying industry gaps and supporting workforce training efforts

Timeframe: Throughout duration of moratorium

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Additional SlidesBackground information

31

Acronym

ER Electric Resistance

FO Fuel Oil

NG Natural Gas

LP-NG Propane converted to Natural Gas after 7 years

FO/SHW Fuel Oil with additional Solar Hot Water

FO/SolCombi Fuel Oil with Solar Combi for space heating and domestic hot water

BIO Biomass pellet boiler

BIO/SHW Biomass pellet boiler with Solar Hot Water

BIO/SolCombi Biomass pellet boiler with Solar Combi for space heating and domestic hot water

GSHP Ground Source Heat Pump

GSHP/PV Ground Source Heat Pump with Solar PV

ASHP Air Source Heat Pump

ASHP/PV Air Source Heat Pump with Solar PV

32

Customer ScenariosHVAC technologies modeled for new buildings and retrofit of existing buildings

Note: policy may need to be clear on fuel switching and/or savings adjustments from eventually switching fuels

Space heating Domestic Hot Water

Natural Gas Secondary heater

Fuel Oil Secondary heater

Electric resistance Electric Storage Water Heater

Temporary shift to Propane and then to Natural Gas in 7 years Secondary heater

Air Source Heat Pump Heat Pump Water Heater

Ground Source Heat Pump Heat Pump Water Heater

Biomass Pellet boiler Secondary heater

Additional to Fuel Oil, Biomass

Solar Combi System Solar Hot Water

Additional to Air Source and Ground Source Heat Pumps

Solar PV

33

Calculation details• Sensitivity scenarios• High electricity rate: 30% higher than EIA long term outlook• High natural gas rate: 30% higher than EIA long term outlook• High ASHP install cost: 50% higher than average cost of $4,000/unit• Low ASHP install cost: 25% lower than average cost of $4,000/unit• NG moratorium duration: 5 and 9 years versus assumed 7 years

• Solar Installation assumptions• Solar domestic hot water: serves 60% of annual DHW load• Solar combi system: serves 40% of annual heating and DHW load• Solar PV system: 7kW financed with low interest loan

34

Source: DOER Markets Division, data as of 1/31/2015 looking out to 2026

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Base CaseNew Construction – incl. A/C

Technology Net Present Cost Capital Cost

20-yr Operating

Cost

Electric Resistance $ 83,867 $ 11,250 $ 115,696

Fuel Oil $ 66,319 $ 23,250 $ 73,263

Fuel Oil/Solar Hot Water $ 66,087 $ 26,470 $ 67,781

Fuel Oil/Solar Heating $ 62,461 $ 36,900 $ 45,243

Ground-Source HP $ 58,815 $ 36,150 $ 38,569

Biomass/Solar Hot Wat. $ 58,669 $ 28,970 $ 51,338

Biomass/Solar Heating $ 58,464 $ 39,400 $ 34,540

Biomass Boiler $ 58,069 $ 25,750 $ 55,424

Propane to Natural Gas $ 56,967 $ 22,750 $ 53,311

Natural Gas $ 45,768 $ 21,750 $ 41,095

Ground-Source HP w/ PV $ 44,085 $ 36,150 $ 14,102

Air-Source HP $ 43,750 $ 12,650 $ 50,139

Air-Source HP w/ PV $ 29,019 $ 12,650 $ 25,672

Retrofit – excl. A/C

Technology Net Present Cost

Upfront Cost

20-yr Operating

Cost

Electric Resistance $ 75,407 $ 4,500 $ 112,483

Ground-Source HP $ 48,421 $ 26,150 $ 37,192

Fuel Oil $ 48,334 $ 6,500 $ 70,049

Fuel Oil/Solar Hot Water $ 48,103 $ 9,720 $ 64,567

Fuel Oil/Solar Heating $ 44,477 $ 20,150 $ 42,029

Air-Source HP $ 42,531 $ 12,650 $ 48,211

Biomass/Solar Hot Wat. $ 40,685 $ 12,220 $ 48,124

Biomass/Solar Heating $ 40,479 $ 22,650 $ 31,326

Biomass Boiler $ 40,084 $ 9,000 $ 52,210

Propane to Natural Gas $ 38,983 $ 6,000 $ 70,049

Ground-Source HP w/ PV $ 33,690 $ 26,150 $ 12,725

Air-Source HP w/ PV $ 27,800 $ 12,650 $ 23,744

Natural Gas $ 27,783 $ 5,000 $ 37,881

36

Greenhouse Gas EmissionsRelative to NG

Electric Resistance 54%Fuel Oil 40%Fuel Oil/Solar Hot Water 29%Propane to Natural Gas 24%Natural Gas 0%Fuel Oil/Solar Heating -16%Air-Source Heat Pump -34%Ground-Source Heat Pump -49%Biomass Boiler -50%Biomass/Solar Hot Water -54%Biomass/Solar Heating -70%ASHP/GSHP & PV -100%

37

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/PV

GSHP/PV

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Net Present Cost (20y) - New Construction

Base Case, incl. A/C Base Case, excl. A/C

38

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/P

V

GSHP/PV

$-

$20,000

$40,000

$60,000

$80,000

$100,000

Net Present Cost (20y) - Retrofit

Base Case, incl. A/C Base Case, excl. A/C

39

Sensitivity scenariosTesting sensitivity to electric and natural gas rates, as well as ASHP install cost

40

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/PV

GSHP/PV

$-

$20,000

$40,000

$60,000

$80,000

$100,000

Net Present Cost (20y) - New Construction

Base Case, incl. A/C High electricity - incl. A/C High natural gas - incl. A/C

41

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/PV

GSHP/PV

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Net Present Cost (20y) - New Construction

Base Case, incl. A/C High ASHP - incl. A/C Low ASHP - incl. A/C

42

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/P

V

GSHP/PV

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000

Net Present Cost (20y) - Retrofit

Base Case, incl. A/C High ASHP - incl. A/C Low ASHP - incl. A/C

43

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/P

V

GSHP/PV

$-

$20,000

$40,000

$60,000

$80,000

$100,000

Net Present Cost (20y) - Retrofit

Base Case, incl. A/C High electricity - incl. A/C High natural gas - incl. A/C

44

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/P

V

GSHP/PV

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000

$100,000

Net Present Cost (20y) - Retrofit

Base Case, excl. A/C High electricity - excl. A/C High natural gas - excl. A/C

45

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/P

V

GSHP/PV

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Net Present Cost (20y) - Retrofit

Base Case, excl. A/C High ASHP - excl. A/C Low ASHP - excl. A/C

46

Moratorium Length SensitivityLP-NG / Net Present Cost

incl. A/C excl. A/C incl. A/C excl. A/CNew Construction Base Case $ 56,967 $ 48,507 Longer Moratorium $ 58,828 $ 50,368 103% 104%Shorter Moratorium $ 55,092 $ 46,631 97% 96%Retrofit Base Case $ 47,444 $ 38,983 Longer Moratorium $ 49,304 $ 40,844 104% 105%Shorter Moratorium $ 45,384 $ 36,923 96% 95%

Longer Moratorium = Moratorium is 9 years instead of 7 yearsShorter Moratorium = Moratorium is 5 years instead of 7 years

47

ERLP

-NG FO NG

ASHP

GSHP

BIO

BIO/SH

W

BIO/So

lCombi

FO/SH

W

FO/So

lCombi

ASHP/P

V

GSHP/PV

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000

Net Present Cost (20y) - New Construction

Base Case, incl. A/C Longer Moratorium, incl. A/CShorter Moratorium, incl. A/C

48

Air Source Heat Pump with Solar PV – Upfront Investment

• Ideal combination of PV with efficient electric heating/cooling option• Revenue from SRECs not included

Solar Installed Cost: $31,500 7 kW System @$4.50/wattHeat Pump Installed Cost: $11,000 3 – 1 Ton Systems

Total Installed Cost: $42,500Cool Smart® Rebates: ($1,500) (3 - $500 rebates)

CEC ASHP Rebates: ($2,250) (3 - $750 rebates)MA Personal Income Tax Credit: ($1,000) (15% Solar Installed Cost, up to $1000)

Federal Investment Tax Credit: ($7,875) (30% Solar Installed Cost)Net Owner Investment: $29,875

Heat Pump Net Investment: $7,250 (Financed through Mass Save HEAT loan)Solar PV Net Investment: $22,625 (Financed with DOER Solar Loan?)

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Technology SummariesAdditional discussion of alternatives

50

Natural Gas• Standard technology• Low install cost, easy/low cost maintenance• Natural gas prices currently low and predicted to remain low• Cooling requires additional A/C installed• New construction requires distribution system to be installed• Not currently available to most Cape Cod customers• Conversion moratorium projected to be in place for 5-7 years (National Grid)

51

Electric Resistance• Standard technology• Easy and cheap install and maintenance, not location sensitive• Highest energy cost of all technologies due to low efficiency• Cooling requires additional A/C installed

52

Propane, then Natural Gas• Specific scenario in which residence first converts to propane and

then to natural gas when moratorium is lifted (assumed 7 years)• Lifetime cost savings compared to Fuel Oil (15-20%) or Electric

Resistance (35-50%)• New construction requires distribution system to be installed• Cheap and easy conversion from Propane to Natural Gas ($300)• Requires installation and rental of propane tank ($100 per year)• Cleaner burning fuel than Fuel Oil• Cooling requires additional A/C installed

53

Air Source Heat Pump• Mini-split systems are easy and quick to install (no ductwork)• Lowest upfront cost of the renewable heating options• Energy bill impact: • Compared to Electric Resistance: lowers electricity use by X2, X3• Compared to fossil fuels: increases electricity use, but heating cost savings

compared to Fuel Oil/Propane, not compared to Natural Gas

• Effectiveness depends on building lay-out (number and size of rooms)• Also provides A/C• Does not require installation of distribution system for new construction

54

Ground Source Heat Pump• Very high installation cost, though significant incentives available• Need for expert installer, right underground conditions for well drilling• Limited installer pool locally

• Energy bill impact: • Compared to Electric Resistance: lowers electricity use by X3, X4• Compared to fossil fuels: increases electricity use, but lowest operational

heating costs of all technologies

• Also provides A/C

55

Pellet Boiler• Boiler and heat distribution technology is similar to Natural Gas and

Fuel Oil, making it a good retrofit candidate• Need to have space for fuel storage• Relatively high upfront cost, though significant incentives available• Maintenance required, but limited• Bulk pellet delivery on the Cape currently limited• Cooling requires additional A/C installed• New construction requires distribution system to be installed