Beat the heat with heat pumps

September 7, 2022
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Lou Finazzo



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The past two summers have brought record-breaking heat waves to the Pacific Northwest (e.g., the infamous June 2021 heat dome). As Washington becomes increasingly affected by the effects of climate change, communities across the state will experience more frequent and intense extreme heat events.


Only 53% of homes in Washington have air conditioning, leaving many residents — particularly low-income and Black, Indigenous and Colored (BIPOC) community members who have less access to air conditioning — vulnerable to heat-related illness and death. Local governments use a variety of tools to prepare their communities for climate change and extreme weather conditions. One method is to incentivize heat pump installations as a means of cooling and heating homes.


This blog provides an overview of heat pumps, examples of local government incentives in Washington state, and new state and federal programs.


What are heat pumps?


Heat pumps use electricity to transfer heat to heat or cool a home. Heat pumps transfer heat from outside to the house during the heating season and heat from the house to the outside during the cooling season. The most common heat pumps in the country are ducted air source heat pumps (for homes with existing HVAC ducts) and ductless air source heat pumps (for homes without existing HVAC ducts).


By transferring heat rather than generating heat or cooling hot air, heat pumps are very energy efficient. These efficiency gains result in energy cost savings, reduced greenhouse gas (GHG) emissions, and both adaptation and resilience of communities exposed to extreme heat.


Given these benefits, why aren’t heat pumps being adopted quickly in Washington? In short: the financial burden. Installing a heat pump system can cost as much as $10,000 or more, depending on the heat pump type, heat pump efficiency, labor costs, and other factors. High costs make heat pumps inaccessible to low-income households and prohibitively expensive for most middle-income households. Incentive programs can have a significant impact here.


How local governments are promoting heat pumps


Local governments use rebates, loans, and other approaches to incentivize homeowners to install heat pumps. Let’s look at how each is designed and offered.


discounts


The most common incentive for heat pump installations is a rebate. Discounts are most often distributed to approved, qualified installers, who then pass the savings on to the utility’s customers in their installation quote. Some public utility districts (PUDs), such as the Benton PUD and Clark County’s #1 PUD (commonly known as Clark Public Utilities), offer discounts ranging from $100 to $2,000 depending on the heat pump type (ducted or non-ducted). , the efficiency class of the heat pump and the existing heating method of the house. Some city electric utilities, including Centralia City Light, Ellensburg Electric Utility, and Seattle City Light, offer discounts ranging from $300 to $1,600.


loan


Another approach is to reduce residents’ financial burden of borrowing. Heat pump loans are subject to various requirements, including the use of approved qualified contractors and that the home’s existing heat source be electricity, among other things.


Tacoma Power offers various rental options for ducted and ductless heat pumps. For Duct Heat Pumps, Tacoma Power offers seven-year 0% interest loans up to $10,000. There are two loan options for ductless heat pumps: the first is a seven-year, 0% interest loan of up to $4,000 and the second loan option, designed for Income-Eligible Customers, offers a loan of $3,500 plus a $500 rebate. The homeowner must repay the loan if the home is later sold to a new owner.


Clark Public Utilities also offers loans for ducted and ductless heat pumps. The loans for both types of heat pump have an interest rate of 4.99% and a repayment period of five years for projects costing less than $10,000 and seven years for projects costing more than $10,000. Applicable incentives, such as B. Discounts are deducted from the total loan amount.


partnerships and group purchasing


One innovative approach currently being tested is the Energy Smart Eastside collaborative heat pump program. The program brings together the cities of Bellevue, Issaquah, Kirkland, Mercer Island and Redmond and a variety of partners to pool incentive resources and increase outreach.


The program uses a group purchasing model whereby interested eligible residents can purchase heat pumps as part of a group order and receive a discounted price. The program offers at least a $500 rebate for installation, and the incentive can be stacked with city and utility (in this case, Puget Sound Energy) incentives. Income-eligible residents are entitled to additional benefits. For example, Bellevue Income-Eligible Residents are eligible for a mix of incentives and financing options that may result in free installs.


State and federal incentives


The Washington State Department of Commerce offers Clean Energy Fund Building Electrification grants for projects that support the installation of electrical equipment (such as heat pumps) and fuel switching (such as converting a building’s heat source from gas to electric). Local governments can apply for grants both for their own buildings and as program administrators. The application documents will be available from autumn 2022.


Past the United States. At Congress in August 2022, the Inflation Reduction Act provides funding for a high-efficiency residential electrification rebate program that includes heat pump rebates of up to $8,000 for low-income households (distributed by state energy departments and tribal governments). Income-eligible households are eligible for tax credits of up to $2,000 for installing a heat pump. Discounts become available in 2023 and tax credits apply to devices installed on January 1, 2023 or later.


Conclusion and Resources


As extreme heat becomes the summer norm, access to affordable, efficient, and reliable cooling is critical for all Washington residents, especially low-income and BIPOC community members. By incentivizing heat pump installations in conjunction with state and federal resources, local governments can help their communities build resilience and adapt to climate change in an equitable manner.


Below are additional resources from MRSC:




MRSC is a private non-profit organization serving local government in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

About Lou Finazzo

Lou joined MRSC in May 2022 as a Public Policy Intern. He is pursuing a Masters of Public Administration degree from the University of Washington with a concentration in policy analysis and assessment, environmental policy, and public finance management.

Lou has previous experience as a process assistant and research analyst at the Sierra Club, where he focused on a variety of issues including climate change, environmental justice, fossil fuel infrastructure and transportation.

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