The recent webinar — “The Energy Transition: An ROI-NJ discussion on flexible energy systems powering the future” — discussed a lot of key topics in the energy sector.
It could not, however, solve this seemingly innocuous debate: When is it chilly and when is it cold?
Eric DeGesero, president of Edge Consulting and executive vice president of the Fuel Merchants Association of New Jersey, said the distinction is important.
To DeGesero, it marks the point at which heat pumps lose their value as compared with gas furnaces.
DeGesero, who always fights with facts, will stipulate that heat pumps are more efficient than gas furnaces — to a point.
“(It) is 100% correct that a heat pump will operate at three times the level of efficiency, but that coefficient of performance drops precipitously if it’s an air-to-water heat pump once you get close to 30 (degrees), and if it’s an air-to-air heat pump once you get closer to 25 to 20 degrees.
DeGesero said the cost for 20 million BTUs — which is needed to warm a 2,200-square-foot house (not a commercial building) — essentially is the same on normal day at approximately $230, at 12 cents per kilowatt hour.
But, when it’s cold, DeGesero said the cost of the heat pump jumps to $475.
DeGesero said it’s a second cost that is not readily known.
“The enormous upfront cost (to transition) is the huge barrier that we know about,” he said. “But the operational advantage that electric gets when it’s chilly out isn’t true when it’s cold.”
DeGesero said this should be a concern of building owners everywhere.
Eric Miller, director of New Jersey energy policy, climate and clean energy at the Natural Resources Defense Council, isn’t buying the numbers.
He, too, is bringing facts — starting with anecdotal evidence, he said.
“I always love the chilly vs. cold conversation in a state like New Jersey,” he started. “It doesn’t get that cold in New Jersey. And, when it does get cold, it’s not nearly as cold as Massachusetts, Maine and upstate New York, which have very high heat pump penetrations.
“Up there, that industry has been shifting for years toward electrification, away from traditional fuels. Vermont has a lot of delivered fuels, a lot of kerosene oil and wood-burning stoves. They’re moving forward with electrification. And, so far, it hasn’t been entirely problematic.”
Then there’s this: Those upfront costs will pay off in the long run, Miller said. He said recent studies all indicate the electrification will be cheaper over time — not to mention the environmental impact.
“Under every scenario — high electrification, low electrification, high clean fuels, low clean fuels, the lowest-cost option overall is high electrification,” he said. “All of them come to pretty much the same conclusion.”
Miller challenged the notion that this is bad for the bottom line of a business.
“Should businesses be concerned?’” he asked, and then answered. “I think businesses should be excited — and this really stems from how we’ve done energy efficiency in New Jersey and across the country for 30-40 years.
“New Jersey has a long history for cost-energy efficiency programs; all of the utilities, electric and gas in the state run very robust energy efficiency programs. And, it says, ‘If you want it, we’ve got some programs to help you.’ And, what it’s really targeted at is, from a business, I’m deciding where to bury my profits or my cash reserves this year. I want to make sure I get a good ROI.”
That return on investment, Miller said, comes down the road.
“We know over the lifecycle of these technologies, 15-20 years, they net out,” he said. “(Businesses) want them to net out faster — it’s always better to get your ROI in one or two or three years than five or 10 years.”
Miller acknowledges the upfront costs of conversion.
“This helps close that gap, makes those investments more attractive, and that’s really why we see them a lot of market,” he said. “I don’t want to pretend that they only exist because this technology’s never cost-competitive.”
Miller said this is the bottom line.
“Any renovation you take on a big building will be expensive,” he said. “Making it so that renovation lowers CO2 emission, moves to electrification and shrinks that ROI, is what these programs do, and which is why they’re so valuable.”
DeGesero answered back.
“When I want to replace my heater, I don’t want to have to take out another mortgage and do a retrofit,” he said.
He noted a report from ICEEE in July of 2023.
“They reported weatherizing buildings as an excellent first step toward electrifying their heating and cooling systems — without weatherization, the annual bill increase with electrification is $980,” he said.
“In December of 2022, Efficiency Maine, which is seen as kind of the paragon of heat pump promotion in a cold state, put out something that said, ‘Enclosed you’ll find tips to get the most from your heat pump during cold weather months, as well as a handout on how to maximize the use of your heat pump, while also heating with a boiler furnace.’”
DeGesero offered his own anecdote, from New Jersey, to counter the claims that all is well.
“On Dec. 23, we (may have) missed the email from our utilities that received notification from PJM saying, ‘Please turn down your thermostat and unplug your unnecessary lights — i.e., your Christmas lights — because it’s cold out and the grid can’t handle the demand.”
The spirited debate continued (watch it all here). More than that, know that it is a lot more complicated than simply debating: When is it chilly and when is it cold?
