This document discusses the economics of home heating using different fuels such as oil, natural gas, and electricity. It finds that natural gas is the most cost-effective fuel, costing $17 per million BTU compared to $27.11 for oil and $38.10 for peak electricity. However, off-peak electricity is more competitive at $15.63 per million BTU when used with a heat pump, which delivers about 3 units of heat for every 1 unit of electricity. Using regulated electricity rates and a heat pump can provide heat for as little as $9.95 per million BTU, while also reducing carbon emissions.

1. The
Curious
Economics
of
Home
Heat
Todd
Hixon
Oasis
October
26,
2010

2. $5,000
Heat
Bill
• 3,800
B2
house
• InsulaDon
not
great
• Forced
hot
air:
oil
heat
+
AC
• Two
systems:
first
&
second
floors
• Concord,
MA
2

3. 2007-­‐2009
Energy
Use
0
10
20
30
40
50
60
70
0
2
4
6
8
10
12
Nov
Dec
Jan
Feb
Mar
Apr
May-­‐Oct
Oil
Gal/d
kWh/d
HDD
index
Summer
AC
Cost
is
a
small
%
of
total
3

4. Energy
Units
• BTU
(BriDsh
Thermal
Unit)
is
a
measure
of
energy
in
the
form
of
heat
– Heat
to
raise
temp
of
1
lb
of
water
by
1°
F
– Analogous
to
1
calorie
=
heat
1
gm
of
water
by
1°
C
• KiloWae-­‐hour
(kWh)
=
unit
of
electrical
energy
– Can
be
converted
to
heat:
1
kWh
delivered
to
a
resisDve
load
releases
3,412
BTUs
of
heat
• Thermal
efficiency
=
heat
delivered
to
house
÷
heat
released
when
fuel
is
consumed
4

5. Cost
of
Heat
By
Fuel
Natural
Gas
Is
The
Obvious
Choice
Wholesale
Cost/unit
Retail
Cost/
unit
Units/
MMBTU
Thermal
Efficiency
Cost/Usable
MMBTU
Lb
CO2/
Usable
MMBTU
Oil
(gallon)
$2.284
$3.023
7.41
82.5%
$27.11
1995
N
Gas
(therm)
$0.372
$1.493
10.00
87.5%
$17.00
1345
Electricity
(kWh)
$0.0431
$0.13
293.1
100%
$38.10
1626
1) ISO
New
England
2) U.S.
EIA:
hep://www.eia.gov/pub/oil_gas/natural_gas/feature_arDcles/2010/ngyir2009/ngyir2009.html#markets
3) U.
S
EIA,
June
2010:
hep://www.eia.doe.gov
4) New
York
harbor
spot
price,
10/13/10
5) Naturalgas.org:
hep://www.naturalgas.org/environment/naturalgas.asp#greenhouse/
6) 81
lbs/MMBTU
for
New
England
electric
system
fuel
mix
÷
50%
transmission
loss
factor.
5

6. Natural
Gas
/
Oil
Price
RaDo
Is
VolaDle
0
20
40
60
80
100
120
07/08
08/09
Current
Retail
N
Gas
$/MMBTU
As
%
of
Oil
6

7. Electricity
and
Heat
Are
Not
Equivalent
• Electricity
is
a
more
useful
form
of
energy
– Converts
efficiently
to
mechanical
energy
• Electricity
is
a
service
–
difficult
and
expensive
to
store
– Value
different
at
different
Dmes
This
makes
a
simple
comparison
of
oil
and
electricity
misleading
7

8. Heat
Pump
Physics
• Pumps
heat
into
house
–
“recycles”
lost
heat
• Powered
by
electric
motor
• Delivers
~3
heat
units
to
house
per
unit
of
electrical
energy
8

9. Heat
Pump
Economics
0
0.5
1
1.5
2
2.5
3
3.5
4
17
20
30
35
40
45
47
Outside
Temperature
(deg
F)
Delivered
Heat
/
Energy
Used
• 3x+
leverage
• Called
“Coefficient
of
Performance”
(COP)
• LimitaDons:
– Throughput
declines
with
outside
temperature
– Delivers
heat
at
~95°F
• Cheap
supplemental
heat
– Not
enough
to
heat
house
in
mid-­‐winter
Source:
Carrier
25HPA5H
Spec
Sheet
9

10. Electricity
Is
Cheap
At
Night
Marginal
Cost
($/MWh)
Source:
ISO
New
England,
Weekly
Market
Summary,
9/27/10
10

11. Electricity
Is
Green
At
Night,
Too
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NE
Electric
Capacity
Ordered
By
Variable
Cost/MWh
Nuclear
Hydro,
Wind,
etc.
NGas
-­‐
CoGen
Coal
NGas
-­‐
Conv
Oil
3am
Load
Average
Daily
Peak
Annual
Peak
Source:
NE
ISO,
Concord
Municipal
Light
Electricity
costs
in
NE
are
Ded
to
N.
Gas
–
the
marginal
supply
most
of
the
year
11

12. Concord
Off-­‐Peak
Tariff
Cents/kWh
Peak
Hours
13.4
Off-­‐Peak
Hours*
5.5
• Off-­‐Peak
=
11p-­‐6a,
1p-­‐3p,
for
residenDal
heaDng
&
hot
water
• Implemented
via
a
2nd
meter
+
load
controller
that
responds
to
a
power-­‐line
carrier
signal
indicaDng
peak/off-­‐
peak
12

13. Cost
of
Heat
By
Fuel
Wholesale
Cost/unit
Retail
Cost/
unit
Units/
MMBTU
Thermal
Efficiency
Cost/Usable
MMBTU
Lb
CO2/
Usable
MMBTU
Oil
(gal)
$2.284
$3.023
7.41
82.5%
$27.11
1995
Gas
(therm)
$0.372
$1.493
10.00
87.5%
$17.00
1345
Electric
(kWh)
•
Peak
$0.0501
$0.130
293.1
100%
$38.10
1626
•
Off-­‐Peak
$0.0278
$0.055
293.1
100%
$15.63
1127
•
Heat
Pump
$0.0501
$0.130
293.1
300%
$12.70
546
•
RegulaDon
$0.0109
$0.035
293.1
100%
$9.95
1127
1) EsDmated
from
ISO
New
England
data
2) U.S.
EIA:
hep://www.eia.gov/pub/oil_gas/natural_gas/feature_arDcles/2010/ngyir2009/ngyir2009.html#markets
3) U.
S
EIA,
June
2010:
hep://www.eia.doe.gov
4) New
York
harbor
spot
price,
10/13/10
5) Naturalgas.org:
hep://www.naturalgas.org/environment/naturalgas.asp#greenhouse/
6) 81
lbs/MMBTU
for
New
England
electric
system
fuel
mix
÷
50%
transmission
loss
factor.
7) 56
lbs/MMBTU
for
New
England
electric
system
off-­‐peak
fuel
mix
÷
50%
transmission
loss
factor.
8) EsDmated
from
ISO
New
England
data
9)
VCharge
CorporaDon
13

14. Heat
Pump
&
Off-­‐Peak
Can
Be
Combined
Heat
provided
by
each
system
proporDonal
to
temperature
liB
Heat
Pump
heats
air
to
95°
F
Electric
Thermal
Storage
(ETS)
Tops
Off
Heat
Return
Air
@
65° F
Supply
Air
@
110° F
14

15. New
System
for
Upstairs
Heat
Pump
(on
right)
Electric
Thermal
Storage
(ETS)
Unit
15
Return
air
Heat
Pump
Condenser
Brick
Stack
Air
Handler
Supply
Air

16. Cost
Model
for
Upstairs
• 51%
cost
savings
• 63%
of
heat
from
Heat
Pump
16

17. Results
Measurement
• Oil
deliveries
• Separate
meter
for
off-­‐peak
electricity
• Installed
power
meter
on
Heat
Pump
supply
circuit
Current
Sensors
Power
line
communicaDons
node
17

18. Results
Measurement
• Power
sensor
on
Heat
Pump
shows
power
usage
• Maintains
hourly
log
file
18

19. QuanDtaDve
Results
• Cost
savings
=
54%
($1,300)
– Invested
~$3,000
over
replacement
cost
of
old
system
• Saved
850
gal
oil
&
4.75
tons
CO2
• Heat
pump
carries
less
of
heat
load
than
expected
19

20. Comfort
Factor
• Electric
heat
is
inherently
cleaner
and
more
reliable
• The
heat
pump
is
an
awesome
air
condiDoner
– Made
light
work
of
the
2010
heat
• It
feels
good
to
be
green
– Especially
if
you
save
money
• My
wife
gave
the
new
system
thumbs-­‐up
– More
powerful
air
handler
eliminated
cold
spots
20