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Beneficial Electrification: Converting Propane Heated Homes to Heat Pumps

Converting propane heated homes to heat pumps can be a great Beneficial Electrification strategy.  The amount of benefit depends a great deal on climate and the price of both electricity and propane, but in many situations there are multiple benefits:

  • For the member, it can provide energy savings in summer and/or winter, plus protection from the instability of propane pricing
  • For your co-op, it can provide steady cumulative revenue growth

For the environment, reduced fossil fuel emissions

Co-ops can promote  conversions of propane heat to heat pumps in a number of ways.  and conversion program, your co-op can encourage your members to convert their heating/cooling fuel sources from propane to electricity.

Heat Pump Conversions Can Benefit the Co-op Member

Heat pumps have become far more efficient over the years and can operate at lower temperatures. There are three common types of heat pumps:

  • Air source forced air systems: draw heat from the outside air and distributes it through the house;
  • Ductless, sometimes called ductless mini-splits: are also air source but have little or no ductwork.  They can distribute heat to as many as four rooms for each outdoor compressor; and
  • Ground source, or geothermal: draw on the constant heat from below the ground’s surface.

The benefits of converting from propane to a heat pump can be multiplied if insulation and air sealing is done at the same time.  Collaborative Efficiency has conducted energy analyses of older, propane heated homes that are under-insulated and too leaky and found that overall energy use could be reduced by over 30% in many cases.  Some homes can cut energy costs by over $1000/year.

Increased Electricity Sales

How much would a heat pump conversion program affect electricity sales?  This depends a great deal on climate and space heat and air conditioning load, but let’s make some assumptions and look at an example situation.  Let’s assume a Midwest co-op of about 10,000 members targeted propane heated homes also needed some insulation and air sealing.  Within a few years an aggressive program might be able to complete retrofits in as many as 100 homes each year.

The additional revenue from this program would not be large in the early years, but its impact would grow.  Within three years the cumulative additional revenue could be equivalent to the revenues gained from a 1% annual increase in demand.   Within six years the cumulative additional revenue could be equivalent to the revenue gain from an annual 2% demand growth rate.

Environmental Benefits

Programs that grow electric sales revenue are unlikely to be favored by regulators and policy makers unless they benefit the customer and the environment.  One factor at play that helps produce a more positive environmental impact as propane heated homes are converted to heat pumps is that electricity has become a cleaner and greener fuel as its more likely to be generated by natural gas or renewable sources.

The other keys to producing an environmental benefit are the efficiency level of the heat pump and the installation of insulation and air sealing measures.

Program Size

Growing a program large enough to create substantial and meaningful benefits is a challenge for any utility, and even more challenging for electric co-ops that do not serve massive numbers.  There are tools and techniques available that can leverage a very small program staff and enable great achievements.  The first step to building a sizable program is the assessment, which will help determine the full potential for Beneficial Electrification in your service territory and help you target the types of homes that can most benefit from a retrofit.

Keys to Success

At Collaborative Efficiency, we can help you assess the heat pump conversion potential in your service area. We’ll help navigate issues like

  • Scope: Select the right types of buildings and the right demographic of members to increase the likelihood of success
  • Scale: Understand what resources you can attract and what tools you can draw upon as you quantify goals and plan your program
  • Financing: How to develop the financing package that’s right for you and your members
  • Outreach: How to make sure your members know about the program and take advantage of it

To learn more, contact Pat Keegan at pkeegan@collaborativeefficiency.com or (720) 331-0018