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Switching to electric heat pumps would increase costs for most MA homes with natural gas heating, but there are opportunities for savings in households with electric resistance heating.
Cambridge, MA - June 26, 2024 - Air-source heat pump adoption will increase heating costs for approximately half of all Massachusetts households due to high electricity prices, according to a new town-level spatial analysis by researchers at Harvard University. Concerns around increased energy bills could challenge Massachusetts’ ability to achieve its ambitions for decarbonization of buildings across the state.
In February 2024, MA announced a new target for 65% of residential-scale heating to be heat pump equipment by 2030 and 90% by 2040. The state earmarked nearly 4 billion dollars in incentives between 2022 and 2024 to promote uptake. But with the third most expensive electricity in the country, consumers may be reluctant to switch to heat pumps if doing so would increase heating costs.
Using location-specific data, a new report from the Belfer Center and the Harvard University Center for the Environment calculates, on a town-by-town basis, the annual change in residential heating costs incurred by the average-sized Massachusetts household converting from natural gas, oil, or electric resistance heating to an air- or ground-source heat pump. In most places in the state, heat pump adoption for homes that use natural gas will increase annual bills, or, in the best-case scenario, result in only marginal savings. For an average-sized house of 1800 square feet, switching to heat pumps would increase the annual bill by $400 to $500 per year.
“Our research shows that, for most households, electricity prices will need to come down significantly before switching from natural gas or oil heating to heat pumps is cost-effective,” said lead author Roxana Shafiee, Environmental Fellow at the Harvard University Center for the Environment. “However, we also identify where the state can target its short-term efforts to encourage uptake without increasing people’s heating costs.”
State-level policies and subsidies should initially prioritize the 16% of MA households with electric resistance heating, argue the authors, where switching to heat pumps would significantly decrease annual heating costs, in some cases up to $2900 per year (for the average-sized MA home). Many of these homes are low-income households or rental housing, where landlords have limited incentive to install more economical heating systems. If the state can provide appropriate incentives for heat pump installation in these homes, it would not only reduce energy consumption but also provide economic relief to families for whom energy bills are a significant portion of their household budget.
Another opportunity exists for homes that use oil heat. These homes would incur only marginal savings if they switched to heat pumps, but at least would not see an increase in heating costs in most places. With subsidies to help with purchase and installation costs, it would make sense for many of these homes to switch to heat pumps. In addition, some of these homes with oil heat that already have central air conditioning could be encouraged to switch when it is time for their air conditioning system to be replaced, as the mechanical requirements of a heat pump system are similar to central air conditioning.
“Heat pumps are the only viable pathway to decarbonize home heating across Massachusetts at the present time,” said Daniel Schrag, Sturgis Hooper Professor of Geology at Harvard University and Co-Director of the Belfer Center’s Science, Technology, and Public Policy Program. “There are opportunities for us to get started – specifically for households that use electric resistance heating or oil heat. But full decarbonization of building heating will require big changes in energy pricing as well as changing the generation mix in our electricity system.”
Massachusetts is not alone in confronting the challenge of eliminating natural gas as a main source of building heating. “This is not just an issue for Massachusetts, but for most of the northern United States, where electricity prices are high relative to natural gas,” said Schrag.
Hanlon, Elizabeth. “Heat Pump Adoption Not Cost-Effective for Majority of MA Households, Says New Study.” Science, Technology, and Public Policy Program, Belfer Center, June 26, 2024