1 Domestic Heating Fuel Choice Study (aka The Direct Use of Gas) Michael Schilmoeller NW Power and Conservation Council presentation for the presentation for theRTF Tuesday, December 07, 2010

2 Study Objectives What’s better economically? –Costs and decisions use total resource cost, with wholesale prices for electricity and gas –The study should consider carbon penalty costs and other sources of risks –Conversion can go either way : direct gas to electricity or electricity to direct gas Recognize uncertainty and imperfect foresight Determine if incentives or disincentives improve the outcome

3 Key Assumptions Limited to existing construction Assume that energy requirement per household for water and space heating is seasonal but insensitive to natural gas and electricity price Assume that a fixed portion of existing stock turns over each year, which determines the conversion potential

4 Incremental Cost of Conversion Needs to Reflect Changing Federal Standards US DOE must adopt new efficiency standards for furnaces, central AC and heat pumps by May/June These standards would take effect in 2013 for gas furnaces and 2015 for Central AC and Heat Pump DOE adopted new standards for gas and electric water heaters effective April 16, 2015 Associated costs updated

5 More Realistic Representation More existing situations (segment groups) More conversion opportunities (segments) Energy distribution of the appliances Restrictions on replacement-in-kind –Hot water heaters with capacity > 55 gallons must adopt more efficient appliances –Eliminate electric resistance tank and conventional gas tank –Use HPWH and high-efficiency condensing gas as retrofit in kind

6 More Realistic Representation Credit for air conditioning –Segments without A/C and without heat pumps will convert to segments without A/C No credit given for cooling value of heat pumps in retrofit systems –Segments with A/C and without heat pumps are assumed to convert to segments with A/C No differential impact on cost or energy –Segments with heat pumps converted to either heat pumps or systems with A/C

7 More Realistic Representation Ignoring all gas hydronic systems –Both existing and as retrofit Exclude gas/HP hybrid Assume multi-family type housing do not have basements Exclude all-electric to all-electric segments, where no gas is available Exclude zonal conversions to electric FAF is excluded

8 Old Segment Groups Customer segments were determined primarily by existing circumstances –Single- or multi-family building –Existing space heating appliance –Existing water heating appliance –Whether or not a gas main is available, and if so, whether service already exists or an extension from the gas main is necessary

9 Old Segment Groups Market segments include single- (s) and multi-family (m) homes FAF refers to forced air furnaces DHW refers to domestic hot water Conversion opportunities distinguish segments 2 and 3

10 New Segment Groups

11 20 New Segment Groups Associated with FAF Electric and Electric DHW

12 Conversion Options Note that there are only four choices for retrofit domestic hot water: heat pump water heats (HPWH), electric resistance, gas tank, and instant gas.

13 Selected Combinations Only water heating conversion is available to segment 2; only space heating conversion is available to segment 3.

14 New Segments

15 20 segments Associated with Electric FAF and Electric DHW → Gas FAF Electric and Instant Gas DHW

16 Energy Distributions

17