Column: Economics of gas, electric or hybrid heating and cooling systems
Whether you are building a new home or upgrading an existing home, one area of concern should be the type of energy you use for heating and cooling, generating hot water, and running your appliances.
The largest energy used in a home is for heating and cooling; it’s about 46 percent.
For 90 percent of us, the choice is natural gas or electricity, but for a few it is heating oil, propane, coal or wood. There are also renewables, wind and solar; however, renewables are a small part of the residential energy supply and, in most cases, can’t provide standalone power sufficient to support a home 24 hours a day without grid or battery backup.
The bottom line for any decision is how much energy do I need to condition my home for comfort and how much will it cost; this is where an analysis comes in. Ideally you should know how much energy your home loses through conduction, convection, radiation and air leakage through its outer skin. This is the amount of energy your heating and cooling system has to replace to maintain a constant in home comfort. A comprehensive energy audit can supply this information, but for many it is an unknown.
When comparing heating and cooling systems, the common energy measure is the British Thermal Unit (BTU). The gas company bills a homeowner in Therms, which is 100,000BTU and the electric company bills its customers in Kilo Watt hours (KWh) where a KWh is equal to 3412BTU. Now with the conversion in place, it is easy to compare the cost of electricity with that of natural gas or any other fossil fuel.
Now look at the cost of these fuels. Based on numbers in Prescott, the average price of natural gas in 2016 is $1.34 per Therm and electricity 11.3 cents per KWh, or $3.27 an equivalent Therm.
It is important that you use costs based on your own energy bills, as they tend to vary with usage. All energy bills are based on the fuel you use and a large fixed cost due to distribution and taxes.
From above, the same Therm of electric energy supplied to heat or cool your home costs approximately 250 percent more than natural gas – why, because over 50 percent is lost in the transmission to your home from the generation station. This is why in most cases electricity isn’t used for home heating. That is, unless you consider a heat pump.
A heat pump is a device identical to the air conditioner in your house or car; the only difference is it can reverse direction and heat in winter and cool in summer. There are two configurations. One uses air as its energy medium and the other, called geothermal, uses the ground and/or water as its medium. Heat pumps are a science unto themselves and beyond the scope of this discussion.
The important point to note is that heat pumps extract energy from the air or ground and generate more energy than they use; that is, for a KWh of source power the unit generates 3KWh (+300 percent) of output power. All other heating systems absorb energy during the input to output conversion called efficiency factor. The heat pump is the only device that supplies more energy than it consumes because it steals energy from the air or ground.
However, it has limitations. Its efficiency or Coefficient of Performance, the ratio of input to output energy level, varies with air or ground temperature. The air-based system is more susceptible to temperature variations than geothermal as ground temperature is reasonably stable below 30 feet at around 55°F. However, for this discussion we will concentrate on the more popular, lower-cost and readily available air-based systems.
We know that natural gas costs $1.34 per Therm and electricity costs $3.27 per equivalent Therm, but if we now consider the heat pump’s energy efficiency characteristics; as the outdoor temperature rises the heat pump efficiency increases and at 60°F it has a performance boost of approximately 5 and the cost drops to 65 cents a Therm of electricity, much less than the $1.34 Therm of natural gas; but as the temperature drops below 40°F and the performance factor drops the electricity cost increases above natural gas reaching $1.40 at 28°F and $2.10 at 8°F.
This is why a standalone air-based heat pump is not economically viable in very cold climates; however, new dual fuel systems that use natural gas as backup to the heat pump can provide the best of both worlds. Be careful with the electric-only systems as the electric back-up unit is costing 250 percent more at $3.27 per Therm and not the $1.34 of natural gas. For more information and calculations, go to http://www.greenhomeenergyadvisors.com/articles-and-technical-information/duel-fuel-the-best-of-both-worlds/
Another advantage of a natural gas dual fuel system is that as fuel prices change, the temperature at which the system switches fuels can be adjusted for the best cost model. And remember your heat pump is also your air conditioner and with a device called a desuperheater, your heat pump can provide effectively free hot water to your home when the heat pump is running summer or winter.
Dual fuel systems cost a little more than a standalone natural gas furnace and air conditioning unit, but as a cost-effective system dual fuel makes a lot of sense. It provides heating, cooling and hot water from one configuration and with a low operational cost.
For more information, contact Paul Scrivens at www.greenhomeenergyadvisors.com