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I believe in electrification. So why did I just install a new furnace?

Posted by Gabe Lieb, EFCA Director of Strategy

Our executive director Charley Cormany works with the Building Decarbonization Coalition and National Resources Defense Council (NRDC) to bring a contractor’s perspective to residential decarbonization and electrification policy in California.  Efficiency First California (EFCA) manages the SMUD Home Performance Program, which last year started incentivizing electrification with hefty rebates. I subscribe to MCE’s 100% renewable energy  Deep Green rates. You could say that I’m an electrification champion. So why did I just put a new furnace into my house?

Recently my family and I moved into a hundred-plus-year-old home that needed a ton of updating and deferred maintenance. Among other things, the building’s old gas furnace and water heater not only required updating with more efficient options but were also in the way of essential structural work. Not only would keeping the furnace and heater where they were have made these renovations difficult, but the space they were in would also have been too tight to be code compliant. I was excited at the prospect of replacing the old equipment with heat pumps to go all electric–until I started getting bids and looking into rebates.

So why did I not go for a heat pump like I initially planned? Install costs, operating costs, and comfort.

We live in a part of the Bay Area that has greater heating loads then cooling loads. Our home is on the shady side of the street and set back into a hill. While there are occasionally hot days and even weeks, for the most part summers are tolerable. It’s not Sacramento or the Central Valley. We’ve dealt with life so far without air conditioning, and because we were air-sealing and insulating the home as part of our remodel, I was pretty sure the house would stay even cooler when it did get hot. Since we weren’t sure we even needed AC, replacing the furnace with a heat pump would have been more expensive than it needed to be.

To stay under budget, I looked into rebates. As we probably are all aware, because of the “three-pronged test”, investor-owned utilities are effectively barred from offering rebates for fuel switching. If I chose a heat pump, I would be reducing my Home Upgrade rebate by hundreds of dollars.

The cost of the heat pump itself wasn’t my only consideration. Our home had a 100 amp electrical panel with a little room for new equipment. People who live in SMUD territory can get an incentive to install a 200 amp panel if they are converting gas equipment to heat pumps, but I’m not in its service area. Upgrading the panel was another expense that we didn’t necessarily have in the budget when the home needed so much work.

But even if the cost of equipment and installation had been the same, there were still other issues impacting my pocketbook. Gas is much cheaper than electricity in PG&E territory, and adding additional electric loads would put me into higher rate tiers. When I penciled it out, it was going to be more expensive to run a heat pump for heating.

Of course, an easy solution to my operating cost problem would be to install solar. However, because we live on the southern side of a small valley, we also have little to no sun exposure on our roof. So there isn’t a cost-effective way for us to produce our own clean energy.

Finally, there was one more issue that was important to me: comfort. The way a heat pump operates is different from a gas furnace. It heats up more slowly. We wanted to do shell work, but the home was built in 1912 and had some air leakage challenges and missing insulation that we just weren’t able to tackle. I had expectations that our upgrades would improve this, but realistically I knew the house would never be as airtight as I wanted it to be. Like many of us, my wife grew up with oversize furnaces the heat up quickly. I guessed that a heat pump in a leaky and not super insulated house might be a disappointment.

So what did I do instead? I replaced the 80 percent efficient 100k BTU furnace with a 95 percent efficient two-stage 40/26k furnace. Our new ductwork was designed using Manual J, and the ducts went from leaking 50 percent to 5 percent. The ducts in the attic were also buried under blown-in cellulose. In short, I significantly increased efficiency and decreased the home’s heating costs.

So, in the end, what are the takeaways from my experience?

First, while it’s essential to support policies on fuel switching and moratoriums on new natural gas hookups, it’s just as important to shape policies that help contractors sell electrification upgrades to homeowners. We need rebates that incentivize the difference in cost between installing a furnace and installing a heat pump, and rate structures need to support the switch.

At the same time, let’s not forget that comfort is still relevant. In the past, homeowners have sometimes had bad experiences with heat pumps, and even now, the best ones perform differently from furnaces, and work best in otherwise highly efficient homes. If we’re going to push for electrification, we need to address these concerns.

It’s also important to remember that there are other ways that a homeowner can significantly reduce his or her carbon footprint. It may be more impactful for some people to prioritize electrifying personal transportation. There may be other home upgrades that significantly reduce emissions without fullying electrifying, like hybrid heat pumps. We need to shape policy to support the overall goal, carbon reduction.

It was honestly a hard choice for me to go with the furnace. However, it just made sense. It’s important for policy folks to understand that even motivated homeowners like me may need the extra nudge and proper incentives to go all electric. That’s not to say that I’m basing all my decisions on cost, though. I did replace that gas water heater with a heat pump, and I’m upgrading my electric panel so that my next car can be electric.

Gabe Lieb
Director of Operations
Efficiency First California