In this episode, Paul is joined by DR Richardson and Jan Keleher of Elephant Energy to discuss the challenges of the residential heat pump market. With an array of federal, state and local incentives, a myriad of technology options, sizing requirements, electrical upgrade decisions and other factors that play into installing these units, Elephant Energy has found a niche as a "one-stop shop" in helping homeowners.
We explore why business model innovations such as Elephant's may be necessary to ensure that this useful decarbonization technology gets deployed at scale.
In this episode, Paul is joined by DR Richardson and Jan Keleher of Elephant Energy to discuss the challenges of the residential heat pump market. With an array of federal, state and local incentives, a myriad of technology options, sizing requirements, electrical upgrade decisions and other factors that play into installing these units, Elephant Energy has found a niche as a "one-stop shop" in helping homeowners.
We explore why business model innovations such as Elephant's may be necessary to ensure that this useful decarbonization technology gets deployed at scale.
This is 8 minutes a podcast helping you understand the energy and climate challenge in just a few minutes, and your host, paul Schuster. Heat pumps are having a moment. According to the International Energy Agency, pump sales grew by 11% globally last year and here in the US heat pump sales officially outpaced gas for the sales for the first time last year, boosted by incentives tucked away in the Inflation Reduction Act as well as by state and local rebates. Heat pumps are both climate-friendly and wallet-friendly, but the process to get heat pumps installed Between sizing them correctly to getting a knowledgeable HVAC installer, to accessing those rebates there are a lot of moving parts. Too bad we don't have a magic concierge who, with a snap of our fingers, can do a lot of that heavy lifting for us. Oh wait, maybe we do. Heat Pumping Energy is a Colorado-based company making it easy for homeowners to install heat pumps Full disclosure. Elkent just opened up operations in Massachusetts and my wife and I were among the first installations. They did out here and honestly I was so impressed that I need to invite DR Richardson and Jan Kelleher onto the podcast to talk about their service and the challenges they are trying to overcome for the heat pump market.
Speaker 1:
8 minutes. It's how long it takes the suns raised to the earth, or about the amount of time my kids spent doing their homework last night Two hours fighting with me for 8 minutes of effort. Whatever, let's get it on. Heat pumps are one of the more powerful tools that we have to decarbonize. Federal, state and even local agencies have banked on convincing homeowners to convert their residential HVAC systems over to this fully electric solution. But it's not like. This is a new technology. At its core, heat pumps are using the same heat transfer technology as your refrigerator or even your old AC unit. But today's heat pump equipment can do more than just cool, as DR explains.
Speaker 2:
So it's a very old technology. The new quote-unquote, the new innovation has been its ability to work in reverse, so not just provide cooling but provide heating, and do that at very cold temperatures.
Speaker 1:
And it's that heating ability that has created a real opportunity for decarbonization.
Speaker 2:
You can really decarbonize a gas furnace. We're always burning methane in a home. That methane is always going to be creating CO2 emissions and instead what we can do is we can replace that gas heating and cooling or heating with electric technology and you can decarbonize electricity. You can replace those electrons with wind, solar, other renewable energy technologies.
Speaker 1:
The technology has come a long way and recent improvements have even proven to handle some of the most extreme cold situations that residents may face. Elphin Energy operates in both Colorado and Massachusetts, neither of which are states that anyone would call balmy, but the adoption of heat pumps is really taking off even in these cold states. Maine had set a target of installing 100,000 heat pumps by 2025 and reached that goal of full two years ahead of schedule, because heat pumps not only provide a climate benefit, but are often good for the wallet too, operating far more efficiently than even the most efficient gas furnaces. But navigating the process of installing these heat pumps is still a challenge. There are a lot of moving parts.
Speaker 2:
There rebates at the city level, at the county level, at the utility level. There are tax credits, both federally and at and statewide. On what size heat pump would we need? The Contractors did exactly zero work to understand how much heating load my home Actually needed and said, relied on old-school rules of thumb that were not particularly accurate and in our view, we're going to massively over size things.
Speaker 1:
Which is where elephant energy comes in, helping homeowners work through these challenges, as yawn and dr so elegantly articulate, there's been quite a variety of incentives out there and I think navigating all that is really a challenge.
Speaker 3:
Does the system I want to install, or you know my contractor is recommending, does it qualify for the local incentives, whether that's mass-save or other utilities in your region? Does it qualify for any state credits or state incentives? Does it qualify for inflation reduction act tax credits or the rebates that are coming down? Hopefully sometime this calendar year.
Speaker 2:
Our business model, right, is to work closely with homeowners to help them upgrade their homes to be more climate friendly, and we do that with a network of vetted subcontractors and and our insight has been that Most HVAC contractors are actually really quite good at their job. But all those technical details that yawn just mentioned, keeping track of which equipment qualifies for which rebate programs, what are their variables it's pretty technical, but now what you have in the in the rebate world is at least for, if not more, different, highly technical parameters that are required. Heat pump has to meet all of those parameters to be able to qualify for those rebates and there's a complex set of paperwork that contractors have to fill out to qualify equipment for those rebates.
Speaker 1:
It's business model innovation, such as elephants, that are needed to really see adoption of this technology scale. The heat pumps work and the incentives are there. We've just made it pretty confusing and messy to fully access. Easing that market friction is super important and Despite financial support from incentives in the IRA and at the individual state level, it's not like the process is gonna get a lot easier.
Speaker 3:
It's not clear to me that that's going to make things easier. Mass save, for example, we'll continue to have their requirements, irrespective of what comes out of DC Sport. Inflation reduction at specifics, a utility like Excel energy, which we work with a lot in Colorado, you know, might have might have different interests. For example, while they are interested in in decarbonizing the heating sector, they're also very interested in making sure that their summer peak low remains low and for that reason that might change the kind of equipment that they really want to see and really want to incentivize in their region a lot of well-meaning homeowners have given up on installing heat pumps due to these complexities, and that's a lost opportunity, not only because of the missed immediate impact, but because new gas furnaces are likely to stick around for a while.
Speaker 2:
If you're a furnace dies in your place, over the gas furnace, you're locked into those carbon emissions for another 15 plus years.
Speaker 1:
Homeowners looking to do the right thing may have been overwhelmed in the past, but companies such as elephant are helping them navigate their decarbonization journey, making it easier for homeowners to switch over.
Speaker 2:
The challenge is the heat pump industry is not quite there. Inventory is a little harder to come by. There's actual work that's required to size and scope and design a system perfectly for your home. The rebates are complicated and often require a lot of paperwork and work done ahead of time to qualify for the rebates. Look, at the end of the day, care about climate change. There's a very short list of decisions that you make as a homeowner that have a very large impact on carbon emissions, and Then there's a whole lot of very small decisions. The very big decisions how you heat and cool your home, how you heat the water in your home, the car that you choose to drive these are things that really move the needle from a carbon emissions standpoint.
Speaker 1:
And companies like elephant energy are making those big decisions easier to deploy. I'm Paul Schuster, and this has been your 8 Minutes.