By Rob Roper
Dear Senate Committee on Natural Resources & Energy,
You asked today what is a “clean heat credit.” Good question. You didn’t really receive a clear answer from your witnesses, so I hope you find the following helpful.
A Regulated Financial Asset. The credits obligated parties will be required to obtain through the clean heat standard (CHS) are a buyable, tradeable financial commodity that will have to be regulated as such. How this will be done and at what cost is a question your committee should delve into.
“Mined” not “Minted.” A key characteristic of the credits under the CHS is that they are “mined” (created organically through authorized but unorganized activities of individuals acting on their own initiative) as opposed to being “minted” (issued by a central authority and made available for purchase.)
RGGI credits, for example, are “minted” — issued by RGGI Inc, auctioned off quarterly to obligated parties, who can then trade them on secondary markets. CHS credits, on the other hand, are created whenever someone, for example, installs a heat pump, or weatherizes a building, or switches from oil to bio-fuel. I hope it is obvious that the latter way of creating credits is insanely more complicated than the former. This is a problem for the viability of the program.
Please consider that according to analysis presented to the Vermont Climate Council, there will be about 250,000 such actions necessary by 2025 and nearly 500,000 by 2030 in the thermal sector alone to meet the GWSA goals. Each of these actions would generate one or more clean heat credits, with credits having different shelf lives. These credits, thus generated, can then be bought and sold on a secondary financial market. Which gets us to the next question.
How is the PUC going to be able to verify that these half a million actions take place all over the state, assign a unique credit value and shelf life to each, and, once this is done, broker sales, track the ownership of, and then retire those credits when they expire? If you want to see how complicated this process is, check out the latest RGGI financial compliance report.
This CHS process will be significantly more complicated — and more expensive — than RGGI to administer, and RGGI costs multiple millions of dollars a year to administer with those costs shared by the multiple states in the RGGI coalition. Not just little ole’ Vermont.
Not Enough Miners. A further complication to the CHS (and the Climate Action Plan as a whole) is the fact that there is not a labor force in Vermont large and skilled enough to do the work necessary to generate all these credits.
As Jared Duval could have told you (guess he forgot), The Energy Action Network reported, “Vermont currently has about 700 weatherization workers. We have good reason to anticipate that … we will likely need somewhere in the range of 5,000 weatherization workers by sometime around the middle of this decade if we are to achieve the weatherization recommendations of the Climate Action Plan.” (1/6/22)
That’s 4,300 workers short, or 14% of where we need to be — on just weatherization. These people are not going to just materialize. Is there an actual viable plan to attract them? No. So, what happens if the credits obligated parties need to buy are never created in the first place? Are they stuck paying a penalty through no fault of their own? What happens to consumers who may wish to swap out their furnace for a heat pump to escape the rising costs of fossil fuels exacerbated by the CHS, but can’t because no one is available to do the work?
I hope in the weeks to come your committee will explore these issues in depth and bring some measure of reality to this debate.
Rob Roper is on the Board of Directors of the Ethan Allen Institute. He lives in Stowe.
4 thoughts on “Roper: Clean heat credit system unworkable for Vermont”
HEAT PUMPS ARE MONEY LOSERS IN MY VERMONT HOUSE, AS THEY ARE IN ALMOST ALL NEW ENGLAND HOUSES
Any experienced energy systems engineer can readily calculate the hourly cost of operating heat pumps and propane furnaces.
The HP operating cost per hour would become greater than of an efficient propane furnace, because HPs would become increasingly less efficient with decreasing temperatures. See table 3
Energy Cost Reduction Due to HPs is Minimal
– HP electricity consumption was from my electric bills
– Vermont electricity prices, including taxes, fees and surcharges, are about 20 c/kWh.
– My HPs provide space heat to 2,300 sq ft, about the same area as an average Vermont house
– Two small propane heaters provide space heat to my 1,300 sq ft basement
– I operate my HPs at temperatures of 15F to 20F, or greater; less $/h than propane
– I operate my wall-hung propane heater at temperatures of 15F to 20F, or less; less $/h than HP
– My average HP coefficient of performance, COP, was 2.64
– My HPs required 2,489 kWh to displace 35% of my fuel.
– My HPs would require 8,997 kWh, to replace 100% of my fuel.
– The average Vermont house COP is about 3.34, because the HPs typically operate at about 28F to 35F and above
– The average Vermont house requires 2,085 kWh to displace 27.6% of its fuel, per VT-DPS/CADMUS survey. See URL
Before HPs: I used 100 gal for domestic hot water + 250 gal for 2 stoves in basement + 850 gal for Viessmann furnace, for a total propane of 1,200 gal/y
After HPs: I used 100 gal for DHW + 250 gal for 2 stoves in basement + 550 gal for Viessmann furnace + 2,489 kWh of electricity.
My propane cost reduction for space heating was 850 – 550 = 300 gallon/y, at a cost of 2.339/gal = $702/y
My displaced fuel was 100 x (1 – 550/850) = 35%, which is better than the Vermont average of 27.6%
My purchased electricity cost increase was 2,489 kWh x 20 c/kWh = $498/y
My energy cost savings due to the HPs were 702 – 498 = $204/y, on an investment of $24,000!!
Amortizing Heat Pumps
Amortizing the $24,000 turnkey capital cost at 3.5%/y for 15 years costs about $2,059/y.
This is in addition to the amortizing of my existing propane system. I am losing money.
Other Annual Costs
There likely would be service calls and parts for the HP system, as the years go by.
This is in addition to the annual service calls and parts for my existing propane system. I am losing more money.
Energy Savings of Propane versus HPs
Site Energy Basis: RE folks claim there would be a major energy reduction, due to using HPs. They compare the thermal Btus of 300 gallon of propane x 84,250 Btu/gal = 25,275,000 Btu vs the electrical Btus of 2,489 kWh of electricity x 3,412 Btu/kWh = 8,492,469 Btu.
However, that comparison would equate thermal Btus with electrical Btus, which all engineers know is an absolute no-no.
A-to-Z Energy Basis: A proper comparison would be thermal Btus of propane vs thermal Btus fed to power plants, i.e., 25,275,000 Btu vs 23,312,490 Btu, i.e., a minor energy reduction. See table 1A
Almost all RE folks involved with the GWSA claim energy reductions from HPs.
They likely do not know how to compose table 1A
However, they mandate Vermonters what to do, to save the world from Climate Change
This is a case of the blind leading the gullible
Table 1A, Energy Savings
Heat in propane, Btu/y, HHV 25275000
Fuel to power plant, Btu/y 23312490
Fuel to power plant, kWh/y 6833
Conversion efficiency 0.4
Fed to grid, kWh 2733
Transmission loss adjustment, 2.4% 2667
Distribution loss adjustment, 6.7% 2489
Heat in propane, Btu/gal, HHV 84250
Purchased propane, gal/y 300
Purchased electricity, kWh/y 2489
Heat in propane Btu/gal, LHV 84250
Standby, kWh 91
Defrost, kWh 154
To compressor, kWh 2244
Heat for space heat, kWh 5926
Furnace efficiency 0.8
Btu/y for space heat 20220000 20220000
HEAT PUMPS ARE MONEY LOSERS IN MY VERMONT HOUSE, AS THEY ARE IN ALMOST ALL NEW ENGLAND HOUSES
Vermont “Electrify-Everything” Goals Will Cost $Billions and Will Reduce Little CO2
The Vermont state government wants to electrify-everything (heat pumps, electric cars, and transit and school buses, no matter the:
1) Very high turnkey capital cost,
2) Very meager energy cost savings
3) Very meager CO2 reductions, on an A-to-Z, lifetime basis.
VT-DPS Survey of Vermont Heat Pumps
VT-DPS commissioned CADMUS to perform a survey of Vermont heat pumps, after numerous complaints from HP users regarding: 1) high electric bills and 2) minimal annual savings
The average energy cost savings regarding HPs was about $200/HP, as proven by the CADMUS survey report of operating data of 77 existing HP installations.
Those meager energy savings would be more than offset by the annual amortizing cost of $4,500/HP at 3.5%/y for 15 years, plus any annual maintenance costs, and parts and labor costs. HPs are money losers for Vermonters. See URLs
The result of Vermont’s HP saga been:
1) Lucrative benefits to the Efficiency-Vermont-Approved HP installers
2) Lucrative benefits to Canadian-owned GMP, which sells oodles more high-priced electricity.
3) Everyone else getting royally screwed; an example of “fighting” climate change, a la Don-Quixote tilting at wind mills.
My Experience with Heat Pumps in my Well-Insulated, Well-Sealed House
I installed three heat pumps by Mitsubishi, rated 24,000 Btu/h at 47F, Model MXZ-2C24NAHZ2, each with 2 heads, each with remote control; 2 in the living room, 1 in the kitchen, and 1 in each of 3 bedrooms.
The HPs have DC variable-speed, motor-driven compressors and fans, which improves the efficiency of low-temperature operation.
The HPs last about 15 years. Turnkey capital cost was $24,000. GMP, the electric utility, provided a $2,400 subsidy.
My house has a wall-hung, efficient, propane furnace to provide: 1) space heating, and 2) domestic hot water, year-round.
The basement has a near-steady temperature throughout the year, because it has 2” of blueboard, R-10, on the outside of the concrete foundation and under the basement slab; the thermal storage of the concrete acts as a temperature stabilizer, which has saved me many thousands of space heating dollars over 35 years.
Winter Operation: Downstairs heads are used for space heating during winter. Upstairs heads are always off during winter.
If the sun is shining, my south-facing house warms up, and the HPs can be turned off by about 10 AM. They are turned on again around 4 to 5 PM
The basement has two small propane heaters to provide space heat to my 1,300 sq ft basement during winter; that heat rises to warm up the first floor. The heaters require no electricity, which is beneficial during a power outage.
Summer Operation: The downstairs and upstairs heads are used for space cooling during hot days in summer
Hourly Operating Cost of HPs Versus Efficient Propane Furnaces
Cold Weather Test: On 22 January, 2022, the temperature was -20F at my house. As a test, I operated my kitchen heat pump. After about 15 minutes, there was lukewarm air coming from the wall-mounted unit, but it was much less warm, than it would be at, say 15F. That lukewarm air did not heat my kitchen from 6 AM to 9 AM, so I turned off the HP and turned on my wall-hung, propane heater.
Conclusion: 1) The name cold-climate HP is merely an advertising gimmick, and 2) HPs are economic:
1) Down to about 15F to 20F in my well-sealed, well-insulated house, depending on wind and sun conditions
2) Down to about 28F to 35F in average Vermont houses, which are energy hogs, by modern standards
Fun video for you enjoyment
He’s going to come 2024
DJT for speaker of the house of representatives….that would be fun.
The clean heat credit system will work as well as the health care system in Vermont. A complete failure.
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