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With such high upfront costs, the current plan is leaving the state’s underprivileged and disadvantaged communities behind.
Last month, the state experienced its first heat wave of the year, with six straight days of temperatures in excess of 90 degrees. Residents in the Providence area experienced the fourth warmest July and third driest July on record, with less than half an inch of rain.
Because 73 percent of the state’s homes were built before 1980, Rhode Islanders are more likely to feel the heat and spend more on heating or cooling their homes.
But Rhode Islanders looking forward to colder months to shield themselves from the heat will still be sweating – Rhode Island Energy (formerly National Grid) announced last month that taxpayers will pay more for electricity and gas this winter.
Beginning in October, the utility increased its winter-summer rate from 7.8 cents to 17.8 cents per kilowatt-hour, and residential customers will pay an average of $52 more per month.
The utility cited rising global gas prices and increased demand for gas in Europe and Asia as reasons for the price increase. The final tax rate must be approved by government regulators before it goes into effect.
Taxpayers will feel the pressure no matter what: 54% of Rhode Island homes use natural gas for heating. Another 32% depend on household heating oil and don’t get a respite from high prices. The average price of fuel oil for home heating in New England hovered around $5 a gallon most of the summer, while prices were typically half that.
Governor Dan McKee launched the state’s new High Efficiency Heat Pump Program (HHPP), providing $25 million under the US Rescue Program Act to incentivize heat pump installations and fund workforce development in the HVAC industry.
“The transition of our thermal energy sector to electric heat and moving away from fossil fuels is critical to our fight against climate change,” McKee said in a press release. “In addition, reducing greenhouse gas emissions will help reduce the health impact of pollution, especially for those living in communities with high rates of asthma.”
Under the latest draft of the Energy Administration’s (OER) plan, the program is providing $11.2 million in housing incentives for any homeowner who is heated by natural gas, propane, or heating oil. Under this offer, homeowners will be eligible for a $1,250 incentive for every ton of cooling and heating equipment they use.
Another $7.2 million will go to “expanded incentives” targeting low-income and disadvantaged communities, while $5.2 million will go to incentives for small businesses, non-profits and other organizations. The program also provided $1.3 million for workforce development.
As determined by the US Department of Energy, the Governor has allocated 40 percent of the funding to the state’s low-income communities.
“Heat pumps are energy efficient,” said Hank Webster, director of the Arcadia Center in Rhode Island. “They are at least three times more efficient than natural gas stoves and many times more efficient than oil and propane.”
Fossil fuel heating systems that run on propane, natural gas, or oil must heat something else and then transfer that heat into the building, wasting a lot of potential energy in the process.
But a heat pump can heat and cool a house using only electricity. They work in a similar way to air conditioners: they remove warm air from your home in the summer and add warm air in the winter.
“It’s much more efficient because it moves heat rather than generating it,” Webster said.
The installation of heat pumps will be key to meeting the emission reduction targets of the Climate Change Act. Residential, commercial, and industrial heating accounts for the largest share of statewide greenhouse gas emissions, at 35.4 percent, according to the latest inventory from the Rhode Island Department of Environmental Conservation.
Heat pumps are almost as close to zero emissions as most large home appliances. Instead of running on fossil fuels, they use the building’s electricity supply, meaning that emissions are only related to how the building generates electricity. For supporters, heat pumps are ready for a renewable grid.
Households switching from fuel oil to heat pumps reduce emissions equivalent to taking more than a dozen cars off the road in a year, Arcadia Center estimates. Over the life of the equipment, a household can reduce emissions by 58 tons.
Only 8% of Rhode Island households use electric heating. Meanwhile, states like Maine, which have colder winters than southern New England, have installed more than 46,000 heat pumps since 2013, with government officials promising to install 100,000 more by 2025.
But adoption in Rhode Island is still slow. According to a 2020 study commissioned by State Grid, 60% of residents surveyed said they had no prior knowledge of district heat pump systems. Another 64% said they know almost nothing about ductless heat pumps.
McKee’s new heat pump program lists consumer education as a key goal, but does not allocate a specific amount to outreach programs. It is expected that advocacy funding will come from three categories of incentives or workforce development funds.
Cost is a big barrier to heat pump adoption, hence government incentives for consumers. Equipment needs and installation costs can vary, making it difficult to determine an average cost.
According to a 2020 National Grid study, the average cost to replace an existing home with a ductless mini-split heat pump can be as high as $15,582.
“The high cost of installing a heat pump is also a major barrier to adoption, with repeat customers commenting that they are ‘unlikely’ to install a heat pump with incentives,” the study authors wrote.
They continued, “Research on willingness to pay shows that incentives of at least $3,600 per system are needed to allow the average consumer to install a heat pump, in many cases with higher incentives.”
Current incentives are distributed by OER from revenues from the Regional Greenhouse Gas Initiative (RGGI) and by Rhode Island Energy from the Energy Efficiency Fund.
In April 2020, OER awarded $2.75 million to its heat pump incentive program. From March 2021 to December 2021, OER incentive programs helped 450 customers switch from fossil fuel systems to heat pumps.
In terms of utility incentives, Rhode Island Energy offered $3.1 million in rebates to customers who installed nearly 4,000 central and small split heat pumps.
The RGGI proposal this year to the Rhode Island Public Utilities Commission provides for $1.5 million in heat pump incentives.
But with such high upfront costs—and most of the existing incentives function in the form of rebates or interest-free loans—the current program is leaving behind the state’s low-income and underprivileged populations, who are already suffering from high temperatures in the city’s heat—the island effect and less canopy shading.
40% of the funds from the new incentive program will go to communities within census tracts designated by the US Department of Energy as Disadvantaged Communities (DAC). Rhode Island’s 40 DAC census tracts are centered in the downtown area. It includes 20 blockbusters in Providence, 10 in Pawtucket, four in Central Falls, two in Cranston and two in East Providence.
According to the proposal, the new incentives could cover between 50% and 100% of the total cost, including equipment, installation and other necessary upgrades.
Low-income residents enrolled in the Supplemental Food Assistance Program (SNAP), Low Income Home Energy Assistance Program (LIHEAP), Supplemental Social Security Income (SSI), Medicaid, Rhode Island Works, Public Assistance will automatically receive 100% reward or if they are customers of the utility’s preferential rate.
The new program is expected to launch sometime in the winter of 2023, and the final distribution of each stimulus may change, the OER said. Before the end of the month, the department is seeking public opinion and feedback on the plan.
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