Outdated efficiency standards could hamper home decarbonization

The Inflation Reduction Act (IRA) is the single biggest investment in climate change in the short history of our planet. The incentives built into the IRA have the potential to electrify over one million homes and in turn, make a meaningful and lasting impact on climate change. However, there is one little number that threatens it all. One little number that will make it more expensive for homeowners to electrify, incentivize partial-fossil fuel centric solutions, and more importantly, secretly work against the IRA and prevent us from hitting our climate goals. This number is called the Energy Efficiency Rate (EER). Here, I will help you understand what EER is, what it says about our real commitment to electrification, and why if removed, we will make a massive impact. 

EER measures how efficiently specific HVAC equipment brings cool air into a home. This along with SEER and HSPF are three key numbers that CEE, Energy Star, and most utilities like Xcel use to set standards for heat pump equipment in order to grant rebates. All three numbers are flawed and based on a technology paradigm of the past. NEEP, an energy efficiency organization funded by the DOE, argues that these measurements don’t adequately consider performance at low temperatures and fail to take into consideration the efficiency gains from the variable speed capabilities of today’s modern heat pumps. If you compare it to cars, it’s as if we based the MPG ratings for all vehicles only on their performance at speeds above 80 miles per hour. 

Ok, EER and other metrics are flawed, so what? The cheapest way to electrify a majority of homes is to swap out the furnace for an air handler and an outside condensing unit. In this approach, we can utilize the existing ductwork and minimize our expenditures on equipment and labor. However, when you look at the most efficient residential cold climate heat pumps in the world, their ducted solutions often don’t meet these EER standards by a slim margin. As a result, we either have to downsize and add electric resistance, switch to a ductless or mixed option which results in the installation of a much more expensive system or worse, switch to a gas hybrid system. Our government, rating agencies, and utilities say they want to make it as easy and inexpensive as possible to electrify, but these archaic AC standards are forcing homeowners to either pay more upfront with additional equipment, pay more monthly with inefficient electric resistance, or keep burning gas. 

I have had a number of conversations about EER with utilities, state and city energy offices, and even pro-electrification groups. A consistent thread that runs through these conversations is a lack of confidence that heat pumps are the right solution even in cold temperatures. Our company, Helio Home, has designed over 100 net zero electrification roadmaps for houses in the greater Denver metro area. Denver is one of the most challenging climates for heat pumps given the dramatic variance in temperature between seasons. I can count on one hand how many of these homes necessitated any backup to meet their year round heating loads. Nevertheless, there is a persistent belief that either the heat pumps can’t hack it below five degrees, or that their efficiency would drop off so severely that they would be too expensive to run. Let’s not forget that nearly all of Scandinavia heats their homes with heat pumps. If they can do it, we can do it. 

What people tend to miss is the fact that heat pump technology has advanced dramatically in the last ten years. We are now seeing units with COP ratios over two that can produce 100% of their heating output at five degrees. For comparison, top of the line Energy Star gas furnaces reach a COP of 0.98. In addition, the Center for Energy and Environment estimates the average homeowner in Colorado would save $240 per year if they used a heat pump instead of gas. At temperatures below-five degrees the heat pumps do cost more, but would only add an additional $20 per year to run than a gas furnace at today’s current energy prices.

If we get rid of EER we get cheaper heat pump installations, energy savings, healthier and more comfortable homes, and the IRA dollars will go further. Why then do Energy Star utilities like Xcel and rating agencies like CEE want to keep it? The best answer is that all of these entities still view the world through the old paradigm. Their main concern is to avoid turning on expensive peaker plants. Because AC units are the main driver of this daily spike in summer demand, they want to incentivize equipment with high EER scores to help minimize this AC spike. 

However, comprehensive studies have modeled out scenarios of electrification penetration and concluded that peak loads would actually drop significantly. What utilities and others are failing to realize is that the world has changed. Houses will no longer be dumb rate payers at the end of power lines. All electric homes that are powered by solar with an EV or battery backup in the garage are dynamic energy assets that can be orchestrated to serve the grid in curve smoothing ways that also save rate payers money. 

The time to drop these vestiges of the old energy world like EER and sprint towards the future that is inevitably coming is now. Please reach out to your utility company to Energy Star or to anyone you know in government and tell them you want EER gone for cold climate heat pumps. The IRA has given us a tremendous opportunity to jump start the electrification movement and accelerate the mitigation of one-third of US emissions. Let’s not waste this opportunity defending a number like EER that no longer serves us. #electrifyeverything

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