In a northern landscape that’s often cold and dark, heat pumps can afford Ontarians one of the most environmentally friendly sources of warmth in winter and cooling in summer. Now a pair of recent studies shows that powering a heat pump with solar energy doesn’t just help save the planet – it can be profitable, too.
The analysis by Western engineering professor Joshua Pearce is the first to examine whether the financial payback of solar-plus-heat-pump is worth the extra upfront cost than heating with natural gas or propane.
“Of course, it has made environmental sense all along, but this is the first time we’ve crossed the threshold into being a good economic bet. You’re basically decimating your carbon footprint and making a bit of money at the same time,” said Pearce, who is Western’s John M. Thompson Chair in Information Technology and Innovation and holds a shared appointment in Engineering and at Western’s Ivey School of Business.
First, Pearce analyzed the policies and heating sources in the sister cities of Sault Ste. Marie in Ontario and Michigan, across the border and river from each other.
“We were really trying to probe how pricing and costs work in different countries with different energy policies, but with the same climate and similar people,” Pearce said.
He modeled for both cities what the cost and benefit would be of solar-plus-heat pump, compared with the cost and benefit of conventional heating and cooling systems.
That analysis included the upfront and lifespan costs of heat pump and solar panels, balanced against lower utility bills and the price the utility pays the homeowner to generate and feed solar power into the grid.
In Michigan’s Sault Ste. Marie, a switch from natural-gas furnace to solar-fed heat pump would pay for itself in 16.7 years. In the Canadian Sault Ste. Marie, the payback is faster at 15.5 years.
Return on investment
As these systems last much longer than this, the annual return on investment in the Canadian example would be 2.7 per cent; in northern Michigan, 1.9 per cent.
That may not seem like a lot, but it is far more than you are currently making on your savings accounts or GIC. Most other heating systems or combinations only take money from the homeowner’s pocket with no guarantee of a return on your investment, Pearce said.
In the second study that investigated homes that rely on propane for heating, the total lifecycle cost also heavily favours heating with solar-powered heat pumps and would reduce residential building greenhouse gas emissions dramatically.
Heating electrification using solar-powered heat pumps also provides protection against volatile natural gas and propane prices.
“The results of these studies clearly show that for the first-time consumers can both electrify their heating loads using a heat pump and still profitably power their homes with solar energy in North America. This gives northern homeowners a clear and simple method to reduce their greenhouse-gas emissions by making an investment that pays for itself over time,” Pearce’s report says.
Think like an investor
Air-source heat pumps draw warm air from outside the home in winter and pull hot air from the home to cool the residence during the summer. Heat pumps are three times more efficient and cost far less to operate than either furnaces or electrical heating. “They’re incredibly efficient because they’re just moving cold or warm air around,”Pearce said.
It is still a tricky thing to sell to homeowners more accustomed to thinking about up-front costs, he acknowledged.
“The mental shift that has to happen is that we have to be long-term investors. We need to think slightly more like a business and less like a consumer.
“If I offered you a 25-year investment with a guaranteed 7 per cent ROI (return on investment), you’d probably take it. But if I told you solar powering your house would pay for itself in just under 12 years you might hesitate, although it is the same investment and ROI.
“Solar panels have come so far down in cost; such investments are available for homeowners in Ontario now. Today, you would have a tough time finding another guaranteed investment offering such returns. Solar is so economical – it is what makes heating your home with a heat pump break into profitable territory.”
He said the rising cost of fossil fuels and electricity means installing a heat pump will become an increasingly savvy move for homeowners.
“These studies have shown that under current economic conditions, residents of northern Michigan and Southern Ontario can profitably install solar PV (photovoltaic) to provide all of their electric and heating needs…The photovoltaic-heat pump combination should be considered a 25-year investment in financial security and environmental sustainability,” he concluded.
People who can best take advantage of this are those who are doing a new home construction or are considering replacing the roof of their homes, he said. “They can use their roof as a revenue-generator rather than as just something to keep rain and snow at bay.”