It's the opposite for me, much bigger ROI on the heatpump than solar. Rural property, 10 years old, ~3,500 sq ft + basement, in Canada where summer can be above 30C (86F) and winter below -30C (-20F). Electricity costs (Canadian) 7.6 ¢/kWh off-peak and 15.8 ¢/kWh on-peak here.
I spent C$40K (about US$30k) on a ground source aka 'geothermal' heat pump to replace furnace powered by propane tank. I kept propane for on-demand hot water and whole house generator. I have no options for utilities other than electricity.
A couple of years later I spent another C$40k for a 20kW rooftop solar system, with net metering and no battery. Net metering was critical for getting any return at all. A battery is next to useless here- I generate almost all of my solar electricity in May-Oct but use the majority of it in Nov-April. Net metering lets me 'store' excess from summer and use it in winter.
Annual costs:
Before:
C$8,000+ propane (heating + hot water)
C$2,500 electricity (cooling + misc)
$10,500 total
So I'm seeing about C$8k/yr saving for C$80k investment. The heatpump saved me over $5k a year and the solar about $2,500 a year. The heatpump has pretty much paid for itself after 5 years, the solar will take at least 15 years (unless prices go way up) although should eventually see some return 15-20 years out.
In reality it might have cost even more than that to heat with propane. On the propane furnace we barely heated in winter, burned a lot of firewood to make part of the house livable. I'm trying estimate how much it would cost to heat the house to a comfortable 20C (68F) although the thermostat now with the heatpump is set to 22C (72F) in winter so there's an improvement in comfort as well as the ROI.
> Net metering lets me 'store' excess from summer and use it in winter
FYI net metering is unsustainable for the grid and policies will probably change (reducing rates for energy, increasing rates for delivery fees to offset the "freebies") as soon as adoption reaches a critical mass.
I’m not sure what you mean by ‘unsustainable’ nor ‘critical mass’ here. Of course not everyone can net meter- on a sunny but mild day with no-one using A/C nor heating and everyone contributing back to the grid it doesn’t work.
My local utility is well aware of that, applications for permits to net meter have to be made, and only a fraction (something like 15%) of properties in each area can net meter. Also the government is aware and there are no grants for net metering, only for battery systems.
I’m giving details about my personal system for one property in one location, not in any way making a statement about what works for anyone else.
Sorry, I should've been more specific, I can explain.
> My local utility is well aware of that, applications for permits to net meter have to be made, and only a fraction (something like 15%) of properties in each area can net meter.
Okay, that changes things. The way it worked here is that anyone in the country could install solar and get grandfathered into net metering (perpetually), and then at a certain point they decided to cut it off completely. So you have people from before with who have net metering, and anyone installing it later doesn't have it.
People would install 10-20kW worth of solar, overproduced massive amounts of energy in the summer and then in coldest part of winter (with heat pump COP dropping below 2), people expected to draw 4-10kW of power for heating and pay close to nothing all year round.
The government decided that this was unsustainable so they changed the distribution rates. In effect anyone who doesn't have solar pays roughly the same as they did before, but anyone who has net metering pays substantially more than they thought they would when they signed up.
Ultimately I think this is fair but many people felt cheated by this change. I'm assuming the same could happen elsewhere so I wanted to warn others who might be looking at net-metering deals that look "too good to be true".
> People would install 10-20kW worth of solar, overproduced massive amounts of energy in the summer and then in coldest part of winter (with heat pump COP dropping below 2), people expected to draw 4-10kW of power for heating and pay close to nothing all year round.
So this is more or less the exact same position that I'm in in northern New Mexico. We have 6.7kW of ground mount PV; we generate roughly 3x what we need in the summer, and roughly 1/3 of what we need in the winter (air source heat pumps for heat). Overall generation is close to 100% of our annual use.
In some ways I agree with the analysis but there are some mitigating factors. We live in an old adobe home that requires almost zero cooling during summer. For better or for worse, most new construction in the area is stick frame wood construction which even with reasonable insulation requires cooling during the summer. Guess who provides the power for that?
New Mexico is in a good position to combine solar PV with wind and be able to meet base load demand more or less continuously. It likely requires storage facilities that are on the order of 5-7 days of load, which would be enough to bridge most gaps in generation.
Our local utility actually provided two options for metering: one was what you're calling net metering, the other was credits for surplus on a monthly basis, with the credits generally being priced slightly below the purchase cost for the same energy. I would have been happy with either - the latter is perhaps fairer. However, they also stipulated that if you took credits, they could claim your PV as part of their own PV-adoption goals. So we took net metering instead.
That makes more sense, but your utility's failings are not necessarily the same as mine nor anyone else's.
I wish I'd never mentioned solar nor net metering now- I'm not on some crusade to promote either, I was just explaining the economics of my personal setup.
You can't store energy year-round. I explained the situation in more detail in a sibling comment but the tl;dr is that people expected to run net-metering households expected to run their brand new heat pumps full tilt in the winter for ~free, the economic reality disagreed, and rates were changed to reflect that.
I meant distribution. Our electrical bill roughly consists of: energy production (per kWh) and distribution fee (per kWh). When you're using energy you accumulated through net metering, the "energy production" portion is free, but you still pay the full rate for distribution.
At some point our previous system became unsustainable and they were forced to rebalance the rates and those who have solar panels with net metering now pay significantly more than they expected they would. I explained in more detail in a sibling comment.
I'm jealous of your financial learnings. However, your model is not accurate as it doesn't factor in the 4 degree improvement in comfort and indoor pollution from propane furnaces: Propane furnaces can cause indoor pollution through the release of pollutants like carbon monoxide (CO), nitrogen dioxide (\(NO_{2}\)), and benzene, which are byproducts of combustion.
It also doesn't include the negative externalities because of tragedy of commons. Sadly, these kind of flawed 'financial' calculations are widespread.
What is inspiring from the OPs comment is that this is doable in harsh Canadian winters with negligible solar and it breaks even. Most of the world is living in significantly more sunshine, so it should work out a lot better financially for >99% of the population.
I've lived most of my adult life in houses with forced air furnaces (albeit powered via natural gas, not propane), and what you are saying is inaccurate regarding indoor air pollution unless your furnace is in need of immediate replacement.
A modern furnace works via a heat exchanger, where the combustion produced pollutants never mix with the indoor air being pushed through. All pollutants are expelled outside via a property functioning chimney. This is one reason why you should have the furnace (and chimney function) inspected annually. Aging heat exchangers will show hotspots before there is a possibility of air being mixed, giving plenty of time to plan for a replacement. Of course there is a possibility of failure, which is why you should have a carbon monoxide detector.
For externalities or immediate health benefits, heatpumps are pretty defensible. However, solar isn't a saint. Rare earth/mineral mining is hazardous plus only a fraction of solar panels are getting recycled properly.
> this is doable in harsh Canadian winters with negligible solar and it breaks even
It's doable alright. OP got subsidies (See comment re: risk free loan and grants). Talk about externalities, this is definitely wealth transfer.
Can you please share your definition of "whataboutism?" And explain how bringing up a single alternative (plus flaw) is addressing the critique and NOT changing the subject?
"Whataboutism", like "dog whistle", is a name for an imaginary discussion pattern that doesn't occur in real life, but is super easy to point out in most conversations, allowing one to cry foul and "win" the argument (or whole discussion) through violence instead of reason.
This is pretty much the same as accusing a colleague of insulting you through PR they asked you to review, because there's an added line that says:
class HOLEInstance ...
i.e. obviously they're calling you "assHOLE".
- "But wait, it's no such thing; it's a Handle for OLE component instances - it's part of support for COM stuff in those legacy reports..."
- "AHA! See also here, dear readers:"
class HOLEClientSite // TODO: : public HOEComponent?
"Surely, you see how bad my coworker is! They badmouth our customers too, and even call them public harlots! Don't believe their lousy defense that this was a typo, either!"
This is what pointing out "whataboutism" and "dog whistles" is. Artificial, cross-cutting pattern that match easily, but don't correspond to any real phenomena.
Adults don't talk like this. The parent shared they would be far less likely to have moved forward without the subsidies. Now, you implied that someone (me) pointing out a tradeoff of solar subsidies must be non-critical of O&G subsidies, yet you provided no proof that I wasn't ALSO critical of O&G subsidies.
Meanwhile, I would love to learn more about the financials of your non-profit, ChargeFoundation.org that has mailing to a residence in Austin, TX. I'm not seeing any 990s.[0] Can you please post your foundation's financial reports on your site?
I hope we can agree that fossil fuel consumption is something to be avoided. Subsidies are an effective means of incentivizing people to avoid fossil fuels.
If you believe the externalities of solar are a problem, what do you propose to do instead? Should we subsidize some other alternative? Redirect resources from oil to nuclear? Other?
You're making different/absolutist arguments. Even the most ardent electrification proponents agree that you can't replace downstream chemicals/materials.
As for subsidies, you're thinking too narrow if you feel it necessary to only spend limited government budget on energy to improve lives.
At no point did I make an absolutist claim. If I meant “fossil fuel use should be eliminated”, I would have used those words. Do you agree that it should be avoided and/or curtailed? If not, there is little point in continuing to discuss here, as we will likely never see eye-to-eye on this.
> you're thinking too narrow if you feel it necessary to only spend limited government budget on energy to improve lives.
I also did not use the word “only”. Governments are quite capable of doing more than one thing at once. Should governments not consider spending money on energy to improve lives?
Indoor propane furnaces exhaust outdoors in most cases. Space heaters that exhaust indoors are rare - more used for garrage heat than house. If you use them of course actount for it, but most are not.
Theoretically yes, in practice no. There is (according to my sensors) a fairly large CO2 increase inside a room when a modern furnace (with external exhaust) is running. I've confirmed this with several units (all made in the last 10 years), and it's not that the windows are closed - when the furnace turns off, the CO2 drops. And it's not that the exhaust is placed in a bad spot either.
Yes, fossil fuels are the best to keep pollution away, just need to installed perfectly, configured and maintained regularly, monitored to make sure everything is running correctly, and have additional properties lying around vacant just in case there are leaks, misconfigurations, poor installation, etc. But we must use fossil fuels, there are no other options!
I had a gas furnace that wasn't properly maintained as far as cleaning. Result: insufficient air flow for full combustion. Secondary result: CO build up in basement space. Tertiary result: asthma-like symptoms for me.
Your control for this test should be (and maybe was, you don't say) running the furnace circulation fan without running the burner. CO2 levels are unlikely to be uniform throughout a building, and thus mixing will change (raise, lower) the CO2 levels depending on where you're measuring.
Looks pretty good to me over 25 years. Not many safe/guaranteed investments that will reliably return 8% these days. And as utility rates will no doubt rise over time, savings in future years will be greater.
Yes the people selling solar systems all factor in aggressive future electricity increases, it's best to also see how it looks with more conservative rate increases. By my calculation in a reply above with the interest free solar loan it's an 8% return over 14.3 years.
It will be interesting to see if this will make natural gas a more attractive source of residential heating as the price has remained relatively stable over the past 20 years.
The push for electrification seems like it relies on us metaphorically drowning in excess cheap electricity and want somewhere for it to go but right now the opposite it happening.
There’s also the argument to be made (this has manifested in other countries) that as gas usage wanes and more homes electrify, nat gas costs will increase as the infrastructure costs are spread among fewer and fewer people
> There’s also the argument to be made (this has manifested in other countries) that as gas usage wanes and more homes electrify, nat gas costs will increase as the infrastructure costs are spread among fewer and fewer people
This has kinda wonky incentives though - if your fixed costs for gas are high but your marginal costs remain low and for whatever logistical reasons you can't cut the gas connection entirely, then your motivations are to move as much of your heating load over to gas as possible.
I'm currently facing this dilemma when it comes to my new water heater purchase. The $/kJ actually delivered into the water difference is so significant despite gas being less efficient that I'm probably going to switch to gas. Electricity has gotten so expensive that even with an efficiency advantage it still loses on the order of $500-800 per year.
Is gas actually less efficient? I haven't had to work out the math myself yet, but there are some very salient variables - e.g. what's the energy source of the electricity? If it's a natural gas power plant, you're looking at like 30-60% efficiency of gas->electricity in the first place. Are you looking a at a heat pump heater? If so, how much of its energy would be pulling heat from the house that needs to be replaced by the home's heating supply anyway?
This is the kind of thing where a carbon tax is great for sorting out the pricing to match the externalities.
You might be right, I'm just talking about "last mile" efficiency. I get electricity at $/kWh and gas at $/therm and then an electric heater is x% at converting that electricity into hotter water and a gas heater is %y. From what I can find y < x for water heaters on the market. But even despite that my $/therm is so low that it still comes out ahead.
> ”Are you looking a at a heat pump heater? If so, how much of its energy would be pulling heat from the house that needs to be replaced by the home's heating supply anyway?”
Heat pump water heaters pull heat from the outside. Usually with a split outdoor unit, just like normal A/C and heat pump systems.
I’ve also seen models where the entire system (integrated storage cylinder for the heated water) is installed outdoors, but those are presumably meant for more mild climates.
In any case, they certainly don’t pull heat from inside the house.
Heat pump dryers don’t cool the room either because they work in a closed loop. There’s no external vent removing hot air to the outside like a conventional dryer. So they pull heat from the room but also put it back in the room, and the overall effect is to warm up the room slightly.
I skimmed the article (so forgive me if I'm off.) It appears to reference non-US markets and the parent was assuming US (my assumption).
AFAIK, the US has a mid-long outlook of gas oversupply. EU's market is broken and has 3x the price (c.f. Henry Hub v. TTF). I haven't seen any major forecasters predict reaching parity anytime soon. Hence, LNG export projects keep getting (over-)built to chase the arbitrage.
That doesn't make any sense. Bitcoin miners get wealth from people buying Bitcoin, not from electricity customers. Same for AI. It's a wealth transfer from electricity customers to electricity producers if anything.
Most likely most of the increase is just temporary though. Electricity supply will increase to meet the sudden and unpredictable increase in demand.
Which to me is funny, when the electricity prices will clearly not rise when there is solar energy production from said panels. But might in other times.
I think the argument is that on average people are buying heat pumps and EVs faster they are installing solar panels but it’s not completely convincing though, power stations can be added.
Further north where I am solar can only ever be a small component of total electricity generation due to the dark snowy cloudy winter months with close to zero solar generation for weeks on end.
The issue for me with batteries is that in the summer I can produce in a day much more than I can use, and in winter I consume a lot and barely produce anything. This is where net metering steps in- I can ‘store’ all of my excess summer consumption in the grid in summer and get credit for it in winter.
A cheaper smaller system right sized for summer consumption with a battery would have my second best option, but for me never showed any potential payback due to the fixed costs of installation and the extra battery costs.
The point of my original post was that I’ve seen a much greater ROI on my own heatpump than solar, even though I don’t regret the solar installation. I wasn’t making any claims about sustainability/scalability of solar, just showing how it worked for me.
My comment was regarding net metering policy, not solar itself. Solar is great, and even better (for you) if you have net metering. But it’s not sustainable or scalable for utilities to keep offering net metering, and ultimately it creates wrong/distorted market signals: an incentive to generate more electricity when it’s abundant and to use more when it’s scarce.
Yes the figures are my approximate bills so include net metering revenues.
You're right about the 8 year negative IRR for the heatpump, although I'm being very conservative about propane costs, it's likely much shorter. I was pretty conservative about the solar savings too, I generally go for the worst case in these estimates.
Your overall NPV calculation seems a bit off. It's ~21 years to zero NPV at 8% discount rate, spending $80 up front to save $8/year. Factoring in the 10 year interest free government solar loan makes it more like 14 years. My working:
For me it helped with the ROI because I couldn't go any larger than a 6kw array due to roof shape/exposure. Only roof mounted solar is permitted in my community :/ So a ductless saved us energy in the summer months vs. window units, so I could bank more with net metering when the sun was shining.
Excellent data, thanks! Net metering does look necessary for economics. Have you factored in relative replacement/maintenance costs for the geo pump vs furnace? Also curious how much your investment was discounted thanks to tax subsidies.
There was a C$7k government grant at the time for the heatpump, which roughly matched the tax.
The current Ontario solar grant is weird- it only applies to battery systems without net-metering. They also offered a 10-year interest free loan though so I took that, improves the ROI a little. I think battery systems do make more sense for people who are further sound and using more electricity at the time of year that they are generating it. The solar sales people estimated a 10-year ROI but they had to include a pretty high annual energy cost increase in their calculations (I think 8%/year), I estimated more like 15 years.
I didn't really consider replacement, by all reports the WaterFurnace pump should last 25-30 years and the propane furnace was probably 5 years old so would have lasted about the same. I would think that the WaterFurnace costs a little more to replace, maybe a winter's worth of propane.
Several people told me that ground source heat pumps were too expensive, but years later it still feels like the best investment I've ever made, the gentle heating and cooling is more comfortable too. Anyone with enough space who has to have fuel delivered (propane, oil, etc.) should seriously consider it.
Err, be careful. You made these improvements sequentially, not independently. Each one halved your costs and might still have done exactly that if done in the opposite order.
Look closer. How could his 20kW rooftop solar electricity have halved his initial monthly costs, when >3/4 of those costs were for propane heating fuel? (Vs. <1/4 for electricity.)
People told me that, but I did the calculations myself and the impact on my energy bills is real. Net metering is essential though, so not everyone can do it.
Compared to say SoCal I generate 2/3 as much per year, much less evenly- a lot more in summer than winter, whereas further south there's less variation year round. Cooler temperatures improve solar panel efficiency too. There are online solar potential calculators if you want to compare for yourself.
Right, but you have to compare it to the opportunity cost of the money. A solar panel is an annuity. There is a one time sunk cost for a relatively consistent, long-term payout.
If I put $100 into the stock market in approximately seven years I will have $200. If I put $100 into solar panels, in 10 or 15 years, I will have $100 worth of savings. Financially, it is not much better than just putting it under a mattress.
I get that the non-economic parts of solar are pretty much all upside. I’m not saying nobody should do it. Just that they should view it as a luxury, not an economic opportunity. But until the finances work out, it will not achieve widespread adoption, and the finances are a function of how much sun you have and your energy prices.
Those of us up north have little sun and lower energy prices. We would be a lot better off just putting your money in the stock market and paying for your electricity if you were only considering money. That is not true of the American southwest.
I have homes in both Phoenix and Cleveland and I have done the math on both. I actually can’t put solar in Phoenix, I wish I could, it would be a great investment. I could put solar in Cleveland, but I might as well throw my money down the drain. I can’t imagine the math is any better in Canada.
I see it as insuring myself against electricity price rises. If it's a roughly neutral cost today, but saves me a lot if electricity prices double or triple, then that's a good deal.
> I can’t imagine the math is any better in Canada.
I don't have to imagine, I've actually installed it and I can see the impact on my bills. By most estimates it has a 12-15 year ROI that matches the stock market, and will continue to generate electricity for another 10-15 years after that. The 'math' is a function of many things: orientation, roof angle, occlusion, installation costs, electricity cost, latitude, grants/loans, net metering terms, etc. It's a huge assumption to say that what doesn't work in one location in Cleveland won't work for a property in Canada 2 degrees further north.
It does not match the stock market in any locale in the US. Artificial externalities may make it do so (government incentives, exorbitant energy rates) in Canada, in which case ok great. But I think you’re probably doing your math wrong.
I’m guessing you’re not counting the fact that if you buy a stock for $100 you still have the $100 (you can sell the stock) but that’s not true of solar because it’s an asset whose value quickly goes to near $0 as the cost of uninstalling the panels is more than they are worth or nearly so. You’d have to be getting near 20% ROI annually for it to match the stock market in that time frame. A quick google shows that even the Canadians selling solar don’t claim that. You don’t even get that in California, where the panels produce a multiple of what yours will and all of the other factors (incentives, latitude, high energy prices and net metering, etc.) lean toward solar so I’m guessing you’re erring.
Easy to verify though: what was your install cost and how much is it saving you on energy bills?
Right, that’s a bad financial investment. If I put $100 in the stock market, in 10 to 15 years, I will have $200 to $300, on average. If I put $100 into solar panels, in 10 or 15 years, I will have break even.
Yes and no. A house's value is largely based on the price of other comparable houses in the area that have recently sold. It's very possible to "overimprove" a house and you will not recoup those costs when you sell. Whether the furnace is brand new or 10 years old will have a negligible impact on the selling price.
I spent C$40K (about US$30k) on a ground source aka 'geothermal' heat pump to replace furnace powered by propane tank. I kept propane for on-demand hot water and whole house generator. I have no options for utilities other than electricity.
A couple of years later I spent another C$40k for a 20kW rooftop solar system, with net metering and no battery. Net metering was critical for getting any return at all. A battery is next to useless here- I generate almost all of my solar electricity in May-Oct but use the majority of it in Nov-April. Net metering lets me 'store' excess from summer and use it in winter.
Annual costs:
Before:
With C$40k investment in geothermal heatpump: With heatpump and then C$40k investment in rooftop solar: So I'm seeing about C$8k/yr saving for C$80k investment. The heatpump saved me over $5k a year and the solar about $2,500 a year. The heatpump has pretty much paid for itself after 5 years, the solar will take at least 15 years (unless prices go way up) although should eventually see some return 15-20 years out.In reality it might have cost even more than that to heat with propane. On the propane furnace we barely heated in winter, burned a lot of firewood to make part of the house livable. I'm trying estimate how much it would cost to heat the house to a comfortable 20C (68F) although the thermostat now with the heatpump is set to 22C (72F) in winter so there's an improvement in comfort as well as the ROI.