Blog

Are Heat Pumps Smart and Do They Save You Money?

Posted on 2013-11-13 14:45:02 PST

There’s certainly a lot of noise and promotion going on about heat pumps (and in particular Ground Source Heat Pumps). I’m sure that anyone who has to make a decision on a heating source for their home or building has run across them.

There’s lots of noise, but how much is real hard information that helps you make a proper decision? Not a lot, I’d bet.

The main promotional noise generally focuses on energy efficiency. Energy efficiency is good. Why use more energy than you need to? That’s wasteful and probably will cost you more than you need to pay in operating costs. And who doesn’t want to save money? Afterall, you’ll have to live with (and pay for) your choice for years to come.

A very good way of evaluating the value of alternatives is to look at simple payback. Will the additional cost premium that you have to pay now pay for itself in the future? Basically this method tells you at what point down the road the additional investment will start paying back. If it doesn’t have a payback return, or the return is too far out, then it’s not a good investment.
For instance, in a recent project I was working on, a customer was considering a SmartRooms system vs a Ground Source Heat Pump (GSHP). This is a residential project – a single family home in a cold climate. The GSHP came in at a premium of $22,000 more expensive than the SmartRooms system. Right then and there he knew that it was outside his budget so it wasn’t a viable option for him. But would it have saved him money in the long run?

Lets have a look at some numbers:
At $22,000 extra (bundled into his mortgage at, say, 5%) his first year’s financing cost is going to be $1,100 in additional interest. Now the interest costs will slowly drop over the years as he pays down his mortgage but the picture is clear: at the very minimum the GSHP must save at least $1,100 over the alternative just to pay the additional interest! That’s a pretty tall order.
Ok. Let’s get back to the energy savings. When speaking with the GSHP people, they’ll be quoting all kinds of acronyms at you: COP and SEER, etc. The gist of their claims is that these numbers prove that they’re energy efficient and that for every watt of energy you put into the heat pump, you get X number of heating watts out.

A heat pump with a COP of 3.5 means that theoretically for every watt of energy consumed you get 3.5 watts of heat out. Great! Free Heat! Yay! Um, no. That’s only a very small part of the full story. The truth is that these numbers are established in the lab under specific conditions.

This topic itself is deserving of further examination and I will write about it in the future. For the time being, though, you should be aware that a heat pump’s efficiency is not static – it greatly depends on the temperature rise. The greater the rise, the lower the efficiency.
In other words the colder it gets (just when you need the heat the most!) the less efficient the heat pump becomes. How inefficient? I don’t know. Manufacturers don’t or won’t publish these numbers. (Or at least I haven’t found them yet – if anyone cares to point me to such data, I’d love to see it.)

What you really need to know is: what is the average – not theoretical Best Case Scenario – efficiency you can expect during the heating season? Knowing this helps you make an educated decision that is right for you. Maybe that’s why they won’t publish the information.
Moving on… ok, let’s assume for a minute that their published figures are correct for the whole heating season. How do the numbers look now? Do they even approach a break-even point?
In this particular project, I estimated that the annual energy cost to heat this (admittedly large) house, in a cold climate would be around $2,000. (That’s a pretty safe figure, by the way – SmartRooms generally performs better than my estimates because I do take into consideration reasonable real-world scenarios.)

Since we already know that we’re paying an additional $1,100 in interest, the heat pump must heat the home for a full year for $900 or less (2000 – 1100 = 900) and that’s before we take into consideration the maintenance costs, the blower costs, etc. before it can stack up against a SmartRooms system. I don’t know any manufacturer willing to make that claim.

So, what to do?

You need to know, that like a car, there is the cost to buy, the cost to operate and the cost to maintain. SmartRooms systems make part of the decision easy because we have no maintenance costs. The capital costs are quoted so that’s easy to understand.
It’s the operating costs that get fuzzy. If a contractor talks techno with huge savings, well if it’s too good to be true it likely is. Then call the manufacturer directly. SmartRooms makes this easy by giving you a calculated operating cost in writing using your local electrical rates based on your home or project. We use standard accepted calculations that are quite conservative.

There are no surprises here. With 25 years of experience we know these costs to be quite representative. We even recommend you ask the heat pump guys to give you an operating cost – but I doubt they will. Then you can make a truly informed decision for what is best for you.