No Free Lunch: Analyzing the Cost of Deep Decarbonizing Residential Heating Systems

Abstract

Recent studies have analyzed the carbon footprint of residential heating and proposed transitioning to electric heat pumps as an important step towards decarbonization. Electric heat pumps are more energy-efficient than gas furnaces and use electric grid power, which is generally less carbon-intensive than directly burning fossil fuels. The transition to electric heat pumps only solves half of the problem. Electric grids, in most parts of the world, are primarily powered by carbon-intensive fossil fuels and may never be completely carbon-free. Furthermore, the added electricity demand of heat pumps may trigger expensive upgrades in the electric grid. A deep decarbonization of residential heating can be achieved by using co-located solar photovoltaic (PV) systems with battery storage alongside heat pump retrofits. However, there is no free lunch and a deeper decarbonization comes at a significant cost. In this paper, we use data from 4,413 real-world homes to analyze the additional electricity demand due to heat pumps. We investigate the problem of sizing solar panels and storage to completely offset the added demand and investigate the tradeoff between cost and carbon emission reduction benefits. Our analysis suggests that co-located solar PV systems are an effective and carbon-free alternative to the power grid, and can reduce carbon emissions by at least 58%.