Electrifying Residential Space Heating with Air-Source Heat Pumps in a Carbon-Intensive Grid: Greenhouse Gas Emission Impacts and the Case of Incentivising in Nova Scotia

Abstract

Commitments to reduce greenhouse gas (GHG) emissions warrant consideration of alternative residential space heating technologies particularly in regions with colder climates. The Canadian province of Nova Scotia (NS) has relied heavily on home heating oil (HHO) for residential space heating compared to the rest of Canada, accounting for two-thirds of total residential provincial emissions. Displacing HHO with highly efficient cold climate air-source heat pumps (HPs) has been shown in other regions to reduce GHG emissions if the supply of electricity is from clean renewable sources. Although NS has made considerable progress in recent years to increase renewable electricity generation, the province still relies heavily on fossil fuels and is amongst the highest in Canada in terms of emissions intensity. Some estimates indicate that HPs are gaining in market share in NS and the province is incentivising the transition through multiple funding sources. However, does it make sense to displace HHO with a HP to reduce GHG emissions, considering the still relatively high carbon-intensive electricity grid in NS? Furthermore, does the transition make sense to the individual homeowner in terms of operating costs and net overall investment savings? Scenario analysis estimates that displacing HHO with a HP in NS in 2017 can reduce GHG emissions to the province cumulatively and to the individual household, but the net savings of the investment is highly variable based on the individual’s situation. That is, the net savings of a HP investment to displace HHO is highly variable due to the individuals household characteristics, borrowing costs, and also due to what is known as the energy efficiency gap, a well-researched phenomenon that attempts to explain why seemingly economically beneficial investments in energy efficiency do not occur as expected. Sensitivity analysis are presented assessing the impacts of HP and HHO performance, fuel price fluctuations, borrowing costs and discount rates to account for variability among individuals. This research confirms the potential to reduce GHG emissions in NS today by displacing HHO with HPs for residential home heating, and the potential becomes even greater into the future as the provinces electricity supply is anticipated to include more renewables. This research also demonstrates the highly variable net investment savings to the individual, which provides implications for policy design in regard to encouraging the uptake of HPs in NS.