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Transcript of Northwest Power and Conservation Council Slide 1 Direct Use of Natural Gas Economic Fuel Choices...
Northwest Power and ConservationCouncil
Slide 1
Direct Use of Natural GasEconomic Fuel Choices from the Regional
Power System and Consumer’s Perspective
September 8, 2011
Northwest Power and ConservationCouncil
Slide 2
Study Objectives Determine which residential space and water heating systems
are least-cost (TRC) and least-risk for the region’s power system given;– The diversity of space conditioning and water heating
systems and existing housing characteristics– A large number of combinations of space conditioning and
water heating systems to select from– That carbon emissions as well as their economic risk are a
consideration Determine whether the retail market will lead consumers to
chose the space conditioning and water heating systems that are also least cost and least risk for the region’s power system
Northwest Power and ConservationCouncil
Slide 3
Significance Council’s existing policy on fuel choice/fuel switching has not
be thoroughly reviewed since 1996 Council’s analysis and policy recommendations are of intense
interest to the natural gas industry, as well as electric utilities in the region
Of the 3.6 million existing PNW households– 2.6 million will replace their space conditioning and water
heating system over the next 20 years– 130,000 annual “fuel choice” decisions
Potential for conversion of existing appliances:– Electricity to gas: Reduce load by 1,500 MWa– Gas to electricity: Increase load by 2,500 – 5,000 MWa
Northwest Power and ConservationCouncil
Slide 4
Two Perspectives Regional Power System
– Space conditioning and water heating system selection based on wholesale electricity and gas prices
– Considers total system “cost” and “risk” (i.e., consideration of individual space and water heating conversion costs and performance alone does not account for the cumulative effects of these systems on the need for new resources)
Consumer Perspective– Space conditioning and water heating system selection
based on retail electricity and gas prices– Does not consider for “system” level impacts
slide 4
Northwest Power and ConservationCouncil
Slide 5
Preliminary Observations From Regional Power System Perspective (1)
Most homes should stay with their current space heating and water heating systems– Extending gas service is an economic hurdle to converting all-electric
households to gas– The overall efficiency of inexpensive electric space heating and water
heating systems is an economic hurdle that limits the viability of converting existing gas systems to electricity
There are exceptions– Converting gas water heaters to electric heat pump water heaters
appears to be economically attractive in many cases The economic potential of gas-to-electric conversions is
dependent upon whether new gas-fired turbines are needed to serve these new loads or whether existing turbines could support conversions to electric appliance
Northwest Power and ConservationCouncil
Slide 6
Preliminary Observations From Regional Power System Perspective (1)
Regional emissions of CO2 are about the same under a scenario that maintains gas space and water heating market shares or a scenario that results in conversion to electric space and water heating systems– With the exception of heat pumps, electric appliances
produce more CO2 than gas appliances due to the inefficiency of the overall power system
– However, the small potential for economic conversions simply make the impact negligible
Northwest Power and ConservationCouncil
Slide 7
Remaining Analytical Work from Region Power System Perspective
Assess the impact of the interaction between “fuel conversions” and the amount of conservation available (e.g. increased market share of natural gas space heating reduces the potential for residential weatherization, heat pump efficiency upgrades, etc.)
Assess whether consideration of the cooling benefits provided by heat pumps alters the selection of space conditioning systems
Refine the granularity of results for specific market segments Add a heat pump-with-gas forced air furnace backup hybrid
space heating option
Northwest Power and ConservationCouncil
Slide 8
Consumer PerspectiveAlignment of Incentives
Analysis using the Resource Portfolio Model (RPM) revealed that existing homes employing natural gas for space and water heating would convert to electric space and water heating systems based on life-cycle costs using wholesale electricity and natural gas prices
If this were to occur, it would increase the Northwest power system’s cost and risk, which reflect generation plant and operation cost
Northwest Power and ConservationCouncil
Slide 9
Is This Scenario Highly Probable?
Given current retail electricity and natural gas prices and forecast future retail prices, would consumers likely convert from natural gas space and water heating systems to electric space and water heating systems?
If this is the case, should the Council modify its current policy on fuel choice/switching?
slide 9
Northwest Power and ConservationCouncil
Analytical Approach Compare the “first cost” and “life cycle
cost” of alternative space conditioning and water heating systems using:– Utility specific retail electricity and natural gas prices– 6th Plan forecast of future retail price escalation rates– “Average” system installation and operation and
maintenance cost– Representative range of housing sizes and climates
» 1500 – 2250 sq.ft.» Portland, Seattle, Boise, Spokane, Kalispel
slide 10
Northwest Power and ConservationCouncil
Slide 11
Analytical Approach
The “best” space conditioning and water heating system options for consumers is dependent upon the difference between their retail prices for electricity and natural gas
In order to represent this diversity the life cycle cost model was run using the retail rates for all gas and electric utilities in the region that serve the same general geographic area– “service territory” matching was not done
slide 11
Northwest Power and ConservationCouncil
Slide 12
Input Assumptions
Space and water heating systems are “converted” at the same time
Conversions are financed– 6% interest rate– 15 years
Tested alternative assumption where consumer pay cash– Results were nearly identical
slide 12
Northwest Power and ConservationCouncil
Slide 13
RPM Results Focused Consumer Economic Analysis
Resource Portfolio Model (RPM) revealed that eighteen of 95 existing market segments represented 80% of the likely “fuel shifts” from gas-to-electric systems
Segments are characterized by– Housing Type (Single Family or Multifamily)– Existing space heating system– Existing water heating system & storage tank capacity– Presence of existing central air conditioning– Foundation type– Natural gas service access
slide 13
Northwest Power and ConservationCouncil
Slide 14
Consumer Life Cycle Cost Model
Designed to compare:– First cost (Installed cost of system excludes gas line
extension cost)– First year space conditioning and water heating cost– Life cycle space conditioning and water heating cost– “Annual Levelized cost” of space conditioning and
water heating User can model specific utilities and climates Users with “Crystal Ball” can model distributions
of climate zones and utility rates
slide 14
Northwest Power and ConservationCouncil
Slide 15
Consumer Life Cycle Cost Model
User inputs:– Climate (5 locations across region)– Utility specific or climate specific distribution
of retail electric and gas rates– Utility specific or regional forecast of
escalation rates for retail rates– Existing and converted space conditioning and
water heating system configurations– Five home sizes (2 – MF, 3-SF)
slide 15
Northwest Power and ConservationCouncil
Five Segments Represent Over 50% of the Potential Change in Gas or Electric Load
slide 16
Existing Space
Conditioning System
Existing Water
Heating System
Water heater
capacity (gals)
House Type &
Size (sq.ft.) Basement?
Gas Access
Share of Total
Converted Electric
Load
Converted Load (Mwa)
Converted Load
(MMBtu)
Gas FAFGas Storage
Tank X<=55 SF - 1900 No Existing 19% 321
(1,111,661)
Gas FAFGas Storage
Tank X<=55 SF-2250 Yes Existing 13% 215 (775,632)
Gas FAF
Electric Resistance
Storage Tank X<=55 SF-1900 No Existing 9% 153
(530,703)
Gas FAF
Electric Resistance
Storage Tank X<=55 SF-2250 Yes Existing 7% 115
(414,670)
Gas FAF w/Central
ACGas Storage
Tank X<=55 SF-1900 No Existing 6% 96
(332,507)
Northwest Power and ConservationCouncil
Slide 17
Results for Largest Market SegmentsExisting Homes with Gas Furnaces and Gas or Electric
Water Heating
slide 17
$5,00
0
$6,00
0
$7,00
0
$8,00
0
$9,00
0
$10,0
00
$11,0
00$16,000
$16,500
$17,000
$17,500
$18,000
$18,500
$19,000
$19,500
$20,000
First Cost vs. Life Cycle Cost of Alternative Space Conditioning and Water Heating Systems
Assumes 1900 sq.ft. home without basement or central AC
Gas FAF with HPWH (EF2.0) Capacity <=55 gals
Gas FAF with Gas Condensing (EF75) Capacity <=55 gals
Gas FAF with Gas Storage Tank (EF63) Capacity<=55 gals
Gas FAF with Electric Resistance (EF95) Capacity <=55 gals
Gas FAF with Gas Tankless (EF82) Capacity <=55 gals
Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Electric FAF with HPWH (EF2.0) Capacity <=55 gals
Hybrid Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Electric FAF with Gas Condensing (EF75) Capacity <=55 gals
Installed Cost of System (2009$)
Lif
e C
ycle
Cos
t (2
009$
)
Northwest Power and ConservationCouncil
Slide 18
Results for Largest Market Segments w/ Limited Standard Deviation
Existing Homes with Gas Furnaces and Gas or Electric Water Heating
slide 18
$5,000 $7,000 $9,000 $11,000 $13,000$16,000
$16,500
$17,000
$17,500
$18,000
$18,500
$19,000
$19,500
$20,000
First Cost vs. Life Cycle Cost of Alternative Space Conditioning and Water Heating Systems
Assumes 1900 sq.ft. home without basement or central AC
Gas FAF with HPWH (EF2.0) Capacity <=55 gals
Gas FAF with Gas Condensing (EF75) Capacity <=55 gals
Gas FAF with Gas Storage Tank (EF63) Capacity<=55 gals
Gas FAF with Electric Resistance (EF95) Capacity <=55 gals
Gas FAF with Gas Tankless (EF82) Capacity <=55 gals
Hybrid Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Hybrid Heat Pump with Gas Tankless (EF82) Capacity <=55 gals
Hybrid Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Heat Pump with Gas Tankless (EF82) Capacity <=55 gals
Installed Cost of System (2009$)
Lif
e C
ycle
Cos
t (2
009$
)
Northwest Power and ConservationCouncil
Slide 19
Results for Largest Market Segments Existing Homes with Basements using Gas Furnaces and
Gas or Electric Water Heating
slide 19
$5,00
0
$6,00
0
$7,00
0
$8,00
0
$9,00
0
$10,0
00
$11,0
00
$12,0
00$15,000
$15,500
$16,000
$16,500
$17,000
$17,500
$18,000
$18,500
First Cost vs. Life Cycle Cost of Alternative Space Conditioning and Water Heating Systems
Assumes 2250 sq.ft. home with basement without central AC
Gas FAF with HPWH (EF2.0) Capacity <=55 gals
Gas FAF with Gas Condensing (EF75) Capacity <=55 gals
Gas FAF with Gas Storage Tank (EF63) Capacity<=55 gals
Gas FAF with Electric Resistance (EF95) Capacity <=55 gals
Gas FAF with Gas Tankless (EF82) Capacity <=55 gals
Electric FAF with HPWH (EF2.0) Capacity <=55 gals
Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Electric FAF with Gas Condensing (EF75) Capacity <=55 gals
Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Hybrid Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Installed Cost of System (2009$)
Lif
e C
ycle
Cos
t (2
009$
)
Northwest Power and ConservationCouncil
Slide 20
Results for Largest Market Segments w/ Limited Standard Deviation
Existing Homes with Basements using Gas Furnaces and Gas or Electric Water Heating
slide 20
$5,000 $7,000 $9,000 $11,000 $13,000$15,000
$15,500
$16,000
$16,500
$17,000
$17,500
$18,000
$18,500
$19,000
$19,500
$20,000
First Cost vs. Life Cycle Cost of Alternative Space Conditioning and Water Heating Systems
Assumes 2250 sq.ft. home with basement without central AC
Gas FAF with HPWH (EF2.0) Capacity <=55 gals
Gas FAF with Gas Condensing (EF75) Capacity <=55 gals
Gas FAF with Gas Storage Tank (EF63) Capacity<=55 gals
Gas FAF with Electric Resistance (EF95) Capacity <=55 gals
Gas FAF with Gas Tankless (EF82) Capacity <=55 gals
Hybrid Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Hybrid Heat Pump with Gas Tankless (EF82) Capacity <=55 gals
Hybrid Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Heat Pump with Gas Tankless (EF82) Capacity <=55 gals
Installed Cost of System (2009$)
Lif
e C
ycle
Cos
t (2
009$
)
Northwest Power and ConservationCouncil
Slide 21
Results for Largest Market Segments Existing Homes with Gas Furnaces and Central AC
and Gas Water Heating
slide 21
$5,00
0
$6,00
0
$7,00
0
$8,00
0
$9,00
0
$10,0
00
$11,0
00$16,000
$16,200
$16,400
$16,600
$16,800
$17,000
$17,200
$17,400
$17,600
First Cost vs. Life Cycle Cost of Alternative Space Conditioning and Water Heating Systems
Assumes 1900 sq.ft. home with basement and central AC
Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Gas FAF w/CAC with HPWH (EF2.0) Capacity <=55 gals
Hybrid Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Gas FAF w/CAC with Gas Condensing (EF75) Capacity <=55 gals
Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Heat Pump with Electric Resistance (EF95) Capacity <=55 gals
Hybrid Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Electric FAF w/CAC with HPWH (EF2.0) Capacity <=55 gals
Gas FAF w/CAC with Gas Storage Tank (EF63) Capacity<=55 gals
Installed Cost of System (2009$)
Lif
e C
ycle
Cos
t (2
009$
)
Northwest Power and ConservationCouncil
Slide 22
Results for Largest Market Segments w/ Limited Standard Deviation
Existing Homes with Gas Furnaces and Central ACand Gas Water Heating
slide 22
$5,00
0
$6,00
0
$7,00
0
$8,00
0
$9,00
0
$10,0
00
$11,0
00
$12,0
00$16,000
$16,500
$17,000
$17,500
$18,000
$18,500
First Cost vs. Life Cycle Cost of Alternative Space Conditioning and Water Heating Systems
Assumes 1900 sq.ft. home with basement and central AC
Gas FAF w/CAC with HPWH (EF2.0) Capacity <=55 gals
Gas FAF w/CAC with Gas Condensing (EF75) Capacity <=55 gals
Hybrid Heat Pump with Gas Condensing (EF75) Capacity <=55 gals
Gas FAF w/CAC with Gas Storage Tank (EF63) Capacity<=55 gals
Gas FAF w/CAC with Electric Resistance (EF95) Capacity <=55 gals
Hybrid Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Gas FAF w/CAC with Gas Tankless (EF82) Capacity <=55 gals
Hybrid Heat Pump with Gas Tankless (EF82) Capacity <=55 gals
Heat Pump with Gas Storage Tank (EF63) Capacity<=55 gals
Heat Pump with Gas Tankless (EF82) Capacity <=55 gals
Installed Cost of System (2009$)
Lif
e C
ycle
Cos
t (2
009$
)
Northwest Power and ConservationCouncil
Slide 23
Preliminary Findings (1)
Conversion of existing water heaters, whether gas or electric, to heat pump water heaters appears to be preferable on a life cycle cost basis– However, gas condensing water heaters have
life cycle cost that are very nearly as low and heat pump water heaters
Air Source heat pumps appear to be preferable on a life cycle cost basis when air conditioning is desired, except in zonal electric homes where “ductless” heat pumps have lower LCC
slide 23
Northwest Power and ConservationCouncil
Summary of ResultsExisting Systems with Lower Life Cycle Cost
Options Requiring Fuel Conversion
slide 24
Existing Space Cond.
System
Existing Water
Heating System
Minimum LCC Space
Cond. System
Minimum LCC Water
Heating System
SH Fuel Conversion
WH Fuel Conversiion
Share of Total
Potential Electric
Conversions
Electric FAFElectric Resistance Gas FAF HPWH Yes No 5.5%
Gas FAFGas Condensing Gas FAF HPWH No Yes 4.2%
Gas FAF
Gas Storage Tank Gas FAF HPWH No Yes 32.0%
Gas FAF HPWH Gas FAF HPWH No No 1.2%
Gas FAF w/CAC
Electric Resistance Heat Pump HPWH Yes No 4.6%
Gas FAF w/CAC
Gas Storage Tank Heat Pump HPWH Yes Yes 8.6%
Northwest Power and ConservationCouncil
Slide 25
Preliminary Findings (2)
Conversion of existing electric water and gas heating systems to higher efficiency systems (heat pump water heaters and heat pumps when air conditioning is desired) appears to be preferable to conversion to natural gas space heating and water heating from a life cycle cost perspective
However, this finding is not applicable to all consumers due to variations in retail electricity and gas prices across the region
slide 25
Northwest Power and ConservationCouncil
Slide 26
Summary of ResultsExisting Systems with Lower Life Cycle Cost
Options Requiring Efficiency Upgrades
slide 26
Existing Space Cond. System
Existing Water Heating System
Minimum LCC Space Cond. System
Minimum LCC Water Heating System
Share of Total Potential Electric Conversions
Electric FAF w/CACElectric Resistance Heat Pump HPWH 1.3%
Electric Zonal Electric ResistanceElectric Zonal HPWH 3.0%
Electric Zonal Electric Resistance Ductless HP HPWH 5.6%
Gas FAF Electric Resistance Gas FAF HPWH 16.0%
Northwest Power and ConservationCouncil
Slide 27
Life Cycle Cost of Each Space Conditioning and Water Heating System Vary Across the Region
slide 27
Northwest Power and ConservationCouncil
The Life Cycle Cost Heat Pumps and Gas Furnaces with Central AC Are Distributed Differently Across the Region
slide 28
11449.17234458814512.988491427217576.804638266420640.620785105623870.0486155577
0
100
200
300
400
500
600
700
800
900
Life Cycle Cost - Heat Pump
Fre
qu
ency
15342.514800061416985.043332962718627.57186586420270.100398765322001.4142577694
0
100
200
300
400
500
600
Life Cycle Cost - Gas FAF with Central AC
Fre
qu
ency
Northwest Power and ConservationCouncil
Slide 29
Therefore, Only Limited Generalizations About Which System Has the Lowest Life Cycle Cost
Are Possible (or Prudent)
slide 29
$12,000 $14,000 $16,000 $18,000 $20,000 $22,000 $24,000 0
100
200
300
400
500
600
700
800
900
1000
Heat Pump
Gas FAF w/AC
Life Cycle Cost
Fre
qu
ency
Northwest Power and ConservationCouncil
Slide 30
Consideration of “Variance” Changes the Results
Retail electricity prices differ more across the region than retail natural gas prices– Electricity prices range from 2.3 cents/kWh to 12.3
cents/kWh (530%)– Gas prices range from $8.54/MMBtu to $16.13/MMBtu
(190%) Selecting the systems with the lowest life cycle
cost and limiting the “standard deviation” increases the likelihood that natural gas space heating systems are the best economic choice– Heat pump hot water heaters are still selected
slide 30
Northwest Power and ConservationCouncil
Summary of ResultsExisting Systems with Lower Life Cycle Cost Options
Requiring Fuel Conversion When “Variance” is Considered
slide 31
Existing Space Cond.
System
Existing Water
Heating System
Minimum LCC Space
Cond. System
Minimum LCC Water
Heating System
SH Fuel Conversion
WH Fuel Conversiion
Share of Total
Potential Electric
Conversions
Electric FAFElectric Resistance Gas FAF HPWH Yes No 5.5%
Gas FAFGas Condensing Gas FAF HPWH No Yes 4.2%
Gas FAF
Gas Storage Tank Gas FAF HPWH No Yes 32.0%
Gas FAF HPWH Gas FAF HPWH No No 1.2%
Gas FAF w/CAC
Electric Resistance
Gas FAF w/CAC HPWH Yes No 4.6%
Gas FAF w/CAC
Gas Storage Tank
Gas FAF w/CAC HPWH Yes Yes 8.6%
Northwest Power and ConservationCouncil
Slide 32
Results for Other Segments
slide 32
Existing Space
Conditioning System
Existing Water
Heating System
Water heater
capacity (gals)
House Type &
Size (sq.ft.) Bsmnt?
Lowest LCC w/o Std Dev Limit
Lowest LCC w/Std Dev Limit
Electric Zonal
Electric or Gas
Storage Tank X<=55 MF - 1050 No
Electric Zonal with Gas Tankless (EF82) Capacity <=55 gals
Electric Zonal with Gas Tankless (EF82) Capacity <=55 gals
Electric Zonal
Electric or Gas
Storage Tank X<=55 MF - 1450 No
Electric Zonal with Gas Tankless (EF82) Capacity <=55 gals
Ductless HP with Gas Tankless (EF82) Capacity <=55 gals
Electric Zonal
Electric or Gas
Storage Tank X<=55 SF - 1500 No
Electric Zonal with HPWH (EF2.0) Capacity <=55 gals
Ductless HP with HPWH (EF2.0) Capacity <=55 gals
Electric FAF
Electric or Gas
Storage Tank X<=55 SF-1900 No
Gas FAF with HPWH (EF2.0) Capacity <=55 gals
Gas FAF with HPWH (EF2.0) Capacity <=55 gals
Electric FAF w/CAC
Electric or Gas
Storage Tank X<=55 SF-1900 No
Heat Pump with HPWH (EF2.0) Capacity <=55 gals
Gas FAF w/CAC with HPWH (EF2.0) Capacity <=55 gals
Northwest Power and ConservationCouncil
Slide 33
Results for Other Segments
slide 33
Existing Space
Conditioning System
Existing Water
Heating System
Water heater
capacity (gals)
House Type &
Size (sq.ft.) Bsmnt?
Lowest LCC w/o Std Dev Limit
Lowest LCC w/Std Dev Limit
Heat Pump
Electric or Gas Storage
Tank X<=55 SF - 1900 NoHeat Pump with HPWH (EF2.0) Capacity <=55 gals
Gas FAF w/CAC with HPWH (EF2.0) Capacity <=55 gals
Heat Pump
Electric or Gas Storage
Tank X>55 SF -1900 YesHeat Pump with HPWH (EF2.0) Capacity >55 gals
Gas FAF w/CAC with HPWH (EF2.0) Capacity >55 gals
Gas FAF w/CAC
Electric or Gas Storage
Tank X<=55 MF - 1450 NoDuctless HP with Gas Tankless (EF82) Capacity <=55 gals
Ductless HP with Gas Tankless (EF82) Capacity <=55 gals
Electric or Gas FAF
Electric or Gas Storage
Tank X>55 SF-22500 YesGas FAF with HPWH (EF2.0) Capacity >55 gals
Gas FAF with HPWH (EF2.0) Capacity >55 gals
Northwest Power and ConservationCouncil
Slide 34
Next Steps
Solicit Your Input on updated “Regional Power System” and “Consumer Life Cycle Cost Model” Findings
Review Implications for Council’s Current Policy of Direct Use of Gas
Develop staff recommendation for Council consideration
slide 34