This is the second part of a two-part column.
In last week’s column, we looked at two questions: whether heat pumps work in the Yukon (they do), and how much they benefit the climate when powered by electricity from LNG or diesel generators (a hotly debated topic).
On the latter, experts in the Yukon government’s Energy Branch provided some fascinating analysis. They modeled the carbon emissions of a typical Whitehorse home, estimated to use the energy equivalent of 20,000 kilowatt-hours of heat per year – that’s 1,855 litres of home heating oil. Such a home with an oil furnace at 85 per cent efficiency would shoot 6.02 tonnes of carbon dioxide into the atmosphere. A propane system at 92 per cent efficiency would emit 4.79 tonnes. A heat pump with an average Coefficient of Performance (COP) of 2.0 – which is an average combining better performance in warmer temperatures and a COP of just 1.0 in frigid weather – would cause Yukon Energy’s diesels to spew 1.4 tonnes.
There is an important qualifier to that last number. It assumes that 80 per cent of the power used by the heat pump comes from renewable power, not our diesel or LNG generators. At times of day in the shoulder season when no fossil power is operating, the heat pump emits zero carbon. But looking at Yukon Energy’s online energy usage webpage, on a day when the temperature is only -8C, I see that Whitehorse used diesel or LNG every one of the last 24 hours. And at some point in every one of the last 12 months.
So, as discussed last week, if you got a new heat pump today when our hydro is already maxed out it would incrementally increase fossil fuel burn. If you assume the heat pump in the example above was operating just 50 per cent of the time when diesel and LNG were not being used, the emissions would be 3.5 tonnes.
This is still better than the propane or heating oil example. If you ran your heat pump only when diesel generators were running, the heat pump’s emissions would actually be higher than the oil furnace. But, on the other hand, if more renewable power comes onto our grid in a few years the heat pump would be much better than propane or oil.
So, in summary, the climate impact of your heat pump is hard to estimate. But it will be powerful if we get our grid back to being as green as it was a decade ago.
The next big question is financial feasibility. The business case for heat pumps is that you spend a bunch of money upfront on installation, then save every month for the next 20 years. Your monthly electricity bill goes up but your propane or heating oil bill disappears.
You would also save on carbon tax, but the federal government’s recent controversial announcement on exempting home heating fuel means that only propane users need to factor this into their decision for the next few years.
The math is complicated by some additional pros and cons related to oil tank replacement, insurance and electrical upgrades.
The Takhini household mentioned last week was kind enough to share some real-world data. Your situation may differ significantly, but their experience is highly insightful.
The net cost of their installation was $24,000 (all numbers rounded). Of this, the heat pump itself was $27,500, plus $2,500 in wiring costs. They also had to upgrade their electrical service to 200 amps, which cost $2,000. Your house may already be upgraded, or you may require a new pole outside which is costlier. They also got an $8,000 grant from the Yukon government.
They avoided having to buy a new oil tank, which they estimate at $8,000-$10,000. And their new upgraded electrical system has the fringe benefit that it can also accommodate a Level 2 charger for an electric vehicle.
The family has been tracking its energy bills before and after the heat pump. Savings vary based on how cold it gets and energy prices, but based on heating oil prices over the last two years they estimate savings of $1,000 the first year and $2,000 the second.
Very roughly, let’s say the net investment was $14,000. That’s the $24,000 investment less $10,000 in avoided cost on a new oil tank. And their average savings was $1,500 in the first two years. Their payback period on their investment is 9.3 years. It will be faster if heating fuel prices rise in the future and the government brings back the carbon tax on it. Their insurance company refused to include their oil tank in their coverage, so the heat pump eliminates the risk of a costly spill or finding another (likely more expensive) insurance company. They also got an upgraded electrical system so they can more easily tap into the savings associated with electric vehicles.
They also eliminated the carbon emissions in their control. We can’t blame the Takhini-ites for the Yukon government dropping the ball on diesel generators for a decade. When they finally find the ball, this family will be ready for truly zero-carbon heat.
So what does all this mean for you?
This business case is not a get-rich-quick scheme. But neither is it a wild eco-indulgence. Especially when you factor in the costs and risk of the aging oil tank.
Here is a quick checklist of things to think through as you examine your situation, which may be quite different from the Takhini example above.
How long do you intend to own your home? Buyers may or may not value your heat-pump investment if you have to sell in the next few years.
Is your home relatively well insulated with good windows? Installing a heat pump in a leaky old house will undermine your monthly savings.
Are you facing a costly oil-furnace or oil-tank replacement any time soon? This could improve your business case by $10,000 or more.
How importantly do you value cutting your personal emissions? You will probably make some improvement, but be burning some diesel vicariously via the Yukon grid for many years.
How expensive will it be to get 200 amp electrical service in your home? This is very specific to your home.
How big is your mortgage? If you are paying around 5.5 percent, the current going rate on a five-year fixed mortgage, it may make more financial sense to pay down your mortgage before investing in a heat pump.
How much are the new heat-pump incentives going to be worth, and will you qualify? The federal budget last month included new heat-pump incentives, but the details for Yukoners have to be worked out with the territorial government.
The last point could be critical given the size of the potential incentives. So don’t buy a heat pump until the Yukon government announces how juicy these will be, which they will probably do sometime in 2024.
Given the Yukon grid’s reliance on diesel you should also compare versus other options, such as a high-efficiency propane furnace or a ground-source heat pump. The latter involves drilling a deep hole under your house, which is expensive up front but allows your heat pump to tap into the soil’s heat rather than the Forty Below air in your backyard. This can dramatically cut your power bill.
Both the heat-pump-on-diesel-grid and propane options involve ongoing carbon emissions. If you want to offset these, you can also consider something like buying quality offset credits from CarbonZero.ca. For example, buying offsets from a Canadian municipal landfill methane reduction project would cost $25 per tonne of emissions, or $110 per year for a home using as much oil as the Takhini furnace used to.
One thing is certain, however. We should be thankful to families like our friends in Takhini for pioneering heat pumps in the Yukon. Each time a family like them installs one, we learn more. Over time, local installers will get cheaper and heat pumps will come down in price. To achieve our goal of Net Zero by 2050, your oil and propane furnaces will need to go to the landfill someday. And when they do, early adopters will have led the way.
Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He won the 2022 Canadian Community Newspaper Award for Outstanding Columnist.