Heat Pump Incentive Program Reports Sluggish Use So Far
November 27, 2023
PROVIDENCE — It’s been more than two months since Rhode Island officials rolled out a new incentive program to spur heat pump adoption. How’s it shaping up?
Clean Heat Rhode Island, the program launched by Gov. Dan McKee and legislative leaders this past Labor Day weekend, is the state’s latest accelerator to spur widespread adoption of high-efficiency heat pumps. It’s $25 million budget is allocated from federal American Rescue Plan Act dollars, the pot of money given to all 50 states during the pandemic.
The program is overseen by the state Office of Energy Resources (OER), but daily operations have been outsourced to Massachusetts-based Abode Energy Management.
“It’s a great program,” Sarah Doherty, thermal decarbonization manager for OER, said in a video interview with ecoRI News.
Under the program designed by OER, Rhode Islanders can apply for one of three incentives: a residential incentive; a commercial incentive for small- and medium-sized businesses; and a third incentive for low-income customers that covers 100% of the cost of the project, including electrical upgrades. The program also maintains a list of approved installers.
From an engineering standpoint, heat pumps are energy-efficient. Unlike fossil fuel heating systems, such as natural gas or heating oil which burn their fuel and lose a lot of potential energy in the process, heat pumps operate similarly to refrigerators or air conditioners. They simply move cold or hot air in or out of a house, instead of creating it.
Installing heat pumps, and decoupling home heating from fossil fuels, is critical to Rhode Island’s Act on Climate mandates. The state has until 2050 to reach net-zero emissions and is expected to reduce its emissions by half of what they were in 1990 by the end of this decade.
And while residential and commercial heating emissions are on the decline, according to the latest greenhouse gas inventory from the Rhode Island Department of Environmental Management, they still make up a big part of the state’s carbon footprint. Residential and commercial heating account for a combined 27.3% of the state’s total emissions.
So, two months out, how is the heat pump program doing?
As of Oct. 31, Doherty said Clean Heat Rhode Island had spent $346,038 across 113 individual rebates, all in the residential category. That’s an average of $3,062 per rebate.
Meanwhile the other two categories — low-income and commercial — have yet to pay out a single rebate to residents or business owners, despite reported interest from Abode Energy Management. Doherty said there were eight active applications for commercial incentives and no applications in progress for the low-income incentive.
There’s a rub in the program. Rhode Islanders who use natural gas to heat their homes or water heaters aren’t eligible under Clean Heat Rhode Island’s rules for rebates; only residents using propane and heating oil.
It’s a stipulation that excludes more than half the state from the program, many of them in Rhode Island’s urban core, which has the greatest cluster of natural gas hookups. About 53% of Rhode Islanders use natural gas to heat their homes, according to 2021 data from the Energy Information Administration. Just under 29% use home heating oil, and another 4.7% use propane. Only 11.6% of state residents heat their home with electricity.
The reason for the exclusion? Doherty said natural gas was still far cheaper for a lot of customers than electrifying their home heating, and that OER was conscious of saddling customers with higher electricity bills after transitioning to a heat pump. OER expects the price of natural gas to rise as more homes and businesses use heat pumps, and if that happened during Clean Heat Rhode Island’s operational life, the program would be opened to natural gas customers.
“I totally understand if you hear, ‘OK, this person is not eligible for the program, it seems like a discriminatory thing,’ but this is really a protective measure,” Doherty said. “We don’t want to install something, even if 100% of the project cost is covered, and then have their electric bill kick up a few hundred dollars.”
Meanwhile, some of OER’s other electrification incentives have proven to be enormously popular. In September, the Executive Climate Change Coordinating Council (EC4), the state’s lead agency on climate action, allocated an additional $1.1 million toward OER’s electric vehicle and e-bike incentive programs.
Starting in August the office actually had to modify both programs, cutting the rebates and limiting eligibility requirements to ensure both programs didn’t run out of incentive money. The allocation was part of the EC4’s first dedicated budget, derived primarily from Rhode Island’s auction proceeds from the Regional Greenhouse Gas Initiative.
It was the second emergency allocation from the EC4, who gave OER $400,000 in June for both programs.
Clean Heat Rhode Island is accepting applications through June 2025, with an expected program end date of December 2026.