The State of Electrification in 2023– March/April

Written on: February 15, 2023

Author: Joe Uglietto

“Electrify Everything” is gaining ground at the federal level and in many Northeast states. Heat pump incentives, clean energy tax credits and legislation to ban fossil fuels are all on the table in some shape or form. And in states like Massachusetts and Vermont, policies to create new Clean Heat Standards have either passed or are likely to pass in the coming months.

A key driver of the electrification movement in 2023 – and likely for a number of years into the future – is the Inflation Reduction Act (IRA). The recently passed IRA will provide incentives for homeowners to install electric heat pumps that are substantially higher than what has been offered in the past. Rebates for low-income households can reach up to $14,000 for an air-source heat pump system. These rebates will make converting to heat pumps financially competitive in comparison to the installation of new, higher efficiency heating oil, propane and natural gas systems.

Additionally, a number of Northeast states have earmarked millions of dollars of IRA funds for broad-based consumer education campaigns to promote heat pumps and improve perceptions of heat pumps and heat pump technology among the public. The use of IRA funds for consumer outreach and education is in response to the relatively slow adoption of heat pumps thus far. Massachusetts provides an excellent example; the state set a goal of installing 100,000 heat pumps each beginning in 2020 with the ultimate goal of 1,000,000 heat pump installations completed by 2030. According to reporting conducted by the Boston Globe, 2020 heat pump installations totaled 461.

But the slow adoption of heat pumps hasn’t given advocates of electrification pause about the merits of wholesale electrification. It’s simply driven them to double down. The “carrot” of rebates and incentives will likely give way to the “stick” in the form of attempted fossil fuel bans and clean heat standards. A state-by-state clean heat standard would require the heating oil, natural gas, and propane industries to reduce the carbon intensity of their fuel, sell less of their fuel, or pay others to reduce the carbon intensity from heating technologies. Clean heat standards would increase the cost of energy and further incentivize the installation of cold-climate air-source heat pumps.

It is crucial that every stakeholder in the industry prepare for a future that completely embraces renewable liquid heating fuels; a future of clean heat standards and carbon-reduction; and a future that will require a strategic and forceful response in the form of political advocacy and consumer outreach.
Our future is bright. And our industry is poised to play a leading role in the reduction of carbon so long as we aren’t legislated out of business in the process.

Renewable Energy Insights is a regular column by Joe Uglietto, president of Diversified Energy Specialists, a leader in the renewable energy markets and consultant to the industry with a focus around emissions reductions and renewable energy innovation.