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Good news for propane

Home heating analysis results shift against heat pumps, favor propane

The results of the recently updated Comparative Analysis of Residential Heating Systems shifted against air source heat pumps (ASHP) and in favor of propane systems.

Propane even made up some ground against ground source heat pumps (GSHP), commonly referenced as geothermal heating and cooling. Heating oil systems emerge as stronger competitors based on operating cost, but we can expect ongoing opportunities for converting this market to propane.

The Comparative Analysis of Residential Heating Systems was first prepared for the Propane Education & Research Council (PERC) in 2009, using 2008 residential energy rates for propane, heating oil and electricity based on data from the U.S. Energy Information Administration (EIA). Of course, 2008 was the year of the historic price spike in crude oil and related energy sources such as propane and heating oil.

The 2010 analysis update that was just completed this month updates the energy rates using 2009 EIA data, a more realistic comparison of energy prices that seem to be enduring. A bi-annual update of the heating analysis is expected going forward.

Heating and cooling functions were considered for existing and new homes in seven of the eight climate zones in the United States, using propane, heating oil and electric energy sources for 14 types of heating and cooling systems. Systems compared included furnaces, boilers, ASHPs and GSHPs. The 2010 analysis shows some interesting shifts in favor of propane.

ASHPs already had poor emissions performance in the initial analysis due to the heavy use of electricity for the heating and cooling functions. As we know, the majority of the electricity production comes from coal-fired power plants, the biggest source of CO2 emissions in this country. The steadily increasing electric rates also make ASHPs look worse in terms of operating costs and simple payback – the time it takes to pay back the higher first cost for a more efficient heating system.

GSHPs are still far ahead in lower operating costs, but in terms of simple payback propane has the clear edge, even incorporating the 30 percent tax credit advantage into the analysis. GSHPs also have poor emissions performance, so propane has the edge here too. Remember that heat pumps are electric heat, whether they are moving heat from the air (ASHP) or from ground or water sources (GSHP).

The advertising and promotion for heat pumps always seem to overlook the fact that there is a coal-fired power plant lurking in the background. The 2010 updated analysis is a rich source of competitive information for propane marketers battling the advance of geothermal systems in their markets.

Heating oil prices returned to a more traditional comparison to propane in the updated analysis, so it is a closer competitor from an operating-cost standpoint. However, heating oil systems remain well behind from a first-cost standpoint and they are environmentally challenged.

Look for the updated Comparison Analysis of Residential Heating Systems in PDF form at www.buildwithpropane.com. Study the analysis and look for all of the propane advantages that you talk about with consumer prospects and homebuilders and remodelers. Propane and related applications are an effective choice for efficiency upgrades and environmental retrofits for existing homes and a smart, affordable primary energy source for new homes as well.

The residential construction industry is slowly showing signs of recovery from the worst slump in recent history, and now is the time to build or strengthen relationships with builders and remodelers. Even at the bottom of the slump, there are still more than 175,000 members of the National Association of Home Builders waiting to hear from you.

Join your local homebuilders association today and start talking with builders and remodelers about the heating analysis. PERC has provided you with this great information. Start using it today to gain new gallons.