The Mad Schemes of Dr. Tectonic

My funemployment priority last fall was getting a heat pump installed before the end of the year so I could take advantage of the Inflation Reduction Act's tax credits, before Trump's One Big Beautiful Bill increased taxes on energy saving systems. As a perennial procrastinator I managed to get everything in under the wire, wrapping up a week before Christmas and just a few working days before the end of the tax year. Despite IRS deadlines being the spark to get my butt into gear, by far the largest savings came from Xcel Energy's incentive programs. I saved $2,000 on my taxes on the heat pump and $1,000 for improving insulation, but Xcel gave a $6500 rebate on the heat pump, a $3000 rebate on insulation, and a check for $2500 because I did three efficiency projects in a year. So if you're considering energy efficiency upgrades to your house, don't let the death of tax benefits dissuade you: you might still be able to get it installed at a significant discount.

For anyone interested in a home energy project, step one is to get a home energy audit. Xcel offers these at reduced cost: I paid a little over $100 for an expert to spend a couple hours at my house identifying thermal leakage, checking furnace combustion, measuring air-changes-per-hour (which is the main way your house looses heat), and he probably installed at least $100 worth of free LED lightbulbs. This audit also unlocks the Xcel rebate program. It was scheduled about a month ahead of time last year, so get on it early. While you're waiting for that to happen, talk to a free advisor at Go Electric Colorado who can talk in depth about home electrification and efficiency options, navigating rebate programs, and providing a neutral assessment of project bids. One important thing I learned from the energy audit was that Xcel will only give a heat pump rebate if the insulation project happened first; otherwise they assume the heat pump system was oversized. It's also crucial to use companies on Xcel's approved vendors list; otherwise you won't get a rebate. I went with Independent Power for the heat pump project; they were great to work with, and had a lot of experience in the HVAC space. I also had a good experience with Elephant Energy and would definitely recommend them; the main reason I didn't choose them was crew availability before the end-of-year tax deadline. Bestway Insulation had the lowest of three bids, but also did the most thorough job on the free estimate visit, and were able to schedule on short notice. "This is an Eloy job," the estimator said as he squeezed himself out of my crawlspace. "We've got a guy who's really short and skinny. He says 'I was born to either be a jockey or work in crawl spaces and attics.'"

I was looking forward to comparing this winter's energy bills with last year's to get a sense of return on investment. Unfortunately, Colorado kinda forgot to have a winter this year. On the Front Range we basically got one snow storm per month from December through March, and much of the rest of the time was often T-shirt weather, with late March spending a week in the high 70s and low 80s. So aside from a week of Stock Show Weather, the new heat pump hasn't had a whole lot of work to do.

Comparing the unseasonably warm months of November-ish to January-ish, our natural gas usage was cut by a factor of about 10 (just hot water and cooking now), while electricity use doubled (the heat pump was working hard during the single-digits cold snap). The unseasonably warm February-ish increased electricity use by 50 to 60% over November-ish, and gas usage remained decimated. The November-ish bill was about $150 for electrical and $130 for gas. January-ish was about $310 for electrical and $25 for gas; February-ish was about $220 for electrical, $30 for gas. Taxes and other adjustments are included; $7 and $11 are fixed costs for just having service. Febraury's weather was more similar to November's, so this suggests our overall energy bill is similar after the change, given fixed per-unit utility prices.

This is a bit surprising, since with a conversion rate of roughly 29 kilowatt-hours per therm, our total consumption of units of energy dropped by more than half. Electricity is currently billed higher than an equivalent kWh of gas, and a kilowatt-hour of gas burned at a power plant delivers less than one kWh to your meter, of course. This does highlight that the time horizon for a payoff for energy efficiency projects is long-term; before the project I'd estimated perhaps $30 per winter month in savings, which will take more than a decade to overcome the price differential of maintaining the gas furnace status quo. This is one reason energy efficiency tax credits and rebates are important: it's a significant up-front capital cost borne by the consumer with a slow pay-out and the public receives some of the benefits through reduced energy demand. However, market forces may act in my favor: I expect natural gas prices to increase significantly over time (with a lot of short-term spikes too), while deployment of renewables—which have nearly zero operating cost. If Xcel's gas rates rise faster than their electrical rates, I'll break even on the project sooner. (There is, however, a Jevons paradox risk that expanded cheap clean energy will induce demand for electricity, keeping prices high. This is one reason I support carbon pricing in addition to renewable buildout and transmission expansion.)

There are some non-financial benefits of this project, too. I wanted to get a heat pump in part because my house didn't have air-conditioning. Our cooling tools are a swamp cooler and an attic fan, which has been pleasant on warm days but it has trouble keeping up in the heat of summer. A heat pump provides both heating and cooling through the same mechanism, just running in reverse. Insulating the attic and crawl space has also been a big win: when days are sunny to warm up the house (thanks, sun porch!) and nighttime temperatures are in the 40s the heating system often doesn't seem to come on at all, with the house cooling down to the thermostat's room temperature by the time the sun comes up. This was particularly useful handy when Xcel cut power for 20 hours on the final day of the heat pump install; the thermostat around 70 when I went to bed and had only dropped to about 65 the next morning. The air-sealed crawl space also means the bathroom tile floor isn't so chilly on bare feet headed to the toilet in the morning.

The heat pump is also a lot quieter than the gas furnace was. A heat pump can run at slow speed to pull latent heat inside from the outdoor air, then blow that air into the house to keep it a consistent temperature. A gas furnace must periodically start a fire, then blow a bunch of air that's significantly hotter than room temperature around before dousing the fire and waiting for the house to cool below the thermostat setting. The furnace cycles and air movement was pretty noisy, with an air return vent in our living room. Getting warm air meant it was harder to hear the radio, or we'd turn up the TV. Now I often don't notice the heat is on unless I step over a vent. I do sometimes miss the very-hot air rising from the floor, though. When you come in from a cold and wet snow adventure it's nice to be able to temporarily turn the thermostat up one or two degrees and then stand over a vent to quickly warm up. When I was a young kid, my mom would turn on the furnace when I got out of the bath and have me lie next to the bathroom floor vent with a towel over me while she narrated my adventure as a cloud rising over the Pacific and blowing east, dropping rain on the mountains. I also used to wake up in the morning and lie next to the long register in the living room and marvel that I could hear my parents through the duct work in their bedroom downstairs. The efficient "maintenance warm air" from the heat pump doesn't give quite the rosy feeling. Fortunately when the sun's out I can use our sun porch when I want to emulate a heat-seeking feline.