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Every winter, the phones light up at the offices of Mosquito-Bite Rural Cooperative in Frostbite Falls, Minnesota, with customers asking, “What can I do to reduce my heating bills?” There’s little the provider can advise these callers to do, other than to better weatherize their homes. Because natural gas distribution lines were never installed in Mosquito-Bite’s territory, many customers use either electric-resistance or propane devices to heat their homes, and both types of equipment are expensive to operate.
Over at Dogwood Mountain Power and Light, managers face a different problem. For most of the year, temperatures in this provider’s service territory are moderate, but a few times a year, the mercury plummets, sometimes as low as 10° Fahrenheit (F). When that happens, virtually all the heat pumps in the company’s territory call for backup electric-resistance heat, which causes large demand spikes that wreak havoc with the provider’s distribution system.
Meanwhile, at Frigid Hydro, managers have labored for years to implement a program that encourages customers to install ground-source heat pump (GSHP) systems. The program is now a modest success, but it took a heroic effort on the part of the utility managers. Because GSHPs are so expensive and their installation requires coordinating the efforts of numerous contractors, each transaction requires a lot of work. Furthermore, the program’s managers discovered that their top vendors have been keeping prices low by undersizing the ground loops. As a result, the systems are not performing as well as expected.
And at Metropolitan Public Service, managers know the utility has plenty of excess capacity in the wintertime—capacity they would like to sell to customers who need space heating. However, those customers largely use natural gas furnaces, and electric-resistance heating is simply too expensive to compete with the furnaces. If there were a heat pump that could operate all winter long in the provider’s cold-climate service territory, the program managers would happily develop a marketing plan encouraging customers to use it.
What do all of these fictional companies have in common? They have problems that could potentially be addressed by a single new technology: the low-temperature heat pump.
What Is a Low-Temperature Heat Pump?
We have defined the low-temperature heat pump (LTHP) as an air-source unit, capable of providing both heating and cooling, that:
- Operates down to an outdoor temperature below –10°F. It’s rare for a conventional air-source unit to operate below this temperature.
- Meets or exceeds its rated capacity at 0°F. Conventional heat pumps typically put out roughly half of their rated capacity at this temperature.
- Exhibits a coefficient of performance (COP) of at least 2 at 0°F. Conventional heat pumps typically exhibit COPs of 1.7 or less under these conditions.
LTHPs incorporate several recent technological innovations in order to achieve this performance. The most significant one is a sophisticated microprocessor control system that until recently would have been far too expensive to include in a mass-produced residential air-conditioning product. These control systems, working in concert with other features, enable LTHPs to solve some persistent problems for northern electric utilities by:
- Improving on the efficiency of electric-resistance and conventional heat pump space heaters,
- Reducing the peak loads imposed on transmission and distribution systems when large stocks of conventional heat pumps simultaneously call for backup electric-resistance heating,
- Competing more-effectively with natural gas and other fossil fuel–burning furnaces for space-heating load, and
- Providing a less costly and less complex alternative to GSHPs.
Low-temperature heat pump technology clearly has much to offer to the electric utility industry.
The Playing Field
David Shaw, who used to work for Carrier Corp., started conceptualizing the first LTHP in 1995. He set up his own research laboratory—Shaw Engineering—to create an air-source heat pump for cold climates that would eliminate the need for electric-resistance backup heating in very cold weather. After a few years, he received strong interest from Northeast Utilities, which was working with Nyle Special Products (a small specialist heat pump company based in Bangor, Maine) to develop a heat pump water heater. Shaw then licensed the technology to Nyle, allowing it to develop a product based on his work. Nyle built four prototypes that were tested over the winter of 2002–2003.
Nyle dubbed its product the Cold Climate Heat Pump, and we estimate that somewhere between 150 and 200 units have been delivered to customers to date—with around 20 of the installations located in Canada and the rest in the U.S. The performance of these units was decidedly mixed, with some operating demonstrably well and others experiencing problems due to inadequate installation, poor quality control, and flawed control strategies. In early 2005, Shaw decided not to renew Nyle’s license to the technology, and he began negotiating with other manufacturing partners. Nyle, however, retains the trademark to the Cold Climate Heat Pump name and claims that it will develop a similar product that can be manufactured without violating any of Shaw’s patents.
In July 2005, Duane Hallowell, a former Nyle employee who led that company’s efforts to commercialize the Cold Climate Heat Pump, acquired the rights to the patent for David Shaw’s LTHP technology. Hallowell says that his company, Hallowell International, will spend the rest of 2005 perfecting the product and begin releasing 2,000 beta units for a pilot study in the third quarter of 2006.
Meanwhile, in Monticello, Minnesota, another company has been developing a competing product. Electro Industries manufactures and sells a variety of (mainly electric) heating products and control and communication technologies. Dubbed the NorAire, the LTHP Electro Industries is developing will provide domestic hot water and radiant floor heating, or alternatively, forced air for space heating and cooling. The company has hired Purdue University to build a prototype system, and it hopes to be able to test two systems through the winter of 2005–2006. If all goes well, preproduction units will be made more widely available in 2007 and 2008.
Japanese manufacturer Hitachi also produces a product that comes close to meeting the specifications for an LTHP, which it sells in Asia under the Igloo brand. The company is still in the planning stages with respect to its U.S. market strategy and is presently seeking a U.S. partner.
The Case for Utility Action
All four of the LTHP developers just mentioned face serious challenges and must overcome significant market barriers. The North American HVAC market is a mature one, and it’s difficult for new market entrants to gain access to distribution channels, at both the wholesale and the retail level. In addition, these companies will be hard-pressed to ramp up for producing LTHPs in volume. They must also establish the protocols necessary to maintain extremely high quality control, both on the factory floor and in the field.
If utilities are going to have LTHPs available to solve the problems described at the beginning of this white paper, they cannot simply sit back and wait for the manufacturers to grapple with these market barriers and production challenges on their own. The electric utility industry could opt to provide support in the form of marketing, product testing, encouraging major manufacturers to take on the product, or organizing trade allies to ensure that proper quality-control procedures are followed. Why should they take such steps? Because no other industry group has either the clout or the self-interest in this technology that electric utilities do.
We can imagine two mechanisms electric utilities could use to spur the development of a healthy LTHP industry. One would be to form a trade association, much like the association created to promote the GSHP industry. Another might be to craft a “golden-carrot” program, similar to the initiative the utility industry launched in the 1990s to encourage the development of high-efficiency refrigerators.
Should such efforts create a sustainable market for low-temperature heat pumps, the only clear loser would be the domestic natural gas distribution industry. Although it might be tempting for players in that industry to try to block the spread of the LTHP, that doesn’t strike us as a winning strategy for the long term. Instead, we recommend that gas utilities attempt to beat the electric industry at the same game by developing even better gas-based technologies. Likely candidates for improvement include dual-source heat pumps, gas-fired heat pumps, and micro-CHP (residential-sized combined heat and power systems). May the best fuel and technology combination win.
