The Exchanges

Q So let's talk about, we talked about HVAC, let's talk about water heating, obviously that's the other reasonably large category, and I think the one that gets less attention, honestly, people talk a lot about, uh, heat pumps for heating and cooling, I think less for water heating. Where are we on our pace of progress on, on water heating electrification?

A So for water heating, we have a little more time. So water heaters have, again, we use this 10 year life versus 15 for, um, for HVAC, and what that does is it lengthens the shallow part of the curve before we really have to accelerate progress. So our, according to our calculations nationally, again, to that twenty-twenty-five, uh, deadline, we need 810,000 heat pump water heaters, uh, in total installed across the country. We're on pace for 613,000, which leaves about 204,000 or so as a gap, um, in terms of what we need to accelerate. 200,000 over 50 states is not a huge challenge, right? We have, again, this is like the nice, uh, the convenient part of the ramp, uh, that we're in now, but we do have to start taking action. Um, there's been a lot of interesting innovation. I think just a couple days ago, I saw that A.O. Smith introduced its own hundred twenty-volt plug-in water heater, uh, heat pump water heater. Reem has had one on the market for a while. Now A.O. Smith has one as well. So that's a huge opportunity, right? This is a technology that is going to get us A lot of these sales that we need to see in the market because, uh, if, let's say again, you have a gas water heater, uh, but you happen to have a free, uh, 120 volt outlet nearby, you can plug in a heat pump water heater instead of having to have a dedicated 240 volt circuit run. Uh, that's gonna work great for …

AI assessment note: “We're on pace for 613,000, which leaves about 204,000 or so as a gap”

Q slowest? Like there's some things that you can do any time and there's other things that you're only going to do once every 10 years or whatever it is, and that second category are ones that even if it's like the total magnitude of the impact isn't necessarily as large, it's an important one because the purchase behavior is infrequent. How do you think about that with all the categories?

A So we look at, there are, I think, typical statistical lifetimes for equipment. So an HVAC system has a life of about 15 years, statistically. A water heater, about 10 years. Um, clothes dryers may be Seven or eight years, um, and, and cooking might be a little bit longer, but HVAC's really the big one, uh, there again, because, you know, you don't, uh, it's a big expense, right? You don't want to replace your heating system every five years. Uh, hopefully you're not in a position where you have to do that, so, uh, we want, you know, part of our mission at Rewiring America is making people aware of, uh, the appliances in their home and the equipment in their home so that they're ready to make these changes, uh, when that piece of equipment fails, and then you don't lock in emissions from, uh, Um, uh, fossil fuel appliance for another 15 years or so if you're doing, uh, you know, if you're putting in a new, um, fossil fuel HVAC system. Also the electrical equipment, uh, is an important piece to the equation as well. So, uh, if you think about your load center in your house or your electrical panel, that's probably original to your home in most cases. Uh, it doesn't get upgraded very often, but a lot of what we talk about when we talk about electrification is turning fossil fuel devices into Uh, electric alternatives, which in many cases requires, uh, new circuits to be run. So i…

AI assessment note: “we look at, there are, I think, typical statistical lifetimes for equipment.”

Q and You know, it just made the customer acquisition costs higher, all these additional challenges. I wonder how you see that playing out in home electrification here. Is this all happening? As you said, the replacement cycles are all different. Um, but, you know, there, there may be some set of consumers who want to electrify their home and don't want to wait around for each thing to come up.

A Yeah, I think we'll see a variety of solutions. I'm, I'm not going to hazard a guess as to which ones become predominant necessarily. Um, I think for people who have the money to make a huge investment in, you know, big sort of comprehensive investment in, in upgrading their home, then sure, there will be, uh, service providers who, who offer that. Uh, for others, I think, um, it's as important as anything else just to have a plan, right? Just to understand how your house works, what fuels you're even using today, um, and then how long, You might have until you have to replace your heating system. So for example, um, let's say you have a gas water heater and it's five years old, right? Um, you happen to have, uh, your electrician over the house to do some work in a bathroom or something. That electrician should be, you know, there's a good argument to say that that electrician should be prepared to help that homeowner make a plan for electrifying their home sometime down the road. Um, we're developing tools, other organizations are developing tools to help people do this planning, but the idea is that if you have a professional in your home, they can help you navigate, you know, ok, your water heater's five years old, when you're ready to go to a heat pump, even if you're not ready today, we should be doing that electrical work now, uh, or preparing ourselves for it, so that yo…

AI assessment note: “for people who have the money to make a huge investment... service providers who offer that”

Q is home electrification in the context of overall emissions in the United States? Both, I guess there's two parts to that question, like, how much of overall emissions is associated with residential electricity? Energy consumption. And then how big a benefit do you get electrifying, particularly given that the grid is not yet fully decarbonized? So this is going to be a regional answer, I'm sure, but just high level.

A Yeah. So overall, I mean, you can't get to zero emissions without electrifying the appliances and equipment in our homes. Um, there's one hundred twenty one million households around the country. That's a lot of equipment. So the number we use for that is about 42%. Of overall energy-related emissions coming from these so-called kitchen table decisions about what equipment you use in your home, what kind of car you drive, whether you use solar on your roof or community solar to get your energy. So it's a big chunk of the national emissions, um, the national emissions picture. And, uh, it's, it's also, you know, in some places, it's, in a lot of places, actually, it's carbon positive today to make these changes, and some where the grid is, uh, perhaps a little, You know, there's perhaps a lot of coal, uh, or, you know, dirty emission sources on the grid side. It's maybe not emissions positive for everyone today, but, you know, if you put solar on your roof and electrify, that, that changes the equation, uh, dramatically, and we're seeing so much, uh, introduction of new renewables on the grid, uh, nationally that, that situation will change, uh, pretty soon everywhere, right? So this is, you know, electrification is an investment in the future. Uh, it's, it's, uh, It returns, uh, returns some dividends on your, um, your investment in terms of carbon emissions, so every, you know…

AI assessment note: “the number we use for that is about 42%. Of overall energy-related emissions”

Q recently, um, where part of the conversation was like, what's going on with heat pump sales? Just because overall heat pump sales are not exactly booming as you might imagine they would be right now, given all the excitement about heat pumps. So what's the overall picture on heating and cooling electrification? How has that been trending? And like, where are we in the progression of, uh, overall electrification there?

A So, yeah, we think about, we wrote a report earlier this year called the pace of progress, where we charted Uh, what we think needs to happen across each of the, the big end uses to get to, uh, zero emissions, sort of building stock, uh, residential building stock in the country. And we looked to a twenty-fifty target, and we said, where are the sales trends going today, and how much do we need to accelerate those in order to get, uh, get to a hundred percent electric by twenty-fifty, given some of these equipment lifetimes, the long lifetimes that we talk about, and the turnover of stock, and, and where things have been going. Um, for heat pumps, we, uh, you, you may be, uh, aware that heat pumps outsold furnaces for the gas and oil furnaces as, uh, heating equipment for the first time last year. Um, those trends have continued. So I think the, um, the, the changes in sales that are being perceived right now are really broader market changes in people's ability to invest in home upgrades of, of this nature, um, Um, if you look broadly across all heating technologies, all markets are down, and heat pumps continue to beat furnaces, um, in terms of their overall sales. So, going back to the pace of progress, we, the, the way this curve works is it starts off gradually and then ramps up quickly, um, over, uh, future years, which means that we have, you know, a few years left to ge…

AI assessment note: “heat pumps outsold furnaces for the gas and oil furnaces as heating equipment for the first time”

Q or whatever it is, is pretty short. That's now to 20, 25. That's probably, that period is probably during the interest rates remain high cycle. I mean, maybe they come down toward the end of that. Who knows? But, um, You know, from where you sit today, like, how hard is it going to be to approach those numbers, given that, again, we have a growing share of shrinking market?

A I mean, I think it's a, it's a, it's undoubtedly a huge challenge. I mean, we have, we have tens of millions of heating systems, not to mention water heaters and everything else that has to be installed, right? This is a big, uh, mobilization that I think should be considered on par with other big, uh, sort of national mobilizations of effort to, to make the changes we need to make, right? Our Uh, the climate emergency is a climate emergency. It needs to be addressed as such, and, and, you know, thankfully, the administration put the Inflation Reduction Act in place to get the conversation started and put a lot of money into the market, but, um, one thing that always comes to mind for me is that, you know, we have, uh, roughly nine, nine and a half billion dollars in rebates in the Inflation Reduction Act that can be applied for efficiency or electrification. That's a lot of money, but at the same time, in one year, Uh, I think it was twenty-twenty-two. One oil company, Exxon, made fifty-four billion in profit. Uh, that's, you know, six times what's available for rebates. So that's one oil company in one year after doing everything they need to do to secure their, their market share for fossil fuels still reaped fifty-four billion in profit. So that's, you know, the disparity in, in economic power we're talking about here is, is still big. Uh, we need more attention on this. We…

AI assessment note: “I mean, I think it's a, it's a, it's undoubtedly a huge challenge.”

Q or the Northeast where you need a lot of heating. And so I'm interested if, if the trends are different regionally. And then I guess the other way to look at it would be, you know, heat pumps are a broad category. There's mini splits and central ducted units And all sorts of different kinds of things. Do we see any noticeable difference in adoption thus far along those lines?

A So unfortunately we're limited by, uh, the data in this respect. So there, there was a time where there were reason, uh, regional sales figures published for, uh, the heat pump market, um, within maybe across five or six different regions of the country. Unfortunately, those data aren't published anymore. So we're a bit, uh, we're a bit blind to that. We, what we do have, um, Uh, and what we will soon have more of is state-level data that will give us a bit more insight into how the market is moving, um, state by state. Now, for example, one success story of late is the state of Maine, which had a 100,000, uh, heat pump sales target for its statewide, um, climate goals, and exceeded that a couple years ahead of schedule, and then revised that goal up to, I believe, a 175,000 systems. Um, so we know, for example, that There's a lot of success happening in the state of Maine, um, so we can have some of that insight into exactly what's happening state by state or region by region, but unfortunately right now, um, we're, we're sort of limited to the national view plus some of these stories that are coming out, um, you know, in limited quantities from, from certain states.

AI assessment note: “unfortunately we're limited by, uh, the data in this respect.”

Q That's actually another question, like, I don't know if you have data on this handy, but how have prices been trending?

A Um, that's a difficult one as well. This is another area where we're hoping for more and better data through these rebate programs, uh, over time and through state, uh, state programs more broadly. Um, prices are still pretty high in some places. I think it largely depends on how much competition there is in the market, uh, among contractors that do the installation work, uh, how much they're willing to recommend these products. So if, um, I, you know, I expect, uh, that in, The southeast, for example, for heat pumps, where they've been predominant for, for a long time, there's, there's not so much of a margin, uh, compared to, uh, other places where, uh, the market's sort of still getting its feet under it, and, um, you know, maybe there's, there's still a premium being placed on, on some of these installs.

AI assessment note: “prices are still pretty high in some places. I think it largely depends on how much competition”