Cash is king.
In uncertain economic times, can a ground source heat pump (GSHP) serve to shelter us from the forces that cause our energy prices to fluctuate (and generally increase with time)? Those of us in the GSHP industry already know of the many benefits that these systems retain over conventional heating and cooling systems, especially in the areas of environmental impact, energy conservation, home comfort, aesthetics, maintenance and most importantly, economics.
One major advantage of GSHP systems that is overlooked by most is their power to act as a safeguard against inflationary energy prices. It is relatively easy to show that as energy prices go up, GSHP systems become more and more economically attractive while retaining all of their aforementioned benefits.
To perform such calculations, we first need to know the amount of energy contained in a given amount of electricity, natural gas, propane and heating oil as shown in the following table:
| Fuel Type | Energy Equivalent |
|---|---|
| Electricity | 3,412 Btu/kWh |
| Natural Gas | 100,000 Btu/therm |
| Propane | 92,000 Btu/gal |
| Fuel Oil (#2) | 140,000 Btu/gal |
The simplest way to compare the cost of heating with a given fuel source is to calculate the cost to deliver a fixed amount of energy. In this case, we will calculate the cost to deliver 1,000,000 Btu’s of heating energy (1 Mbtu) to a space. The equations used to perform the calculations (which are provided in the new GSHP Design & Installation manual from IGSHPA) are as follows:
Natural Gas Heating Cost:
Propane Heating Cost:
Fuel Oil Heating Cost:
Electric Resistance Heating Cost:
Air-Source Heat Pump (ASHP) Heating Cost:
GSHP Heating Cost:
The cost of energy and assumed efficiency for each type of heating method was assumed to be as shown in the following table:
| Fuel/System Type | Energy Cost | System Efficiency |
|---|---|---|
| Electricity (Resistance Heat) | $0.10/kWh | eff = 100% |
| Electricity (ASHP) | $0.10/kWh | HSPF = 6.8 |
| Electricity (GSHP) | $0.10/kWh | COPa = 3.5 |
| Natural Gas | $1.50/therm | AFUE = 95% |
| Propane | $2.00/gal | AFUE = 95% |
| Fuel Oil (#2) | $3.00/gal | AFUE = 95% |
The results of the calculations for the assumed system efficiencies and fuel costs are provided below. As shown in the table, the cost to deliver 1,000,000 Btu’s (1 MBtu) to a given space was calculated for each type of heating system as previously discussed.
To take everything one step further (using the cost to heat with a GSHP system as the baseline for the calculations), the cost relative to heating with a GSHP system as well as the savings using GSHP system were calculated. For example, the table shows that heating with a 95% high-efficiency natural gas-fired furnace while paying $1.50/therm is almost twice as expensive as heating with a GSHP system with an average annual COP=3.5 while paying $0.10/kWh for electricity. Furthermore, a GSHP system would save about 47% per year in heating costs (or $7.42 per MBtu’s of heating energy delivered) over the natural gas-fired furnace heating system for the assumptions given.
Direct Heating Cost Comparisons
| System Type | Energy Cost | Delivered Cost ($/MBtu) | Cost Relative to GSHP | Savings Using GSHP (%) | Savings Using GSHP ($/MBtu) |
|---|---|---|---|---|---|
| Natural Gas (AFUE=95%) | $1.50/therm | $15.79 | 1.9 | 47% | $7.42 |
| Propane (AFUE=95%) | $2.00/gal | $22.88 | 2.7 | 63% | $14.51 |
| Fuel Oil (AFUE=95%) | $3.00/gal | $22.56 | 2.7 | 63% | $14.19 |
| Electric Resistance (Eff. =100%) |
$0.10/kWh | $29.30 | 3.5 | 71% | $20.93 |
| ASHP (HSPF = 6.8) |
$0.10/kWh | $14.71 | 1.8 | 42% | $6.34 |
| GSHP (COPa=3.5) |
$0.10/kWh | $8.37 | -- | -- | -- |
Next, the same calculations were performed after an assumed 50% increase in ALL energy prices:
Direct Heating Cost Comparisons (After 50% Increase in Energy Prices)
| System Type | Energy Cost | Delivered Cost ($/MBTU) | Cost Relative to Ground Source | Savings Using Ground Source | Savings Using Ground Source ($/MBtu) | Annual Operating Cost Increase ($/MBTU) |
|---|---|---|---|---|---|---|
| Natural Gas (AFUE = 95%) |
$2.25 / therm | 23.68 (+50%) |
1.9 (No Change) |
47% (No Change) |
$11.12 (+50%) |
$7.89 (+50) |
| Propane (AFUE = 95%) |
$3.00 / gal | 34.32 (+50%) |
2.7 (No Change) |
63% (No Change) |
$21.76 (+50%) |
$11.44 (+50%) |
| Fuel Oil (AFUE = 95%) |
$4.50 / gal | 33.83 (+50%) |
2.7 (No Change) |
63% (No Change) |
$21.27 (+50%) |
$11.27 (+50%) |
| Electric Resistance (Eff. = 100%) |
$0.15 / kWh | 43.95 (+50%) |
3.5 (No Change) |
71% (No Change) |
$31.39 (+50%) |
$14.65 (+50%) |
| ASHP (HSPF = 6.8) |
$0.15 / kWh | 22.06 (+50%) |
1.8 (No Change) |
43% (No Change) |
$9.50 (+50%) |
$7.35 (+50%) |
| GSHP (COPa = 3.5) |
$0.15 / kWh | 12.56 (+50%) |
-- | -- | -- | $4.19 (+50%) |
Returning to the example of the natural gas-fired furnace, after a 50% increase in energy prices it is still almost twice as expensive to heat with natural gas compared to the GSHP system. Additionally, the GSHP system still saves about 47% in annual heating costs. However, because the numbers are larger, the savings are more significant.
For the case of the natural gas-fired furnace, the GSHP system saves $11.12 per MBtu of heating energy delivered (compared to $7.42 per MBtu in the previous example). As shown in the table, the 50% increase in energy prices leads to a $7.89 per MBtu increase in the cost of heating with natural gas compared to a $4.19 per MBtu increase in heating with the GSHP system.
The results of these calculations drive home two main points. The first point is that heating costs and the savings associated with a GSHP system are relative to energy prices. As the prices of natural gas, propane, and heating oil increase with respect to the price of electricity, GSHPs look more attractive. Historically, electricity prices have tracked inflation (increasing about 3-4% per year over the last 10 years) while natural gas, propane, and heating oil prices have tracked the cost of a barrel of oil (increasing about 7-8% per year over the last 10 years).
The second point is that GSHP systems do act as a safeguard against increasing energy prices by virtue of how a GSHP works. Only about one-third to one-fourth of the energy delivered in heating with a GSHP comes from electricity consumption, the rest is extracted from the Earth. ALL of the energy delivered with a combustion-based heating system comes from the consumption of a fuel source whether it is natural gas, propane, heating oil or electricity. To put it simply, a 50% increase in a small number makes a much smaller impact than a 50% increase in a large number.
Over time, energy prices will rise and fall but one thing will remain constant: GSHPs are (and will continue to be) the most reliable, environmentally-friendly, economical heating and cooling system available in the marketplace today.
