Will homeowners soon pay more for air source heat pumps due to the Federal Government’s new efficiency regulations?

You might find it hard to believe, but before 1992 there were no Federal Government efficiency standards on residential heating and cooling systems. It wasn’t until 1992 during the Regan and Bush administrations that regulations were put in place. Government research into the status of whether we as a country would run the risk of outgrowing our electrical grid created a fear that we were headed to increasing brownouts and outages due to the rise of new construction home building at the time.

The solution, according to the Federal Government, was for the Department of Energy (DOE) to impose a minimum cooling efficiency standard on residential central HVAC systems. All equipment had to be at least 10 SEER (Seasonal Energy Efficiency Rating).

SEER only measures air conditioning and heat pump cooling efficiency, which is calculated by the cooling output for a typical cooling season divided by the total electric energy input during the same time frame. A SEER rating is a maximum efficiency rating, similar to the miles per gallon for your car. Your car might get 35 miles per gallon on the highway, but if you’re stuck in city traffic it could be lower. If your air conditioner is 16 SEER, that’s its maximum efficiency.

It wasn’t only until 4 years later in 1996, that the Federal Government further imposed on homeowners, and manufactures when the DOE made the SEER standard more stringent by requiring a cooling efficiency of at least 13 SEER. This was a big jump in efficiency requirements. This was a 30% increase in equipment efficiency, but also a 30% increase in the cost of the equipment that would ultimately be charged to the homeowner.

In 2015, the government took over more control, and created regions and different efficiency requirements based on climate. This caused a further increase in the cost of production for manufactures as now they had to change their processes to make different efficiency equipment and assume the cost of organizing and coordinating the proper regional delivery of the equipment to meet local standards. The homeowner ultimately paid for the increase in price.

The new regulations in 2023 are even more overreaching than before. Despite the ozone having actually healed itself over time and actually being as healthy as it was back in the 1960s, the DEO will be imposing new rules. For the first time, these more stringent efficiency standards will apply not only to the manufacturers, as was the case before, but also to the installing HVAC contractors. This will not only increase the cost of production by the manufacturers much like with previous regulations, but will also include increased costs born by the HVAC installers.

HVAC installing contractors will have to build in additional systems to their business to make sure they do not run the risk of accidently selling last year’s lower efficiency model that they have in stock when the final regulations mature. The Federal Government also imposed significant monetary penalties to installing contractors even if contractors unintentionally make this mistake.

So where are we headed? One could argue that it appears the Federal Government wants to make it more and more expensive for homeowners to heat and cool their homes. Its repeated SEER efficiency standards have had that cause and effect – making homeowners pay for the Federal Government’s save the earth ideology.

But what about the new Inflation Reduction Act passed into law on August 16, 2022 which was an offspring of the failed Build Back Better Plan? This law offer’s tax credits for homeowners who upgrade to high efficiency heat pumps. The government’s plan is that people will completely rip out their oil and gas furnaces or boilers and replace them entirely only with a heat pump. Does the tax credit, even if it makes financial sense for an individual homeowner make sense in terms of comfort? What if the house was built in the 1950s and the insulation is not good and the widows are drafty? The typical air source heat pump will leave that homeowner feeling cold in the winter.

The boiler or furnace can produce higher supply air temperatures into the house to sufficiently combat the accelerated loss of heat through the exterior walls due to the extreme temperature difference brought on by the low outdoor temperature. An oil furnace can produce 130F supply air and a boiler can send out 180F water to each room. This is constant no matter what the outdoor temperature is at the time. The typical air source heat pump, by contract, can only provide 90-95F supply air on cold days. This is due to the fact that air source heat pumps, with the heat pump located outside, takes heat from the outside air to heat your house with refrigerant and a compressor. When the outdoor temperature falls below 40F, the typical air source heat pump can no longer heat most homes in existence today. On really cold days, it cannot heat the house, and it must stage on its electric resistive heat strip which is extremely expensive. The outdoor unit heat runs and the electric heat runs. This is not efficient!

But the government points to studies showing that replacing fossil fuel heating systems for heat pumps would have a drastic effect on lowering the carbon dioxide emissions. But is that really the case? Where have you read that the increased power plant electricity production for all these new heat pumps also having to run their backup electric heat (which is a major electric hog) will not increase? You haven’t – because it will. And there is no study that can quantifiably and accurately show that by allowing the power companies to burn fossil fuels instead of homeowners – that earth will be better off.

Some experts contributing their opinion on the matter say that it would be wise for homeowners in colder climates to keep their oil or gas furnace and use the new 2023 heat pump credits to replace their existing air conditioning system with a heat pump. Only the indoor evaporator coil and outdoor a/c only unit will be replaced with an outdoor heat pump. This would provide air conditioning as before, but also heating until the outside temperature reached a predefined setting (say 45F). Then, when the outdoor temperature dropped below 45F, the oil or gas furnace would take over as the heating source. This way the homeowner would not have to give up heating comfort, while installing a higher efficiency cooling system, and saving on his/her oil or gas bill.

One thing is for sure – you do not need a crystal ball to see where the future of residential heating and cooling is headed. History of Federal Government intervention makes it very clear. Once the government gets involved there is no turning back. They will repeatedly step in and each time create more and more stringent regulations that ultimately only impact the end user – the homeowner.

There is a huge push for electrification. Look at electricity only cars. California has just come out saying that no gasoline engine will be allowed to be sold within its borders in 10 years. The Federal Government has repeatedly increased efficiency standards for heating and cooling systems and now is on the move to completely do away with fossil fuel heating equipment in homes.

Many agree by saying that these new sliding scale tax credits for air source heat pumps will unlikely change people from having what they want. Only when these regulations become mandatory and compel people to act as seen in the past.

With all this push for electrification and heat pumps – homeowner’s should also consider replacing their existing heating and cooling system with a geothermal – ground source – heat pump. The tax credit has been increased from 26% to 30% and there is no ceiling to the tax credit. The credit can also be carried over year after year until exhausted.

But most importantly, for those worried about giving up their warm boiler or furnace to a heat pump – the geothermal heat pump can keep you warmer longer than the traditional air source heat pump that is prominently seen.

A geothermal system does not rely on the outside temperature to heat your home with the refrigerant and compressor. It uses the constant 50-55F ground temperature to heat your home. This means you have to rely on the backup electric heat almost never. With the savings on your electricity bill, and the fact that you no longer have an oil or gas bill – you can realize all the benefits of a superior heating and cooling system. All while feeling like you did your part to help the earth.