Our Cleveland Duplex Case Study: The All-Electric Side Saves Money Compared To The Gas Side

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This is a story of electricity beating gas. In 2021, we decided to fix up a duplex in Cleveland, Ohio, that has been in our family for 75 years. After some serious aesthetic and sustainable improvements, we unintentionally ran a multi-year case study in which we experimented with two identical housing units–one powered by gas and the other electric.

We replaced an old water heater and furnace with all-electric heat pumps on the south side, while the north side still has gas systems which we plan to replace in a year or two. After collecting a full year of data, we are excited to report that the all-electric side had cheaper upfront costs, the same utility bills as the gas side (slightly lower when we filter out a couple of extra appliances), and uses way less energy. A win-win-win. And it’s proof that even in a cold Midwest state, an all-electric, decarbonized home does not cost more to own or operate.

What Electrification Means for Heating Systems and Utility Bills

It’s now abundantly clear that one of the critical pathways to global decarbonization is the elimination of fossil-methane, indoor/outdoor-polluting, natural gas. The Intergovernmental Panel on Climate Change states as much, over 100 cities have banned gas in new construction, and leading regions are planning to phase out the sale of gas appliances.

But what does this mean for utility bills? In our family’s all-electric, heat-pump-powered, EV-owning home in Portland, Oregon, we pay an astonishingly low $850/year, but one might argue that’s due to the temperate climate. What about the chilly Midwest and Northeast United States? What about the fact that per BTU (measurement of heat), it typically costs less to create heat with natural gas than electricity?

Well, friends, this is how heat pumps, with their extraordinary efficiencies, have totally changed the game. With 300% heat conversion efficiencies (and up), compared to an 85% efficient natural gas furnace, they bring heating costs to parity or below natural gas in many parts of the country. Even Maine, the sixth coldest state, has found that a cold-climate heat pump costs $1000 less to run per year than a natural gas furnace.

Chart courtesy of Efficiency Maine. Key inputs: Electricity $0.1595/kWh Aug-22 (from EIA), Natural Gas $2.561/ccf Aug-22 (from EIA), Propane $2.663/gal and Oil $5.461/gal Oct-22 (from EIA). Based on a hypothetical home in Caribou, Maine, with 8,150 heating degree days (base temperature of 60°F) and 92 MMBtu annual heat load.

Our Cleveland Heat Pump Story

When we bought the 100-year-old craftsman duplex in Cleveland after a relative passed away, it needed a lot of work. In addition to some extensive renovations, we invested in a couple of measures to weatherize the house. We added new windows and insulated and air-sealed the walls and attic (against the advice of our contractor who warned us the expense would never pay back). We knew that a well insulated home is a key component to electrifying in cold climates because it allows heat pumps to operate more efficiently.

The north side of the duplex after the remodel.

Towards the end of the renovations, we decided to replace the almost-30-year-old furnace and water heater on the south side, which were at the end of their lives. We knew that proactively replacing old gas furnaces and water heaters before they fail is another important electrification strategy. Having time to research and plan for the best, most-efficient heat pump for your space, rather than making a rushed decision when an old machine fails is crucial to ensuring you don’t throw in another fossil fueled appliance that locks your abode into another 15 years of fossil fueled combustion (and pollution).

We started by replacing the gas water heater with a heat pump water heater. In addition to costing us only $100 per year to deliver ample hot water for our Airbnb guests (compared to an estimated $300 for a natural gas water heater), it provides us with free dehumidification, a major plus in damp, Midwestern basements.

A few months later, we tackled the furnace. We got multiple quotes for a new heating system, including a gas furnace for comparison purposes and to justify the heat pump investment to Joe’s siblings (our co-owners). Here are the four quotes with prices that include the product and labor:

To our surprise, and contrary to conventional wisdom, the gas furnace with new AC was the most expensive bid. While this is not an exhaustive list of pricing options, it provides a snapshot of the Cleveland area in late 2021 and proves that heat pumps can be cost competitive with gas furnaces plus AC. Bob Vila points out that our experience isn’t unique, saying that “installing a heat pump is often cheaper.” We also bought our heat pump system before the Inflation Reduction Act was passed, meaning that if we had purchased today, we would have gotten $2,000 off each of the quoted heat pump systems, further reducing our upfront costs!

We ended up with the cheapest option, the Daikin Fit heat pump. In conversations with Daikin, we’ve learned they intentionally made the Fit a lower-cost, less-efficient heat pump to compete directly with the upfront cost of cheap gas furnaces.

We were admittedly a little nervous about operating costs. The heat pump had a 16 SEER (measurement of how efficiently it cools) and 10 HSPF (measurement of how efficiently it heats), neither of which are exceptionally efficient. The installer also included backup electric resistance heating to help on the coldest days, so a big question was how often the system would switch into that inefficient mode during Cleveland’s cold winters and what that would do to our utility bills?

Our Daikin Fit whole house heat pump was installed on the south side unit in the fall of 2021 by Conserv Air (who we highly recommend and who patiently answered our myriad questions). The team ripped out the ancient gas furnace, capped the gas line, and installed a new outdoor condenser and a new indoor air handler, which pumps the efficiently warmed air through the existing ducts. The system is considered a ducted/ductless system because it uses a condenser that typically works with ductless units, with existing ducts, proving to be a great retrofit option.

Old gas furnace and water heater in the south side of the Cleveland house were replaced with a ducted heat pump and heat pump water heater in 2021.
Outdoor condenser unit on south side unit of Cleveland duplex.

We didn’t have the funds to switch the systems on the north side unit (though plan to start doing so this year), so we’ve been unintentionally running a pretty solid apples to apples, gas vs. electric, experiment for the last year and a half. Both sides of the duplex have the same layout and are used in the same way (Airbnb guests for much of the year, with family using the house when visiting Ohio) and both have been kept at a comfortable 72 degrees year round.

The Cost Savings

What has this gas–to–heat pump conversion meant for our operating costs? The table below provides utility bills on both sides for the past year. Incredibly, in total, both sides had almost identical bills, with the all-electric south side totalling $1,803 and the gas + electric north side costing $1,792.

However, digging into a small but significant nuance highlights the true savings: from April to June of 2022, we constantly ran a dehumidifier in the all-electric side basement because it was an exceptionally wet spring. Dehumidifiers use a lot of energy! We unplugged the dehumidifier when we visited in July when we realized how effectively our new heat pump water heater was dehumidifying for free. We also have a string of 4-watt LED-bulb outdoor lights plugged into a south side outlet year round, which we removed from the calcs. After addressing the added consumption from the dehumidifier and outdoor lights, the all-electric side cost us 9% less!

Utility bills comparison. Price of electricity is 14.8 cents/kWh. Price of gas $1.42/therm. Geek out on full data tables here.

These numbers tell us a few interesting things:

  1. The north (gas) side electric costs grow significantly in the summer due to the old, inefficient air conditioner. If we had a more modern gas furnace and AC, the utility costs would definitely be lower. Thus, this isn’t a true apples to apples comparison. But it does show that the lowest upfront cost and most environmentally friendly heat pump option didn’t increase our utility bills.
  2. Gas bills are still pretty expensive in the summer when hardly any gas is used. This is due to the eye-popping $40/month gas service charge from Dominion Energy. By simply not being connected to the gas pipes, and avoiding that service fee, the all-electric side saves $500/year.
  3. Our monthly data suggest that the transition to all-electric systems may shift many climates from summer peaking zones, where electricity usage is highest in summer, to winter peaking zones, where electricity is highest in winter. The all-electric south side of the duplex had higher electric bills in the winter when the heat pumps were working hard, while the gas north side had higher electric bills in the summer when the AC was being used.
  4. Because these numbers are from the cheapest heat pump system we were quoted, a more expensive, higher upfront system would likely have lower utility bills.

Onsite Energy Use Savings

While the utility bills between the two units were close to equivalent, the energy savings story is where it gets really exciting. Onsite energy usage on the all-electric side was less than half (45%) compared to the other side. Because electricity is measured in kilowatt-hours (kWh) and gas is measured in therms, we converted them both to British Thermal Units (Btus) for comparison. As you can see in the table below, the all-electric side used 41.5 million Btus, compared to the gas side using 92.5 million Btus!

This is big news! Electrifying everything means we don’t have to replace all the energy we currently use with clean energy — only about half of it. This is exactly what electrification leader Saul Griffths says, and it’s exciting that our Cleveland duplex proves the point. With efficient heat pumps and heat pump water heaters, we only need half the total energy!

On site energy usage comparison in Btus. Geek out on full data tables here.

Final Thoughts

When it comes to installation costs, utility bills, and energy usage, our all-electric, heat-pump-powered side of a Cleveland duplex beat the fossil-gas-powered side in a cold climate. It brings us great joy and gratification to think that the modest home where Joe’s mom grew up proves an important larger lesson that electrifying, decarbonizing, and doing right for the planet won’t raise bills, and may even save money. The Inflation Reduction Act will only make the savings better. That’s worth celebrating and getting heat pumped about!

This article is part of a series called Decarbonize Your Life. With modest steps and a middle-class income, our family has dramatically reduced emissions and is sequestering what remains through a small reforestation project. Our life is better for it. If we can do it, you can too.


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Naomi Cole & Joe Wachunas

Joe Wachunas and Naomi Cole are passionate about decarbonizing their lives. They both work professionally to address climate change — Naomi in urban sustainability and energy efficiency and Joe in the electrification of buildings and transportation. This passion, and their commitment to walk the walk, has led them to ductless heat pumps, heat pump water heaters, induction cooking, solar in multiple forms, hang-drying laundry (including cloth diapers), no cars to electric cars and charging without a garage or driveway, a reforestation grant from the US Department of Agriculture, and more. They live in Portland, Oregon, with their two young kids and write about their decarbonizing adventures at decarbonizeyourlife.com.

Naomi Cole & Joe Wachunas has 23 posts and counting. See all posts by Naomi Cole & Joe Wachunas