Reducing Costs & Increasing Equity
Moving to Clean Electricity
The Massachusetts Clean Energy Climate Plan specifies that by 2050 over 80% of buildings must be heated and cooled by efficient electric heat pumps.
2050 CECP Key Benchmarks
To meet this benchmark, we will have to:
Rightsize the natural gas system to manage a much lower demand
Retrofit over 1.6 million buildings
Upgrade our electric transmission and distribution systems to be able to deliver the needed electricity
How can we do this in a smart way that reduces costs and increases equity?
Rightsize the Gas System
Gas utilities cannot reduce the gas sold by over 80% and maintain financial viability with over 21,000 miles of gas pipes in the state. They will have to rightsize the system proactively to account for lower future demand and a smaller customer base.
However, it is hard to imagine a gas utility telling residents and businesses on a street that the gas will be turned off in three years, without in some way helping to transition these customers. Neither the utility, nor the state, would be in favor of this.
Retrofit Over 1.6 Million Buildings
Thus, some combination of the government and utility will have to pay for the needed retrofits in the buildings. This would include replacing all gas appliances with electric appliances, upgrading electric panels to provide enough power, probably weatherizing buildings, and other work as necessary such as adding ducts to deliver forced air.
A recent analysis of homes in Boston found that, after current government and utility incentives, there would still be a funding gap of $21,000 to $77,000 per home, not counting any possible reduction in federal incentives under the new administration.
Very few households would be able to afford the retrofits, nor the generally higher bills that come from heating with electric air source heat pumps compared to gas.
Upgrade Our Electric Transmission & Distribution Systems
Transmission
ISO-NE is the organization responsible for supplying New England with its electricity needs in a reliable way. It recently released a report predicting that it would cost up to $25 billion to upgrade the transmission system to meet New England’s movement toward electricity, depending on the efficiency of the technology used.
Peak electric demand is the critical component. The highest 15 minutes of demand all year is what defines the infrastructure needed to deliver those electrons reliably.
If New England transitions inefficiently, it could more than double its current electric peak to 57 GW. If this happens, then the $25 billion of cost for the upgrade to the transmission system would be paid for by customers over time through their energy bills.
Distribution
The distribution system (the local wires, substations, etc. owned by local electric utilities) would also need to be upgraded extensively to deliver all that electricity to homes and businesses. In Massachusetts, the electric utilities recently calculated the cost of this upgrade.
The utilities predict the state will move from a summer peak (on the hottest day of the summer, when we all turn on our air conditioning) to a winter peak (as more of our buildings get their heat from electricity). By 2050, this winter electric peak will be more than twice as high as our current summer peak.
The electric utilities calculated that upgrading the electric distribution system statewide over the next five years will cost a billion dollars a year for the next decade at least. This would also be paid for through customer bills over time.
Reducing Costs and Increasing Equity
Is there a smarter way to tactically rightsize the gas system and move to electricity?
During the Massachusetts Future of Gas regulatory docket, E3, a nationally recognized energy consultant, was given access to statewide utility data to model different pathways forward, including the adoption of networked geothermal—the ultra-efficient approach being piloted by Eversource and National Grid. These models were overseen by regulators, utilities and many stakeholders. E3’s analysis included the impacts on the electric peak for each of the scenarios modeled.
HEETlabs graphed the peak electric demand for the five scenarios that met most or all of the state’s net zero emissions mandates.
Five Modeled Pathways to Electrification
Of these scenarios, networked geothermal resulted in by far the lowest electric peak demand for New England, cutting almost in half the assumed electric peak growth in transmission predicted by ISO-NE.
Networked Geothermal
Networked geothermal (also known as thermal energy networks, or TENs) is a system of interconnected water pipes that deliver ambient-temperature water across a neighborhood, allowing heat pumps in each building to pull off the heating or cooling they need.
Because these systems are ultra-efficient, energy bills are projected to be as low or lower than gas. The temperature of the water is maintained through boreholes and other thermal sources and sinks. There are currently 17 network geothermal installations by U.S. utilities in process.
E3 modeled what would happen if, by 2050, 22% homes and 49% businesses across New England were on networked geothermal, with most other buildings on other types of heat pumps. The resulting lower electric peak demand would save an estimated $13 billion in transmission upgrades, based on the predicted costs in the ISO-NE report.
Massachusetts Savings
Given that Massachusetts has a quarter of New England’s population, if the state installed enough networked geothermal, it could save $3.25 billion (one quarter of the estimated $13B) in transmission upgrade costs. The lower local electric peak would mean that the cost of distribution system upgrades would also decrease, likely saving additional billions.
One way to speed the transition up and make it more equitable is to have electric utilities calculate these savings and use a portion of the avoided costs to help pay for building retrofits so local buildings could connect to the thermal network. This calculation can be done under the oversight of regulators.
Consumer demand for networked geothermal is projected to be substantial. With the Eversource installation in Framingham, when the retrofits were free to the customers, more than 99% of the contacted customers signed up.
Smart & Equitable Way Forward
Two different methods to allocate ratepayer funds
Given these projected savings, gas utilities should transition to geothermal networks wherever possible (and especially where there are local electric constraints). Installed by gas utilities, the costs of the thermal infrastructure would be paid off by the customers over time, while their overall energy bills are projected to be as low or lower than with gas.
With building retrofits being paid for by a combination of rebates and the allocation of avoided costs, one day a gas utility representative could walk down your street to tell you that in three years, your system will move from gas to modern thermal, that the retrofit will be free, you’ll get cooling as well as heat, the indoor air quality will be better and the energy bill the same or lower.
Then we could move toward meeting our emissions mandates equitably, at the necessary speed and scale.
Peak Demand for the five modeled scenarios from Customer Resources and Stakeholder Engagement Process, Final Independent Consultant Reports (3/18/2022), Appendix 4: input Assumptions
See the data from E3’s MA Future of Gas Independent Analysis
