Natural gas prices and consumption are expected to keep rising during winter, according to the latest Short-Term Energy Outlook published by the US Energy Information Administration. Gas-fired heating systems have been a popular option for homes and businesses: they use a fuel that is delivered as a utility service, and their operating costs are low under normal conditions. However, natural gas prices have increased dramatically in 2022, and heating systems that use gas are losing their cost advantage. The combination of solar power and high-efficiency heat pumps is now a viable option for building owners.
According to US EIA forecasts, the Henry Hub spot price will exceed $9 per million BTU by January 2023. They are also estimating record-breaking gas consumption figures for 2022: 86.6 billion cubic feet per day on average, which represents an increase of 3.6 Bcf/d compared with last year. Consider that the electric power sector is the top consumer of natural gas, which means that higher kilowatt-hour prices can also be expected. According to the latest inflation report published on September 13, electricity prices were up by 15.8% in the 12-month period ending in August 2022, while utility natural gas prices were up by 33.0%.
With a solar power system and high-efficiency heat pumps, your building can reduce its consumption of expensive electricity and gas from utility companies. As the price of these services keep rising, the savings achieved by solar panels and heat pumps also increase.
Under favorable site conditions, each kilowatt of solar panel capacity can deliver over 1,400 kWh of electricity per year. You can visit the Global Solar Atlas from the World Bank Group to check the productivity of solar panels in a given location. Just zoom into the exact spot and click, and the Atlas will display a figure called the Specific Photovoltaic Power Output. For example, if your site has a PV output of 1,500 kWh/kWp and you install a 100-kW solar array, you can expect to generate around 150,000 kWh per year.
A properly-sized solar array can generate enough electricity to offset your grid consumption. However, you can also upgrade from a traditional gas-fired heating system to high-efficiency heat pumps and size the PV array larger to also cover their consumption. With this configuration, a building can cover its electricity and heating needs partially or fully, using an onsite energy source that operates with zero emissions.
There are many types of heat pumps available, for both space heating and hot water applications. Compared with traditional resistance heaters, air-source heat pumps typically use around 2-4 times less electricity, while ground-source heat pumps up to 6 times less. Thanks to their high performance, heat pumps can multiply the value of solar electricity. One kilowatt of solar generation can be converted into 2-6 kW of heating output by a heat pump, while a resistance heater can only deliver one kW of heat per kW of electricity.
As you can see in the latest inflation figures, gas prices were up by 33% while electricity prices were up by 15.8% percent in a one-year period. For buildings relying on gas heating, the increase in operating costs has been twice as high, compared with buildings that use electric heating.
Even greater savings are possible when using heat pumps and solar power, since the system is not affected by rising electricity tariffs. Solar panels require an upfront investment and then only a minor maintenance cost. You need to replace the inverters after around 10 years, and also batteries in case your system uses them. However, you have an accurate estimate of ownership costs from the start, while electric tariffs are volatile and unpredictable.
When purchasing any green technologies for a building, we must be aware that not all products in the market offer high quality. If you install deficient solar panels or heat pumps, you can expect issues like low efficiency and a short service life. Low-quality equipment also comes with a greater risk of electrical faults, putting your property at risk.
You can now find high-quality solar panels with a warranty coverage of up to 25-30 years, and a 30% federal tax credit is available for the next 10 years thanks to the Inflation Reduction Act. In the case of heat pumps, the best recommendation is looking for ENERGY STAR units; their performance has been tested successfully by laboratories who are independent from manufacturers, according to federal standards.