March 2, 2013

How to spend $600 to cut heating bills?

A proposed LePage administration rebate would be best used to reduce the amount of energy needed to heat a home, not to buy a new system, experts say.

By Tux Turkel tturkel@pressherald.com
Staff Writer

The average Maine home will burn more than $3,000 worth of oil this heating season. To help lower that cost next year, Gov. Paul LePage wants to offer Mainers $600.

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Bruce Merryman, project manager for Evergreen Home Performance, points to an open area around a chimney to be insulated as apartments in South Portland are weatherized last week.

Photos by John Patriquin/Staff Photographer

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Michael Bunker, left, and Eddie Elwell of Evergreen Home Performance wrap insulation around heating ducts while weatherizing South Portland apartments. The most cost-effective way to spend $600 in most Maine homes is on weatherization and air-sealing.

John Patriquin/Staff Photographer

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The money's not to pay for oil, however. It would be a rebate, for taking steps to use less fuel or for switching to a cheaper alternative.

But this offer would involve an important choice: Would the money best be spent on weatherization and air sealing, to cut the amount of energy needed to heat a home? Or would it make more sense to put $600 toward a new heating system, maybe to switch from oil to natural gas?

Thousands of Mainers could be doing this math, if a proposal from the LePage administration makes it through the Legislature this spring.

Three weeks ago, LePage said Maine would continue to participate in the Regional Greenhouse Gas Initiative, the eight-state plan that cuts carbon emissions from power plants, but only if the state's share of revenue from the program is refocused.

LePage wants to shift spending by Efficiency Maine from targeting electric bills to helping homeowners cut their heating bills, which make up the largest share of personal energy costs.

Many details still are being worked out. But Patrick Woodcock, the governor's energy director, told lawmakers last month that he'd like to use at least $6 million from the greenhouse gas program to convert 10,000 homes to high-efficiency electric heat pumps, wood-pellet systems or natural gas or propane boilers.

If each home could save $1,500 a year, Woodcock estimated, it would keep $15 million in Maine's economy.

It is an ambitious and well-intentioned plan, but it faces at least four obstacles that could keep it from achieving its goals, based on interviews with experts and cost comparisons prepared for the Maine Sunday Telegram:

A $600 rebate may be too little to entice most homeowners to spend the $10,000 to $16,000 that it would cost to replace a central heating system with a high-efficiency natural gas boiler or wood-pellet boiler. A $600 rebate is more likely to be used for supplemental heat, such as a wood stove or high-efficiency electric heat pump.

Homeowners who can come up with the money for a new central heating system face a long payback period on the investment. It's roughly six years for a natural gas boiler, at today's energy prices, and nine years for a wood-pellet boiler.

Natural gas is half the price of oil today. And while thousands of homes are within 100 feet of existing gas lines, most residents live too far from them to take advantage of this cheaper, cleaner-burning fuel.

The most cost-effective way to spend $600 in most Maine homes is on basic air-sealing and weatherization, with a payback of less than a year. But LePage's emphasis seems to be on alternative heat rather than building efficiency.

In an interview last week, Woodcock said both strategies would be encouraged. He said Mainers would need to decide the merits of weatherization and fuel switching in their own homes, based on facts that include the age of the home, how long they plan to live there and distance from a natural gas line.

"The bottom line is we want to lower people's energy costs," he said. "And you can do it a lot of different ways."

But Dylan Voorhees, clean energy director for the Natural Resources Council of Maine, said he has some misgivings about the governor's plan. While his group is still considering its position on whether homes that get government money for new heaters should first be air-sealed, he said a policy that "locks in waste" might be shortsighted, especially if natural gas prices rise again, as expected.

"It doesn't necessarily make sense to just move burners around, if houses are like Swiss cheese and leaking like a sieve," he said.

AIR SEALING SAVINGS TOP $280 A YEAR

The benefits of air sealing are well documented but not widely appreciated. As it happens, Efficiency Maine currently is offering $600 rebates for air sealing, using money from a federal grant. The program has sealed 2,331 homes since last fall.

The work has cut air leakage by an average of 16 percent, which translates into saving of 75 gallons a year in a typical home. At today's oil prices, that adds up to more than $280 a year.

Achieving those savings requires attention to detail.

In South Portland last week, crews from Evergreen Home Performance were air-sealing 24 apartments at Mill Company Gardens. Built in the 1930s for the Coast Guard, the units have had some basic energy improvements over the years. But tests run on the buildings show missed opportunities.

In the basement of one unit, Bruce Merryman, the project manager, pointed to the gap between the chimney and framing, where someone had stuffed fiberglass insulation. It looks helpful, but air moves freely through fiberglass, doing little to blunt the "stack effect" that draws cold air up from the cellar into the house.

Merryman's crew blocked the gap with fireproof flashing, and sprayed foam where pipe and wires run through the floor. They also sealed seams in the aluminum heating ducts from the furnace, and wrapped them in foil-faced fiberglass blankets. That will slow heat loss from the warm ducts to the cool cellar.

"We're insulating the hottest air that has the most heat loss in the system," he said.

REDUCING DEMAND FOR ENERGY

To pick the most cost-effective measures, Evergreen performed a full energy audit on the apartments. Audits typically cost $300 to $600. Included in the audit is a blower-door test, which depressurizes the house to reveal air leaks. It's still undecided whether the $600 rebate envisioned by LePage would require homes to have full audits or blower-door tests prior to air-sealing work.

An added benefit of air-sealing is reduced energy demand, allowing for a smaller heating system. Tighter homes may be able to rely largely on supplemental heaters, such as wood and pellet stoves, or the new generation of high-efficiency, air-source electric heat pumps for cold climates.

For example, Bangor Hydro-Electric and Maine Public Service Co. are running a heat pump pilot program this winter, offering a $600 rebate to early participants. The units cost more than $3,000, but they are expected to reduce the need for oil heat enough to pay for the investment in three to five years.

"I'm hoping that, more and more, people look at the building envelope," said Lee Landry, co-owner of ReVision Heat in Portland.

ReVision sells a range of alternative options, from the new electric heat pumps to boilers that can warm large homes with wood pellets. It also offers customers a spreadsheet analysis, so they can weigh costs and financing options.

Converting an existing oil burner to natural gas costs $4,500, and saves $1,864 a year, at today's energy prices. That's a simple payback of 2.4 years.

A burner conversion isn't as efficient as a new gas boiler, though. But the upfront cost after a federal tax rebate -- $12,337 -- would drag out the payback for a new gas boiler to almost six years.

A wood-pellet boiler also requires a major investment -- $16,000, in ReVision's example. That would lead to a nine-year payback at today's energy prices.

A different cost comparison was made by Efficiency Maine (see chart on B1), using 400 recently completed projects. The calculations, done for the Maine Sunday Telegram, include the LePage administration's proposed $600 rebate. They show paybacks ranging from nearly six years for replacing an oil boiler with a high-efficiency gas unit, to two years for insulating an attic or basement, and seven months for basic air sealing.

LePAGE PRIORITY: NATURAL GAS

These cost comparisons also suggest that $600 doesn't provide much of an incentive to make large investments that require financing.

"Everything is helpful, because we live in difficult times," said Les Otten, president of Maine Energy Systems in Bethel. "But I don't think $600 is enough for someone to convert from one fuel to another."

Otten's company sells wood-pellet boilers that cost $14,000 to $20,000 installed. He hasn't sold many for Maine homes, focusing instead on businesses and out-of-state markets. In New Hampshire, a state rebate program last year offset 30 percent of the cost of a new pellet boiler.

But for many Mainers, natural gas holds the promise of more-affordable heating bills. Expanding access to gas is a priority of the LePage administration.

Even without the incentive, Unitil Corp. added 1,000 new gas customers last year in Maine, and hopes to connect 2,000 this year. It's focusing its efforts on the estimated 30,000 homes and businesses within 100 feet of a main line.

"There's a lot of opportunity for conversion," said Unitil spokesman Alec O'Meara. "It's going to be a huge priority for our business in the next five years."

Unitil doesn't charge extra for digging a service line within 100 feet of its main lines. Beyond that, costs can rise steeply, especially if ledge is present.

Air sealing and insulation might be a better investment for residents living beyond 100 feet from gas lines, O'Meara said. Unitil has a program that doubles Efficiency Maine's $600 air sealing rebate. Crews were using the extra money to upgrade attic insulation at Mill Company Gardens, which has gas heat.

But O'Meara stopped short of offering an opinion about whether air sealing should be done before switching fuels.

"Each home is different," he said. "The homeowner is going to make that call."

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

 

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