This article was originally published in the September/October 1999 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.


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Home Energy Magazine Online September/October 1999

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Gas vs. Electric:An Equal Playing Field at Hand?

Table 1. Cost of Delivered Heat by Fuel Type
Fuel Type Price $/Mbtu of Heat Supplied
Electricity1 8¢/kWh 23
Gas2 70¢/therm 10
1. Assumes resistance heat. A heat pump is able to deliver as much as 3 times the heat for the same amount of electricity (or the same heat at 1/3 the cost).
2. Assumes 70% efficiency of conversion. Most gas appliances exceed this.
The Department of Energy (DOE) is quietly exploring solutions to the site/source energy problem or, more specifically, to the way electricity is compared to other fuels. This controversy has undermined the credibility of the Home Energy Rating System (HERS) and has hindered its widespread deployment. The problem arises because electricity generation is only about 30% efficient, and the energy consumed at the power plant and in transit to homes is ignored by many DOE procedures. At present, the HERS rating considers only site energy consumption; that is, the energy measured by the electric or gas meters. It excludes the energy that is lost in electricity generation, transmission, and distribution (about two-thirds of the total energy). Ignoring these energy losses makes electric-resistance heating appliances appear more efficient than gas appliances. This means that a house could improve its HERS rating merely by replacing the gas furnace and water heater with electric counterparts, even though the energy costs and total source energy (including that consumed at the power plant and in energy transportation) would increase with the electric system.

It's too early to predict the outcome, but clearly the California Home Energy Efficiency Rating System (CHEERS) offers an attractive model to follow. In the CHEERS rating, the fuels are weighted according to their relative costs to consumers (the cost per kWh versus the cost per therm--see Table 1). Since the consumer cost of electrical energy made by resistance heat at the meter is roughly three times greater than that of gas energy, this is nearly the same as a source energy adjustment.

On another front, researchers at the Florida Solar Energy Center have come up with a new way to consider electric and gas energy on an equal basis. FSEC deputy director Philip Fairey feels that this method solves the last remaining technical inequity that has been brought to the table in the debates about HERS effectiveness.

The equations to calculate the point score were normalized to account for the differences in potential for improvements, Fairey explains. For the end uses of heating and water heating, we created a standard for electric and gas, used the National Appliance Energy Conservation Act minimum standard and a set of best-available technologies as the end points in the standard, and then normalized the standards to each other.

This solution transcends the problem, says David Goldstein of the Natural Resources Defense Council, because it doesn't use either gas or electric, but uses a point score. The score is fuel neutral. According to Goldstein, the Residential Energy Services Network is currently discussing adoption of this technique, and the National Association of State Energy Officials (NASEO) has tentatively approved using it. (NASEO will soon vote on whether to make that approval final.) Although the states are not obligated to adopt these guidelines and will make their decisions individually, Goldstein says, most states will probably go along with the guidelines. It's an ingenious approach.

If a change in policy occurs, DOE programs that would also be affected include the appliance standards program and the EnergyGuide labels. Currently, both programs treat gas and electric appliances separately. If they were compared within the same category--and legislation might be required for this--most gas appliances would get far better ratings. For example, if an EnergyGuide label showed gas and electric water heaters on the same scale of annual cost of operation, few electric water heaters would appear on the low-cost end. However, an electric heat pump water heater might appear better than both gas and electric resistance water heaters, which would encourage manufacturers to build them and consumers to buy them.

Such a change could have an enormous impact on consumer decisions, leading to more purchases of gas-fired furnaces, water heaters, and clothes dryers. This could also spur new advances in electric technologies, such as heat pump water heaters, as manufacturers seek to improve the standing of electric heating.

Three factors appear to be spurring DOE into action. First, there is a desire to rationalize some of the economic assumptions inside DOE's regulatory programs. Second, the White House needs to reduce CO2 emissions, and it wants to ensure that internal regulations are consistent with that goal. Finally, the electricity industry--the main opponent to changes in the current situation--is relatively weak and divided. Restructuring has created many new firms and, with them, less opposition to industry reform. Meanwhile, the gas industry remains strongly united.

The RAND Corporation is currently conducting a study for the Department of Energy's Office of Energy Efficiency and Renewable Energy. According to RAND researcher Mark Bernstein, the study will discuss how HERS may be affected by a change in approach. Results of the study may influence DOE's decision; they were not available at press time.

--Colleen Turrell



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