The Biden Administration announced $9 billion in funding Wednesday to improve household efficiency, which could help support the installation of up to 500,000 heat pumps. With winter approaching and utilities warning of gas shortages, technology faces major challenges that the cash can be used to tackle.
To help decarbonize home heating and air conditioning, we need these heat pumps, and quick. Electrically powered systems — which keep homes comfortable pushing heat into the house in the winter and pulling it out in the summer – will be crucial in weaning the world off fossil fuels. But installing the units on a schedule consistent with zero emissions goals will require both a strong supply chain and a well-prepared workforce. Although none of these are fully in place in the United States, the Defense Production Act and the Inflation Reduction Act represent opportunities to develop them.
The funds allocated Wednesday fall under a new reimbursement program administered by the state and the tribe made possible by the IRA. The White House said it helps put the country on track to deliver on the president’s campaign promise to weatherize 2 million homes.
To achieve the goal of net zero emissions by 2050, the The International Energy Agency has declared the global stock of heat pumps is expected to reach around 600 million by 2030. Last year saw a 25% increase in investment in technology and record sales growth, and around 190 million units were in service in the world. However, the organization said this growth has been somewhat held back by ongoing supply chain issues.
The United States is currently largely dependent on foreign heat pump suppliers, leaving the White House target vulnerable to supply chain complications such as those caused by Russia’s invasion of Ukraine. Sam Calisch, head of special projects at nonprofit electrification association Rewiring America, calls America’s heat pump supply chain “not too bad,” but added that the investment is needed as “an ounce of prevention” for future complications, especially as the market grows.
The DOE plans to dedicate an initial $250 million, which is not part of the $9 billion, to further encourage manufacturing of heat pumps, funding that relies on DPA authorities that President Biden invoked in June strengthen the national supply chain for clean energy technologies. The agency is currently seeking opinions on how best to use this pot.
In a recent reportRewiring America encouraged the DOE to invest $500 million in up to 10 facilities in the United States to “ensure that American manufacturing capacity can meet increased demand.”
The country’s goal, Calisch said, should be for all HVAC systems to be replaced with end-of-life heat pumps “certainly by 2030, faster if we can do it.” Rewiring America found that the United States installed 3.9 million heat pumps in 2021; the 500,000 unit boost provided by IRA funds is designed to “energize” the market, he said, but is also part of broader market trends.
The installation of all these heat pumps will also require labor to grow along with the market. The IEA encourages policy makers to anticipate potential workforce challenges “to avoid bottlenecks” on the path to zero emissions, and specifically recommends investing in knowledge sharing and upskilling CVC employees.
The DOE said Wednesday it was holding a discussion among “workers, businesses and other key stakeholders” to determine how best to spend an additional $260 million, which is also not part of the $9 billion. dollars, for workforce development for energy efficiency. This federal investment is something Calisch said is badly needed.
“New programs are emerging, but we constantly find that, especially around electricians, we face a shortage,” Calisch said. He said one option to address this shortage is for the United States to reinvigorate apprenticeship programs.
The IRA contains funding that requires companies with wind or solar tax incentives to employ apprentices, although there is no similar requirement for energy efficiency companies. Specific companies like heat pump company BlocPower have created apprenticeship programs aimed at building a green workforce and advancing racial justice goals at the same time.
This heat pump craze is occurring against the backdrop of an unstable natural gas market, leading to higher winter heating bills around the world. The Energy Information Administration Recent Perspectives on Winter Fuels expected a 19% increase in natural gas prices this year compared to last year. Electricity prices have also increased, but by only 8%.
“This [increase in fossil fuel prices] definitely driving the increased interest in heat pumps,” Calisch said, citing the fact that heat pumps cost users less in heating than other types of systems.