Sunday, April 2, 2017

Sizing and pricing a ductless split heat pump

It's been over two years since I first wrote about mini-split heat pumps.  In that post I explained a bit about how to size a heat pump, and now I'll go into more detail.  Most installers will use rather unscientific rules of thumb, so I suggest doing the calculations to get a more accurate estimate of your heating needs.  Also, the biggest benefit in heating cost stavings comes from installing one system.  When two systems are installed, the second system will rarely provide the same amount of savings as the first.  If the first system saves you $800 per year in heating costs, adding a second might only save you $400 more.

I've shown a power usage report for a house in Nova Scotia with electric resistance heating and no air conditioning.  Other utility companies should provide similar information with their billing.  The report shows that minimum daily use is 15-16kWh per day.  This would be power use from the electric hot water heater, household appliances, and lights.  Subtracting this from the wintertime peak of 122kWh per day gives 106kWh per day of electricity demand related to heating.  Since 1kWh = 3412 BTU, the house requires 106 * 3412 / 24hr = 15070 BTU/hr of heating.  The house will have some upgrades done such as additional attic insulation and air sealing, so the average January heating demand will be less than 15,000 BTU/hr.  The layout of the subject house is reasonably open, so single ductless split with a heating capacity of one ton (12,000 BTU/hr) at -15C will probably be able to provide more than half of the heating requirements.

One-ton mini-splits appear to be the most popular units for residential installs in Nova Scotia, with 1.5 ton the next most popular.  Installed prices for a top brand name (Fujitsu, LG, Mitsubishi) one-ton unit are typically between CAD $3,000 and $4,000 plus sales tax.  For the subject house the installation is rather simple, with a short vertical run for the line set from the outside unit to the inside air handler.  After searching ads on kijiji and asking for referrals, I obtained a quote for CAD $3000 + tax to install a LG LA120HYV system.  It has a maximum heating capacity of 13,720 BTU at -15C and 15,650 BTU at 0C, requiring 1.57kW of power for a COP of 2.92.  This means the cost of one BTU from the heat pump is about one third of the cost of one BTU from an electric resistance heater.  With electricity costs of 15c/kWh in Nova Scotia, I estimate the LA120HYV system will save $1,500 per year.

While installed prices for a top brand heat pump generally start at $3000 and they are usually only sold as installed packages, systems from Chinese manufacturers Gree and Midea can be found for under $1000.  If was buying for my own home where I could install and maintain the system, I'd choose a much cheaper (lower-efficiency) Midea system.  For example, a nominal one-ton Rheem-branded mini-split system manufactured by Midea sells for $799 at my local Home Depot.

I'll note that making technical comparisons of mini-split heat pumps is a very difficult process.  Finding engineering manuals for cheap systems from Midea is almost impossible.  For the high-end brands, despite marketing about their quality and efficiency, many don't publish the engineering data on their web sites to back up those claims.  Between Fujitsu, LG, and Mitsubishi, LG is the only one (as far as I could tell) that makes their engineering manuals readily available on their web site.  For Fujitsu, I had to call their technical support to request an engineering manual for their RLS3 series.  A local Fujitsu dealer I spoke to justified the higher prices of the Fujitsu units by claiming they are more efficient than LG, but he didn't have any numbers to back up the claim.  The specs on the LA120HYV1 show that it is slightly more efficient than the Fujitsu 9RLS3.  The Fujitsu does have a bit higher output than the LG (15.4 vs 13.7k BTU @ 5F), so at 13.7k BTU of output the Fujitsu might  be a bit more efficient.  Given the installed cost of the LG is much less than the Fujitsu, I think the certainly of lower capital costs trumps the possibility of slightly lower operating costs.

If you are doing your own comparisons, take note of the difference between the actual and rated (advertised) capacities.  Industry standards require that a heat pump advertised as a 12,000 BTU model must be able to output at least 12,000 BTU at an outdoor temperature of 47F (8.3C).  System's like Fujitsu's RLS3 series and LG's HYV1 will output much more than their rated capacity, and even output their rated capacity down to -15C or colder.  LG's lower-cost  HSV4 series however only outputs 69% of their rated capacity at -15C.

Addendum - beyond the numbers

Avoid installing too much capacity, such as putting two 1.5 ton systems in a small house (something I have seen in my own neighborhood).  Modern split heat pump systems are variable capacity, meaning they will reduce their heat output before they shut off.  A system that has an output of 16,000 BTU at 0C may reduce it's output to 8,000 BTU before shutting off.  However if it only stays on for 15-20 minutes before turning off, and then turns back on 5 minutes later, it might never enter a defrost cycle.  Depending on how intelligent the controls are, this may not be a problem for some units, but I have heard of this happening with Daikin, Fujitsu, and LG units.

In snowy climates the outdoor units should be sheltered from blowing snow, or raised high off the ground.  When snow blocks the fan blades on the compressor unit, it can blow a fuse on the fan controller board, or fry the control board if it has no fuse.

Saturday, January 14, 2017

High natural gas prices in the Maritimes

Twenty years ago, natural gas exploration near Sable Island promised economic development as well as cheap, clean (compared to oil and coal) energy.  For about a decade, those promises came true, but things changed about five years ago.  Sable Island gas production was dropping, and new wells like Deep Panuke were not producing as expected.  So while gas production in the eastern US has boomed, keeping prices below CAD$4/GJ, prices in Nova Scotia have more than doubled.

In addition to the high market prices for natural gas, Heritage Gas charges a delivery fee (BEC) of $8.18/GJ.  That is quadruple the ~2/GJ delivery fee charged by ATCO.  A year ago when the total cost for a residential customer was over $20/GJ, heating with oil was significantly cheaper than gas.  Although prices in January of 2017 are lower than they were a year ago, natural gas is not a cheaper option than oil for home heating.

One liter of heating oil produces about 0.038GJ when burned.  With current prices of around 75c per liter, heating oil costs about $19.74/GJ.  While that is slightly more than the variable cost of natural gas, when the fixed cost of $21.87/mth is factored in, natural gas becomes much more expensive.  For a three-person residence constructed in the last 30 years that uses natural gas for heat and hot water, annual consumption should be around 75GJ.  With 75GJ/yr of consumption, after adding the fixed monthly cost, the total cost for gas comes to $21.50.

Unless Heritage significantly reduces the delivery fee, I think natural gas is likely to remain noncompetitive compared to oil.  LNG deliveries to Canaport will likely keep prices below $15/GJ, but the days of cheap natural gas in the Maritimes are now long gone.

Monday, December 28, 2015

Oil cheaper than pellets in NS

It's been less than a year since my last heating cost comparison, but the economics has changed significantly.  In eastern Canada, and likely northeastern US as well, heating with oil is now cheaper than pellets.  The low price of crude (below US$40 per barrel) is one factor in this, but not the only one.

Market conditions in the northeast have brought wholesale heating oil prices as low as US$1.10 per gallon.  Although heating oil usually sells for more than gasoline since it generates more heat when burned than gasoline, it has been trading for 10-15c per gallon less than gasoline over the past couple months.  High inventories combined with a milder than average winter so far have caused a supply/demand imbalance that has pushed prices low.

Just after I wrote my last heating cost comparison, CBC ran an article about a shortage of pellets.  Continued strong export demand for pellets (probably fueled by the low Canadian dollar) has kept pellet prices high.  So far this season I have not seen pellets selling for less than C$5.99 per bag.  While pellet prices have gone up by about 10%, the price of furnace oil has dropped by almost 25%.  Since last week, independent dealers have been selling furnace oil for C$0.72 per litre.

Heating with pellets now costs 2.49c/kBTU, versus 2.38c/kBTU for oil.   When taxes are accounted for pellets cost 2.87c/kBTU, and oil 2.5c/kBTU.  Although there is a heating assistance rebate available for low income families heating with pellets, the provincial portion of the HST (10%) is rebated on all heating oil sales in the province.  By those numbers, oil is 13% cheaper than pellets.  If you have to pay for delivery for your pellets, the difference is likely more than 15%.

I don't expect pellet prices to improve, but I think oil prices are about as low as they will get this heating season.  Time to fill up that tank!

Wednesday, November 18, 2015

Nova Scotia's Electricity Plan: more propaganda than science

A half a year after I wrote about Nova Scotia's energy past and future, Nova Scotia's Electricity Plan (PDF) was released.  While there are a couple promising tidbits in the plan, most of it is propaganda and pseudo-science.

The propaganda starts with the executive summary, with statements like, "By 2040, the province will have moved from among the most carbon-intense electricity generators in the country to a green powerhouse."  Firstly, market predictions 25 years in the future are likely to be as accurate as weather predictions 25 years in the future.  Secondly, becoming a "green powerhouse" is not a priority for Nova Scotians; things like health care, education, and jobs are what voters care about.

Page iv talks about interconnection with NL and NB, with the focus being importing power over the Maritime Link, some of which could then be re-sold to New England.  I've previously expressed my skepticism about the economic benefits to NS, and since then I've only found more evidence to solidify that position.  The Economic Analysis done by Natural Resources Canada is a wealth of information.  The cash flow analysis in section 5 shows an expected export price of C$72/MWh in 2017, and $86 in 2020.  I assert that the opportunity for Nova Scotia, in the next 5 years, to re-sell lower Churchill power to New England, is nil.  As I write this blog post on a mid-November day, the wholesale price of power published by ISO new england is US$17/MWh (C$23/MWh), and New Brunswick is selling power to New England for approximately the same price.

These low power rates are not a fluke; from watching ISO-ne and PJM over the past year, I've seen prices averaging around $25/MWh.  ISO-ne recently announced that power prices in 2015 were the lowest since 2003, and more natural gas power plants continue to be built in and around Pennsylvania.  Appalachian natural gas prices continue to be depressed due to supply exceeding pipeline capacity, even as projects like the REX reversal ramp up.  Companies like Cabot Oil and Gas have cash operating cost as low as 10c/MMTU, reserves are huge, so cheap natural gas will continue for the foreseeable future.

Page 21 of the Electricity Plan discusses the declining production of natural gas in NS, but makes no mention of cheap natural gas produced by our neighbors to the south.  It also makes no mention of the fact that the ban on fracking means NS is unlikely to see a revival in natural gas production.

One positive thing in the plan is better interconnection with NB, in particular the "Joint Dispatch Pilot" discussed on page 16.  The plan mentioned it is intended for balancing demand, but I think it should be expanded for large wholesale power purchases from NB.  The upgraded interconnection infrastructure should be a lot less expensive than the maritime link, and the cost of power would be significantly less than from the lower Churchill.

I'll finish by pointing out some of the climate change fear-mongering in the plan on page 19: ""We are experiencing more floods and more dry spells, and more frequent extreme weather events, which are compounded by rising sea levels."  I could find no research confirming rising sea levels in NS connected to anthropogenic GHG emissions.  What I did find is uncontested research showing natural sea level increases over the past 4000 years.

Tuesday, March 17, 2015

Nova Scotia energy part 2: the future

This is part 2, following my post Nova Scotia energy part 1: the present.

The above graph is taken from ICF's 2014 energy market report, and is their minimum growth forecast.  If correct, Nova Scotia will generate around half of it's power from coal for the next 25 years!  My prediction is that the future to 2020 is unlikely to be much better than ICF's forecast, however after 2020, cheap natural gas will start to play a bigger role in reducing power generation from coal.

ICF is forecasting increasing natural gas prices compared to what they were when the report was written.  Their 2015 forecast was for around $4/mmbu a the henry hub, yet it is currently trading below $3/mmbtu.  The report correctly states that the price paid for gas in the maritimes is tied to the price at the Dracut hub near Boston, MA.  Due to limited pipeline capacity from natural gas producers in PA, the price is higher than the henry hub, especially in winter when it regularly peaks over $20/mmbtu.  Heritage Gas is so convinced these winter price peaks will continue that it has entered into an agreement Alton Natural Gas Storage to build salt caverns to store gas for winter peak use.

Over the coming years, I expect these winter spikes to be significantly reduced, due to a number of factors.  The first is new pipeline construction.  The biggest is Kinder Morgan's Northeast Energy Direct pipeline which will bring over a billion cubic feet per day to the Boston area.  The Constitution pipeline will bring up to 0.65 bcf/d of gas north from Marcellus wells in northeastern PA.  A couple smaller projects will add around another .5 bcf/d of natural gas pipeline capacity to the Boston area.

The reason for these pipeline projects is not just because of unusually high prices in New England, but the combination of those high prices and unusually low prices in central Pennsylvania.  This winter while prices around Boston were peaking over $20/mmbtu, prices at the Leidy hub stayed below $3, and are currently averaging $1.50/mmbtu.  Pipeline builders could charge a tariff double the typical 50-75c/mmbtu and producers would gladly pay it in order to get their gas to markets.  Energy companies like Cabot Oil and Gas have halted completion on many of their natural gas wells while they wait for new pipeline capacity to be built.

Another reason I expect natural gas prices in NS to average lower in the coming years has to do with how events on the other side of the world affect LNG prices.  There are a number of LNG import facilities including Canaport that are able to provide extra gas supplies during the winter peak, but for the past few years they have imported very little.  The reason is unusually high LNG prices following the Fukushima disaster made it unprofitable to import LNG.  New production from LNG plants in Australia has cut LNG prices by more than half in the last year, with prices currently around $7/mmbtu.  Additional LNG production from projects under construction in Australia and the US should push LNG prices in the Atlantic down to the $5/mmbtu range  by 2020.

The combination of new pipelines and lower LNG prices should lead to Dracut natural gas prices below $6/mmbtu during the winter peak and around $3/mmbtu for the rest of the year.  This will eventually lead to lower natural gas prices in Nova Scotia, which will provide the financial incentive for switching more generation from coal to natural gas.  Lower natural gas prices should also mean Nova Scotia will use more power from Muskrat Falls when it is completed.  Nova Scotia Power has locked in about 1.2TWh/yr of power from the project, and will be able to purchase another TW or so at market prices.  Cheap natural gas in New England is pushing down electricity prices, so New England won't have to pay top dollar for power from Muskrat Falls.  This should lead to Nova Scotia to purchase much of the surplus power, and at rates that should be significantly lower than the power it has locked in on a 20 year contract.

Thursday, March 12, 2015

Nova Scotia energy part 1: the present

With 60% of power generation coming from coal in 2014, Nova Scotia has made little progress in reducing the use of coal.  Compare this to places like Ontario where the last of their coal plants were shut down years ago, or New England, where coal generation is down to single-digit percentages of power generation.  Nova Scotia has four coal-fired power plants with a total capacity of 1252MW, and has only one power plant that runs natural gas; Tuffts Cove, with a capacity of 500MW.

It's clear from the above graph that the utilization of natural gas generation is less than coal.  If they were used in proportion to their capacity, natural gas would account for 20% of generation and Coal would account for 50%.  The likely reason for the under-utilization of natural gas capacity is due to the high cost of natural gas during the winter peak period.  While I haven't found published information on the price Nova Scotia Power pays for natural gas, the regulated gas recovery rate charged by Heritage Gas should be a reasonable proxy.  The winter 2014/2015 peak was $15/GJ, and the 2014 summer low was around $9/GJ.  Compare this to the Henry Hub, where prices averaged below C$4/GJ this winter.  The price of thermal coal is around US$50/st which, at around 20 million BTU per short ton, equates to an energy cost of US$2.50/mmbtu or around C$3/GJ.

So why is the price of gas in the maritimes up while at the same time going down in the US?  Production from the Sable offshore energy project is less than half of what it was 5 years ago, and new production from deep panuke has not been enough to offset that drop.  Meanwhile US production, primarily from the Marcellus shale, has increased.

As for renewable energy, wind has just made it into the double-digit percentages, but solar is non-existent. Although the cost of PV is approaching grid parity, the lack of a solar feed-in tariff has likely limited solar PV installations to primarily off-grid projects.  Unlike Ontario where microFit pays about 40c/kWh, Nova Scotia is unlikely to see anything similar.  The reason is that Nova Scotia's peak demand of 2GW is in the winter, while Ontario's peak demand is in the summer.  A solar feed-in tariff in NS would just exacerbate this seasonal demand imbalance.  The economics of solar PV has recently become worse, as import duties will likely increase the cost of PV panels in Canada.

In my next post I'll review Nova Scotia's energy plans and make some predictions for the future.

Sunday, February 22, 2015

2015 heating cost comparisons

A couple years ago I did some calculations to compare heating costs in Nova Scotia.  Since then energy costs have changed a bit, and I have more accurate information on the efficiency of oil boilers and pellet stoves.  As well I intend to add natural gas to the comparisons.

Electric heating costs have not changed much, with the cost of electricity now 14.95c/kWh.  This equates to a cost of 4.38c per thousand BTUs.

Furnace oil is now selling for 95c/L.  In my previous calculations, I assumed a 90% efficient condensing boiler.  These are uncommon in NS, so I'll use the 84% efficiency of an oil fired boiler with a tankless coil.  This equates to a cost of 3.14c/kBTU.  Pie anyone?

Instead of propane which is not commonly used for space heating in NS, I'll look at the cost of natural gas.  The current price of natural gas is $20.69/GJ.  When the $21.87 monthly charges is factored over my estimate of 42GJ/yr of gas consumption for a moderately energy-efficient residence, the total cost per GJ is $26.93/GJ.  With one gigajoule equal to 948 kBTU, and an efficiency equivalent to an oil fired boiler, natural gas heat costs 3.38c/kBTU.

For wood pellets, prices have increased so that 40lb bags are selling for at least $5.50.  I've also found out that wood pellet stove efficiency tops out at around 87%, and for typical units is closer to 75%.  After updating my calculations based on the higher price and lower efficiency, wood pellet heat costs 2.29c/kBTU.

With the recent popularity of air-source heat pumps in Nova Scotia, it is prudent to compare their cost of heat to other sources.  A high-efficiency unit with a COP of 2.4 will provide heat at a cost even lower than pellets - 1.83c/kBTU.  A lower efficiency unit with a COP of 1.4 will provide heat for about the same cost as oil - 3.13c/kBTU.