A Comparison of Heating Costs using ASHPs, Wood Pellets, and Heating Oil
By William Strauss, PhD
In many policy discussions regarding efficient renewable heating, heat pumps are one of the solutions that are often mentioned. The renewable component in heat pumps is the heat that is contained in either the ambient outside air or in the earth. Air source heat pumps (ASHP) harvest the heat contained in outside air. Ground source (or geothermal) heat pumps use the warmth of the earth. That warmth is captured with water circulating a deep well or in a long trench.
This brief white paper will focus on air source heat pumps. Geothermal heat pumps have a more or less stable heat source and their ability to harvest heat from the earth is more or less constant. Ground source heat pumps while very efficient are expensive to install due to the need for many hundreds of feet of well or trenching. ASHPs have a much lower capital cost barrier than geothermal heat pumps and are often touted as an alternative to traditional combustion based heating systems.
Heat pump systems, as do all central heating systems that have pumps and fans, require some electricity. The amount of electricity needed by an ASHP to generate a given heat output will vary based on two primary inputs: the temperature of the source (outside air), and the temperature of the heat sink (the home heating system).
Heat pumps are typically measured by their coefficient of performance (COP). The heat pump uses electricity to run a refrigeration cycle in reverse. The heat pump absorbs heat from cold air and transmits it into the heating system. If the outside air is warm enough, it takes significantly less energy to run the pump than the amount of heat it generates. If the system produces four kilowatts of heat energy for each kilowatt of electrical energy, the COP is 4.
As the outside air temperature falls, so also does the COP as the pump has to work harder to extract heat energy from colder air.
The temperature that is required for the building’s heating system also affects the COP. The best uses for air source heat pumps are low temperature radiant heat floors in which the circulating water temperatures are relatively low (around 95o F.). The majority of northern homes that have hydronic boiler systems have hot water baseboard/radiator systems that operate at 175o to 185o.
The table below shows the COP’s of a typical air source system.
In actual operation, the system would never operate below a COP of 1.0. At a COP below 1.0 the systems is worse than a straight electric resistance heating system.
In actual operation, the systems would never accrue costs per kWh greater than the cost of electricity (in this example, $0.125/kWh). The typical air source heat pump system has a supplemental resistance heating component that takes over when the COP is lowered by environmental conditions. It is clear that if heating oil were the only option, air source heat pumps would be the economical choice in a much broader set of environmental conditions.
The chart below shows a typical operating profile and illustrates how supplemental heat is needed at colder temperatures.
Air source heat pumps can contribute to lowering the cost of heating. However, most homes in the northern states that experience winter temperatures below 25o F. cannot be sufficiently heated during with air source heat pumps alone.
In most heat pump applications, domestic hot water demands will still have to be delivered from a separate dedicated hot water heater. In most applications, the home or business will need a supplemental heating system for colder weather and for domestic hot water.
Natural gas, heating oil, and wood pellet fueled boilers will continue to be necessary part of home heating systems in in homes and businesses in the northern states. Natural gas and wood pellet fuel prices deliver heat at the equivalent of a COP of about 2.2. More costly heating oil delivers heat at an equivalent COP of about 1.4. So anytime the “source” is colder than about 30o F. and the heating systems is a baseboard or radiator system running at 185o F., wood pellet fueled boilers or natural gas are the lowest cost source of heat (see that table below for a comparison).
Some of the homes and business in the cold states that are currently using costly heating oil will convert to natural gas. However, many locations that do not have natural gas now never will have natural gas. If ASHP’s are used, the supplemental heat should come from the lowest cost fuel available.
For many in the Northeastern and Midwestern states the most economical option for heating will be modern fully automatic and highly efficient wood pellet fueled boilers.
 For a home that requires 35,000 BTU/hr (10 kW), the well would need to be 260 to 360 feet deep. The trench would need to be three loops each 390 to 590 feet long at a depth of about 5 feet.
 Data from “Air Source Heat Pump Efficiency Gains from Low Ambient Temperature Operation Using Supplemental Electric Heating,” Minnesota Division of Energy Resources, June 2011, and from “State of the Art of Air Sourced Heat Pump for Cold Regions,” Proceedings of the Sixth International Conference for Enhanced Building Operations, November, 2006.
 This is based on the cost per kWh of delivered useful heat from pellets and heating oil when compared to the cost of delivered heat from an air source heat pump running at the respective COP values.
 Based on residential prices for propane at $2.70/gallon, heating oil at $3.70/gallon, natural gas at $12/MMBTU, and pellets at $220/ton.
 Many locations are of too low of a housing density to justify the cost of delivery infrastructure. Furthermore, low natural gas prices mean narrower profit margins per unit of energy, which suggests that many marginal population areas will not support the cost of construction.