A Seasonal Heat Pump Rate Can Incentivize Heat Pumps AND Solar Energy

Camryn Hansen, Zondits guest, 11/15/2023

After hearing for years how much more efficient heat pumps are than any other type of heating system, I was dismayed to discover how much it actually cost to use them to heat my home in Maine during the winter. The answer is that last year, for me, it was almost double the cost of using natural gas. (To be fair, natural gas is relatively rare in Maine, where 60% of households still heat with fuel oil, which is more expensive to use than electric heat pumps, and far more polluting, as we know.) On top of all the other barriers that exist to installing heat pumps across our state, the high cost of electricity in Maine makes heat pump ownership prohibitively expensive for many people.

My utility, Central Maine Power (CMP), recently introduced a rate that stands to help with the cost of using heat pumps in the winter. Its “heat pump rate” is a kind of seasonal time-of-use rate that makes it really inexpensive to use electricity in winter, and more expensive in summer. Rather than the standard delivery charge of 9 cents per kWh, customers on the heat pump rate will be charged 4/10 of a cent per kWh from November 1 – April 30. From May 1 – October 31, the rate increases to about 14 cents per kWh. In Maine, the delivery charge is only a portion—less than half—of the bill. Added to this is the “supplier charge,” which right now is 16.6 cents per kWh. So the standard rate we actually pay is 9+16.6, or 25.6 cents per kWh.

The utility has an online calculator that makes it easy for customers to determine whether or not the rate would save them money. According to CMP customer service, the heat pump rate is not particularly designed to save people money over the course of the whole year, but rather to spread out bill costs so that customers’ bills are roughly the same every month rather than being very high in the winter and very low in the summer.

This is where customers with solar panels have a major advantage. In the winter, when the sun is up for comparatively few hours AND the roof is often covered with snow, solar customers must draw more energy from the grid to power their homes (and charge their cars if they have EVs, whose range is also substantially worse in the winter)…but the cost of electricity is staggeringly low. And in summer, when there is abundant unfettered sun and solar panels produce enough to cover or even exceed people’s usage, high electricity costs don’t matter because solar customers are drawing little or nothing from the grid.      

This being the case, having and aggressively marketing a heat pump rate seems like a great way to encourage heat pump ownership as well as solar installation—certainly in cold climates like Maine’s, and across New England where electricity prices are similarly high. It’s also a good opportunity for heat pump and solar installers to work together more holistically in the service of more effective climate action.