LI sales of heat pumps, geothermal systems jump 20%, PSEG says

Efficient new electric heating and cooling equipment have seen a miniboom across Long Island over the past two years, on the back of increased subsidies for heat-pump and geothermal systems as the state and LIPA advance plans to displace fossil fuel-burning systems.

While the new systems still make up just a fraction of Long Island's heating and cooling market, an increase of more than 20% in the past two years suggests a momentum that PSEG Long Island, which administers the program, is celebrating. 

Mike Voltz, PSEG's director of energy efficiency and renewables, said spiking oil prices were likely the biggest drivers of 2022's growth, which is continuing into 2023. 

"It's a combination of very high oil prices and increased education," said Voltz. "There's definitely a greater awareness of heat pumps and how they work." In addition, he said, "The rebates are fairly generous," and a new federal tax credit up to $2,000 went into effect Jan. 1.

The systems, which can cost anywhere from $5,000 for small systems to $45,000 for geothermal installations, have experienced uneven sales in the region over the years as the technology has improved and newer customers experience the benefits.

Total heat pump figures for 2022 were 7,385 units, which includes 4,060 home heating/cooling devices, 350 heat-pump water heaters, 1,217 pool heaters, 1,554 commercial efficiency systems and 204 geothermal units, PSEG said. LIPA has about 1.1 million customers, and the vast majority heat with natural gas or oil. 

In 2021, total 6,722 heat pumps were installed across Long Island and 5,955 were installed in 2020, PSEG said.

Reviews of some prior generation units have been mixed, but some customers who’ve stuck with them say they’ve paid off.

Richard Hucke, a Brightwaters retiree, said he’d rate his conversion to a three heat-pump system for his home an “A-plus” after tangling with an installer and bringing the utility to small claims court. In the end, he got three high-efficiency units installed for free under a low-income program, and now has a reduced home heating rate that has allowed him to cut his to $73 a month from an average of $100.

Hucke keeps an old gas furnace system for the coldest days, but his gas consumption is down more than 40%, he said.

“All in all the heat-pump program was good for me,” Hucke said.

Included in PSEG's total heat-pump figures are more expensive geothermal systems, which require temperature-sensitive piping up to 350 feet below a customer’s home and can cost upward of $45,000.

PSEG reported that 88 home geothermal were installed across Long Island last year, benefiting from $1.18 million in rebates. That compares with 64 projects in 2021 with $774,435 in rebates. Prior years saw even fewer: just 55 projects in 2020 and 76 in 2019.

Geothermal is still relatively small" compared to the greater heat-pump market, said PSEG's Voltz. He predicted geothermal is "probably never going to be mass market because of its cost," but noted it's considered the most efficient of the heat pumps, especially for summer cooling.

The geothermal systems are seeing a resurgence led by companies seeking to spark a mass market for the units and capitalize on state, federal and utility tax credits and rebates. This year’s increase hasn’t been seen since a high of 128 new projects were begun in 2008. Sales of new systems fell off a cliff in the subsequent decade but have begun to climb again.

While geothermal installations generally favor new home construction given the amount of indoor and outdoor work needed, some do opt for geothermal on existing home installations, and one company, Dandelion Energy, is seizing on that market.

One person who signed up was Joseph Farhangian of Merrick, who has spent tens of thousands of dollars turning his Merrick home into one of the most green buildings around. He’s got solar panels on his roof and a battery storage unit inside. Geothermal energy seemed a natural fit to cut out fossil fuels entirely, he said.

But the installation in his 67-year-old home as been problematic, he said. Temperatures vary by 6 degrees or more per floor, and the air leaving his complex warren of ducts comes out so forcefully at times that he can’t stand it. “It’s really windy” in his house, he said. "It's uncomfortable and loud." He’s hired a consultant who found the installer, Dandelion Energy, may have installed too large a system.

Now, he said, it can't be fixed and he'd prefer to go back to his old fossil-fuel based system. He said he would even pitch in to pay Dandelion a fee to remove it. He's paid only part of the $45,000 bill.

Dandelion chief executive Michael Sachse acknowledged that duct work for the initial installation was “not up to our standards,” and said the company has addressed it. As for the claim of an oversized system, he said the company has “doubled checked our math,” consulted with outsiders and found “the sizing is correct.”

“If we switch the size, I suspect he’ll be even less happy,” said Sachse. PSEG continues to work with the homeowner and Dandelion to work out a solution.

But Dandelion said problems issues such as Farhangian's are the exception. One customer who's "super happy" with his geothermal system is Sidney Blank of Springs. His 1970s-era house had a new system put in last year, he said, replacing his old oil burner with a system. The old system had a lot of "cold spots" throughout the house that Dandelion worked to eliminate.

He said the geothermal system is "a little bit noisier" and the air isn't as hot as that from the oil heater, but the issues are "nominal." His only beef was a pile of sand left in the driveway for a period after the excavator finished his work. Otherwise, the system is "perfect for this house," Blank said.

As for the bigger market, Sachse acknowledged the company hit a road bump as material costs increased last year, but said the 500 installations across the U.S. in 2022 could double to 1,100 this year. PSEG said 20 Dandelion systems have been installed across Long Island. 

"We've seen good demand on Long Island, but feel we haven't yet hit our stride," Sachse said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.