Heat Pump Demand Rising In B.C. With Grant Support

A new federal tax credit will help fill the subsidy gap for multi-unit residential buildings.

The number of B.C. homeowners who switched from natural gas or baseboard electric heating to energy-efficient heat pumps has soared over the last two years, from 3,000 in 2021 to 7,000 in 2022, according to BC Hydro. At least 200,000 B.C. homeowners now have heat pumps, based on BC Hydro grant applications. The number is likely higher because some homeowners could have installed heat pumps without accessing grants.

That’s the good news for energy efficiency. The bad news, from a carbon emissions standpoint, is that the number of homes heated with natural gas has increased by four percent in recent years, according to the Crown Corporation, while heating with electricity went down by three percent. Clearly, when it comes to staying warm, British Columbians still like natural gas for its reliability and its comparatively low cost.

But the average home in B.C. that uses natural gas for heating can produce up to two tonnes of carbon dioxide (CO2) per year, according to BC Hydro. To hit federal and provincial emissions-reduction targets, many more homes, townhouses, condos, and apartment buildings will need to switch from natural gas heating to renewable natural gas or heat pumps.
Electric air-source heat pumps are basically energy-efficient air conditioners that can work in reverse to provide heat in the winter and cooling in the summer. There remains a cost barrier to the wider adoption of heat pumps, despite generous government subsidies. In B.C., it’s still cheaper to heat a home with natural gas, though that may eventually change as carbon taxes continue to rise.
Heating a 2,400-square-foot home with electric resistance heating can cost $2,296 a year, according to **FortisBC**, compared to $902 a year with natural gas, or $1,103 per year with an air-source heat pump.

To date, most conversions to heat pumps in B.C. have been in single-family homes and town houses, as that is the market government grants have targeted. With the exception of new builds, there has been much less uptake in multi-unit buildings.

That may change, however, thanks to the new 30-per-cent clean technology investment credit in the recent federal budget. A building owner that invests $1 million in heat pumps for a 100-unit building would qualify for $300,000 in refundable credits, said Belinda Gilbey, president of Bondi Energy, a Toronto-based company that specializes in heat pump installations in muti-unit buildings and now has clients in B.C.

“Largely commercial buildings – although they represent a huge portion of GHG emissions in North America – don’t always get attention on the incentives and grant side,” Gilbey said. “There’s a lot of focus on single-family homes. What we’re seeing from this new federal budget is the clean technology (investment) tax credits, which is huge.”

One of the barriers to switching from natural gas to heat pumps in some buildings is that they may require electrical upgrades, which in turn add costs.

“It’s a capacity issue,” Gilbey said. “Because electrically heated buildings have enough capacity coming into the building – enough amps, from the transformer to the building – the power’s there. For gas-heated buildings, you have to increase the capacity to support an electrified heating system. Now you’re collaborating with the utility company. You might need to upgrade the transformer to the building.”

To address this, FortisBC now offers incentives for natural gas absorption heat pumps. Swapping a natural gas boiler for a natural gas heat pump can increase energy efficiency and reduce GHGs by up to 50 percent, without having to replace existing natural gas infrastructure in the building. Another barrier to adoption in multi-unit buildings is strata councils. It can be difficult to get a strata council to vote in favour of converting a whole townhouse complex to heat pumps. In cases where not everyone in the building is on board, it is possible to convert individual units, Gilbey said.

The indoor portion of an air-source heat pump | BONDI Energy

“Strata councils can be tricky, for sure,” said Gilbey. “It’s a big capital cost and it’s a big decision to make, so it does take longer. When you’re working with an institutional landlord, you’re dealing with the energy manager and the project management team and their jobs are to make the buildings more efficient and it’s a single decision-maker. It’s different with a strata corp.

“Sometimes, condo owners can individually opt-in. We did a [mid-rise] building, a 100-unit condo building – and went through that process and about 30 of them said, ‘OK, we want to move forward.’”

The biggest project Bondi has undertaken to date is a 325-unit building. Generally, converting a building like that to heat pumps costs about $12,000 per two-bedroom unit. The payback period is about six and a half years. After that, the heat pumps are saving the owners money, Gilbey said. A homeowner who converts from baseboard heating to heat pumps won’t reduce a building’s overall GHG emissions by much, but doing so will lead to heating bill cost savings. Homeowners who switch from natural gas to heat pumps, by contrast, will see a major reduction in GHG emissions, but only marginal savings on their heating bill.

A typical townhouse in the Lower Mainland that switches from baseboard heating to a heat pump would see $276 a year shaved off its heating bill, according to BC Hydro’s energy calculator. If the same townhouse switched from natural gas to an electric heat pump, it would see savings of just $165 a year. Homeowners switching from natural gas to heat pumps are eligible for $6,000 in grants provincially – $3,000 from BC Hydro and $3,000 under the province’s CleanBC program. Grants for homeowners switching from baseboard heating to heat pumps are less generous, up to $2,000 provincially. The B.C. government has also exempted heat pumps from the provincial sales tax.

The City of Vancouver also offers grants up to $4,000, so a homeowner in Vancouver who switches from natural gas to heat pumps could be eligible for up to $10,000 in grants.

Brady Faught, the City of Vancouver’s green building engineer, said one problem with current grant offerings is that they are only available to those who can
afford to own a single-family home. Because he is in a multi-unit building in North Vancouver, he was not eligible for any grants when he decided to have a heat
pump installed in his apartment, at a cost of about $7,000. He was one of eight owners in a 27-unit building that opted to have heat pumps installed at their own expense.

“We don’t have any rebates for people living in multi-family, and there’s a lot of vulnerable seniors and residents in those buildings,” he said. “We need to do better on offering the rebates in an equitable way.”