On Earth Day 2018, New York Governor Cuomo announced a 2025 efficiency target of 185 TBtu of energy savings, part of a multipronged strategy to achieve the state’s goal of a 40% reduction in greenhouse gas emissions by 2030. If met, the efficiency target would deliver nearly one-third of New York’s needed GHG reductions by 2030 – roughly equivalent to the contribution of the goal of 50 percent renewable energy by 2030. Achieving New York’s ambitious efficiency and climate goals will take coordination with many sectors of the economy, and significant public and private investment.

The 2018 New Efficiency: New York whitepaper identifies renewable heating and cooling as a key energy efficiency and decarbonization strategy in New York State. Clean heating technologies are one of the most promising energy efficiency technologies, with potential to deliver a significant portion of the energy savings needed in 2025. This report examines the potential of strategic electrification through heat pump technology under three growth scenarios. It then offers program and policy options to achieve that potential and coordinate activities between the New York State Research and Development Authority (NYSERDA) and utilities. The report assesses multiple heat pump technologies including ground-source heat pumps (GSHP), air-source heat pumps (ASHP), and commercial ASHP applications with variable refrigerant flow (VRF) technology.

Relative to neighboring states, New York has a low penetration of heat pump installations reported through utility and state programs. Overall market activity appears to be somewhat higher, but still represents a tiny fraction of the total market potential in the state. At the time of this report (July 2018), a range of programs and incentives were available in New York promoting heat pump technologies through both NYSERDA and utilities. These programs vary widely in terms of the technologies supported, incentive design, incentive levels, and sectors served (residential vs. commercial). Incentive designs range from downstream rebates paid to customers, to midstream incentives paid to contractors, to upstream incentives paid to wholesale distributors.

Based on our analysis, with aggressive program and policy support to drive the market for heat pumps, New York could achieve the following results by 2025 and 2030 under the high growth scenario:

• ASHPs installed in two-thirds of New York households by 2030.
• 31 TBtu of energy savings from heat pump installations by 2025, contributing 17% of the savings needed to achieve New York’s 185 TBtu 2025 efficiency target.
• 3.1 percent of New York’s GHG emissions reductions coming from heat pump installations by 2030, contributing to the goal of 40 percent savings compared to baseline emissions in 1990.

Our scenario modeling shows that heat pumps have the potential to ramp up to levels that contribute significantly to New York’s energy efficiency and greenhouse gas reduction goals by 2025 and 2030. To achieve this potential, New York will need a range of policies and programs to encourage heat pump adoption, including:

• Performance targets and incentives
• Coordination of utility and NYSERDA efforts
• Updated program frameworks for gas and electric programs
• State building energy codes
• Market development approaches for both proven and emerging heat pump technologies

Clarifying and streamlining the role of utilities and NYSERDA will help provide consistent market signals and drive heat pump adoption. It should be clear to manufacturers, distributors, contractors, and end-users which entity is responsible for which part of the market.