The Numbers Just Made Sense

Written by Evora Glenn, City of Missoula

Type of Project: Retrofit
Type of building: Single family home
Systems electrified:

• Solar
• Air Source Heat Pump and Air handler

Financing used: DEQ loan and IRA tax credits 25C and 25D

When Nick and Caitlin bought their house in early 2020 they already knew that solar and electrification were upgrades they’d want to explore. Nick had been interested in solar since he was a kid, he even won an award in his high school science fair by exploring how to optimize the photovoltaic effect – the process that our modern solar panels use to generate electricity. Caitlin also had an early introduction to renewable energy in Iowa where she grew up witnessing the utility-scale transition to wind energy. The opportunity to install solar at their own home felt like an empowering way to join the transition to clean electricity. Knowing their new home was heated by an old diesel furnace also spurred their plans to upgrade to a highly efficient air source heat pump when the diesel system would inevitably need to be replaced.

They’d been exploring the options to install solar and upgrade their heating system for several months when their diesel tank started to run low on fuel. Their usual management of this system was that about once a year they would refill the massive tank that supplied their furnace with diesel through the cold season. Unfortunately, as their tank began to run low in early spring of 2022, it was not a usual year. Due to a number of economic disruptions, we were all in the midst of a painful spike in fuel prices. It was arguably the worst time in years to buy hundreds of gallons of diesel. Instead of paying this exorbitant premium, they made the tricky decision that many of us have had to make at some point in our lives - they went without. It wasn’t deep winter when they turned off their heat, but it was a long, cold spring. 

The old diesel furnace right before it was removed.

While going without was doable, it was also a wakeup call. They wanted to make the switch to solar and electric heat as soon as they could. By February of 2023, the furnace had reached the end of its operational life, spurring the urgent necessity for replacement.

​Moving forward with both upgrades at the same time was not only going to remove them from alarmingly volatile fuel prices, it was also going to save them money long-term. Nick ran the numbers on initial cost and energy savings over time. That clarity on the full economic picture was what finally empowered Nick and Caitlin to take the leap. They could see that they’d be better off economically by making the switch. 

Installing solar was particularly important in this calculus. If they had decided to only switch to the electric air source heat pump they would be saving a ton compared to their old diesel system, but they also knew that the price of electricity compared to the price of natural gas would have made a natural gas furnace the cheaper option up front, and to operate. That changed with solar. By installing solar at home, they could generate the additional electricity they’d need to power their electric heat pump, saving big on electricity costs. This reduction in cost made the switch to electric heating the best option cost-wise. After 10 years, they’ll have paid off the initial cost of their upgrades and will be paying next to nothing to heat and cool their home for at least the next two decades. Those are significant savings.
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While doing the upgrades together made the most sense financially, it introduced some technical complexity. They needed to work with a solar installer to quote them for a solar array that would meet their future electricity demand after they’d installed their electric heating, not their current electricity demand. Not all installers were interested in looking ahead and making estimates, but they were able to get traction with Solar Plexus who explored their options for solar development and let Caitlin and Nick know how much solar their home was suitable for and how much their future electricity need might be. That information was enough for Nick and Caitlin to make an informed decision on their solar array size.

The new, ducted heat pump system.

Solar infrastructure & electrical box.

Beyond the technical considerations, Nick and Caitlin were also looking at financial resources to make these two upgrades at once and were supported by the Department of Environmental Quality’s Alternative Energy Revolving Loan Program as well as the new tax credits passed in the Inflation Reduction Act. The DEQ loan would cover the up-front cost of the solar and the heat pump, and the tax credits took 30% off the cost of both technologies.
This same tax credit also applies to highly efficient heat pump water heaters, which is next on Nick and Caitlin’s agenda. They hope to combine the 30% tax credit with a local Missoula City-County rebate that takes an additional $575 off the cost. With this next upgrade, Nick and Caitlin will be well on their way to an all-electric home powered by renewable energy.

For them, joining the transition to electrification and renewable energy is also about the health and safety benefits. They’ve had more than one close friend or family member have a scare with their natural gas systems. In each case, a mechanical malfunction created high levels of carbon monoxide in their homes, a severely dangerous situation. They were lucky their alarms functioned properly and that they evacuated instead of going to investigate. Both Nick and Caitlin are looking forward to when they can rest assured that such risks will no longer be a concern in their home.
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Of all the different factors that encouraged them to make these changes, and all their motivations for doing so, Nick and Caitlin have one big piece of advice for other family’s looking to do the same: run the numbers. When they could see the whole economic picture, it made the choice a no-brainer.