New Jersey Has an Energy Master Plan. Fossil fuels would be out. Electricity would be in.

The New Jersey Energy Master Plan calls for electrification of the building sector by 2050. Vocal critics of the plan are the Fuel Merchants Association of New Jersey and Eric DeGesero, its executive vice president, who said it is probable that Gov. Phil Murphy can implement the EMP without any new grant of authority from the New Jersey legislature. There are approximately 3.2 million housing units in New Jersey. On the other hand, as for commercial properties that are having trouble finding a trustworthy energy supplier, a site like Smarter Business may offer some solutions.

“The governor ran his campaign in 2017 talking about clean energy,” DeGesero said in a phone interview. Electricity generated entirely from renewable energy, and increased use of electric vehicles are the main elements of the plan., DeGesero said the governor “did not campaign on making the three million-plus homeowners in the state have to engage in five-figure construction projects when all they want to do is put in a new heater—that’s the bottom line. And that’s the part that many, many legislators and, quite frankly, most of the public just aren’t aware of.”

New Jersey’s EMP, issued in January, calls for homeowners to replace their central heating system with a heat pump beginning in 2030. This can be done with the help of Rama Corporation that provides highest quality heating elements. What remains to be determined is implementing the requirements in the plan, DeGesero said, noting that the coronavirus pandemic forced a shutdown of the state’s General Assembly. “The legislature was just beginning to ask questions about this document and then the world changed,” DeGesero said. “I think you’ll see renewed attention once things get back to normal.”

He called the plan the governor’s “wish list.” The legislature in the 1970s passed a law requiring that the governor periodically perform an assessment of the energy needs of the state, DeGesero said. “In and of itself, the EMP has zero effect of law. It’s just a blueprint of what he wants to do.”

However, orders by state agencies charged with implementing the plan would have the force of law, DeGesero said. The state’s Department of Community Affairs, which includes the Division of Codes and Standards, responsible for building codes, is one such agency. A requirement for heat pumps will force a change in the state’s building codes, DeGesero said.

Another agency that would play an important role is the Board of Public Utilities. The electric utilities will say they need to increase their rates to build out grid infrastructure, DeGesero said. He predicted utilities would say a build-out is necessary because they would have to meet “so much more demand for electricity in the winter time.”

The governor’s timeline for switching to electric heat pumps begins in January 2030. DeGesero wondered aloud whether, beginning Jan. 2, 2030, permit applications for new furnaces fueled by heating oil, propane or natural gas would be rejected.

“That’s a very real possibility as it relates to existing housing stock,” he said. A bill introduced in the New Jersey General Assembly would allow municipalities the option, by ordinance, to prohibit installation of new natural gas hookups, he noted. “That bill has not moved in the legislature as yet… but it is maybe the starkest example of some of the legislature wanting to accelerate the timeline,” DeGesero said.

The legislature has ability to veto executive branch regulations, according to DeGesero. For example, he said, should the Department of Community Affairs in 2023 or 2024 propose a regulation prohibiting new fossil fuel construction beginning in 2025—the legislature “has authority to negate that,” DeGesero said.

Currently, the Energy Master Plan “isn’t necessarily something that’s front-and-center” for state legislators, DeGesero said, as many serve on unrelated committees and further, are not full-time legislators, but have careers of their own. “They’re familiar with what the governor said in the campaign—hundred percent clean power generation and more electric cars,” DeGesero said.

Earlier this year, after the EMP was adopted, DeGesero presented an analysis of the plan. Here, edited for clarity and length, are some highlights:

Of the 3.2 million housing units in New Jersey, 2 million, or 64%, are owner-occupied.

The breakdown by types of home heating fuel is: natural gas – 75%; electricity – 12%; oil – 9%; propane – 2%; other (coal, wood, geothermal, etc.) – 2%, according to the U.S. Census Bureau, American Community Survey, Five Year Estimate 2013-2017.

The types of home heating systems include:

• Boiler – hydronic – heat water with fossil fuel and circulate through baseboard
• Boiler – steam – make steam with fossil fuel and circulate through radiators
• Furnace – heat air with fossil fuel and circulate through duct work
• Electric resistance – heat an element with electricity which radiates into room

The EMP calls for greater use of heat pumps, which take ambient air and transfer it into air heated or cooled to be distributed in your conditioned (living) space.

The EMP focuses primarily on air-source heat pumps – as opposed to geothermal (ground source) heat pumps. There are two types of air source heat pumps: central ducted; and ductless.

The plan calls for electrification to reduce energy consumption and emissions from the building sector, as 28% of greenhouse gas emissions come from buildings. The goal is to electrify the building sector by 2050. The effort is supposed to start by targeting state facilities, new commercial and residential construction, and existing oil and propane homes.

According to the American Housing Survey (2017) boilers make up 9% of heating systems nationwide.

Northern New Jersey boilers make up 43% of all heating systems.

Philadelphia MSA (including all of South Jersey) boilers make up 23% of all heating systems.

In New Jersey 93% of homes use air conditioning, but of that total, only 63%, use central air conditioning. (DoE 2009).

“Because electrified heat is less expensive than propane and similarly priced to heating oil, the most significant expenditures will be the one-time capital cost of installing the electric heating system, which costs an average of $4,000-$7,000 for a typical residence,” according to a draft of the EMP. DeGesero said that cost estimate assumes that a house has adequate electric service to install a heat pump. For houses that have central air-conditioning, this will generally be the case, he said. “But for some old houses without central air-conditioning, upgrading the electric service will be needed. For cold-climate ducted heat pumps, we estimated installed costs at 30% more than a SEER 16 ducted heat pump, based on a suggestion from a major manufacturer that plans to soon introduce a ducted cold-climate heat pump to the U.S. market.”

For ductless heat pumps, DeGesero cited cost projections come from an ACEEE analysis of a Massachusetts database of installed costs for this equipment that said: “We looked at homes installing two or more multi-head heat pumps, finding an average cost of $7,065 per heat pump. The sample size was 496 homes, nearly all of which purchased two multi-head heat pumps.” (Six homes installed three heat pumps.)

DeGesero also cited an account by a Massachusetts heating oil dealer who installed a heat pump system in a small ranch house. Cost of installation was $16,500, according to the account by the unidentified dealer, who estimated that an oil furnace might have been “$6,000, tops.” The homeowner’s fuel bill had been under $800 per year with oil and the existing furnace; the electric bill with the heat pump increased by more than $175 per month, according to this account, and the homeowner still had to run the oil furnace to handle peak load because the mini splits didn’t have supply in every room. DeGesero said the dealer concluded his account by asking, “How do you sell a conversion that costs that much more to install and operate?”

“New Jersey has a high percentage of buildings that utilize boilers and that lack ductwork, which can increase installation costs,” the EMP noted.

DeGesero said the EMP provides “a faulty cost metric.” He projected a net additional new cost per home imposed by the EMP mandate for electric heat and electric hot water to replace fossil fuels:

Home with an existing furnace: Net additional $6,500 -$25,000

Home with an existing boiler: Net additional $11,500 -$32,000

The projected costs do not include upgrade of electric service, DeGesero pointed out. If an upgrade of electric service is needed, that would add $2,000 – $5,000 to the cost, he said.

The New Jersey Large Energy Users Coalition, in comments submitted in September, said that complying with the EMP would add $100,000 to the cost of a new, 2,400-square-foot house. Complying with the EMP would add $13 per square foot for the cost of commercial buildings, not including HVAC, the Coalition said.

Seventy-one percent of New Jersey voters were not aware of the plan and 67% disapproved of being told to stop using natural gas, according to a survey of 500 voters last November by McLaughlin & Associates for a New Jersey Energy Issues Study; 74% believed they should have the right to choose how to heat their homes, the survey found.

“Our research shows that while New Jersey voters care strongly about the environment and pollution, they also disapprove of many of the key elements” of the EMP, McLaughlin & Associates, a research firm in Blauvelt, N.Y., said in a statement upon the release of the survey results. “Specifically, the voters reject the government mandates imposed by the Energy Master Plan and they oppose efforts to eliminate consumer choice in how to provide energy to their home, specifically the loss of natural gas.”

Among a number of proposals, the Energy Master Plan suggests “requiring new homes to get a Home Energy Rating System (HERS) assessment and disclose that report to [prospective] buyers and local governments.” This approach could serve “as an effective energy code enforcement tool,” the plan says.

The state has contracted with Rutgers University to develop a 10-year energy price projection and seven-year cost recovery projections for a number of building electrification techniques, the plan notes, including the installation of electrified heat pumps and electrified water heaters. “Based on the results of the analysis, expected in late 2020, NJDCA [New Jersey Division of Codes and Standards] should consider adopting new regulations guiding developers to the clean energy technologies,” the plan says.

The New Jersey Rehabilitation Code, adopted in 1997, seems likely to influence how the plan might be implemented, DeGesero said. The code is designed for existing buildings, some of which may have been built before building codes were in place. For example, DeGesero noted, the Rehabilitation Code addresses what must be done when work on a building exceeds certain percentages relative to the building’s value, “which might apply in the case of an addition or a change in use.”

The Rehabilitation Code covers “renovations” such as the replacement of equipment or fixtures, DeGesero pointed out. “Equipment” or “fixture” means “plumbing, heating, electrical, ventilating, air conditioning, refrigeration and fire protection equipment, elevators, devices, boilers, pressure vessels, and other mechanical facilities or installations,” the code states, according to DeGesero.

The EMP recommends, “The state should explore industry best practices, such as providing an energy audit or disclosing home energy labels during real estate sales and leases, to increase interest, awareness, and transparency of energy consumption…”

Here are additional elements DeGesero singled out from the Energy Master Plan:

“NJBPU and NJDCA should collaborate to assess how new or existing energy efficiency programs or changes to the energy code can establish pathways to reducing energy demand as buildings are being renovated, beyond what is currently required. For example, home and building audits may be necessary as well as incentives to encourage building owners to update and upgrade their buildings.”

“The state should also consider an environmental benchmark such as CO2e/sq. ft., to assist in the prioritization of building retrofits.”

“Modeling results from the Integrated Energy Plan suggest it would be most cost effective to begin constructing all-electric buildings by 2025 and to begin transitioning existing building stock during natural stock rollover events beginning in 2030.”

“…transition to electrification will depend on technologies that are still maturing.”

“…the inability of a building to become 100% carbon neutral should not hinder efforts toward fuel switching…”

“Finally, the state will need to establish a tolerance threshold for costs of implementation.”—Stephen Bennett

Stephen Bennett is the editor of Fuel Oil News.