Abstract

Abstract for: Doubling Down on Dual-Fuels: Heat Pump and Fossil Backups’ Effects on Grid Load, Cost, and Emissions in Massachusetts

Introduction Residential heating accounts for 6% of U.S. emissions, triple that from aviation. While heat pumps reduce emissions 40%-70% compared to gas furnaces and many states offer rebates, they may strain the grid during cold periods and subsidizing them leads to high public expenditures. Dual-fuel systems combining heat pumps with fossil backups could mitigate these challenges, yet most research overlooks how existing installed systems interact with dual-fuel adoption decisions and policy effectiveness.
Approach We develop a model of residential heating system purchases, including heat pumps, dual-fuel systems, and fossil systems. We distinguish homeowners replacing broken systems from those reconsidering functioning ones and incorporates upfront costs relative to installed equipment, e.g., a homeowner with a gas system can keep it as a backup and only purchase a heat pump. The model is calibrated to Massachusetts, a cold-climate state with ambitious heat pump adoption targets.
Results Rebates for dual-fuel systems reduce peak electricity load but increase emissions and subsidy costs. Because homeowners can keep installed fossil systems as backups, dual-fuel adoption is high even with low rebates. Thus, increasing rebates for dual-fuel systems vastly increases the number of subsidy recipients without improving overall adoption. Dual-fuels also reduce peak load but fossil fuel backups emit more than all-electric heat pumps, undermining the emissions benefits of heat pump adoption.
Discussion This work highlights installed base effects – in this case, the effect of installed fossil systems on dual fuel adoption – as critical drivers of green technology adoption and policy outcomes. Results emphasize that optimal decarbonization requires rebate structures favoring all-electric systems over dual-fuel options, supplemented by complementary demand-side policies like load shifting to reduce heat pump impact on the grid. These findings provides insights for designing heating electrification policy amid competing climate and grid reliability objectives.

Introduction	Residential heating accounts for 6% of U.S. emissions, triple that from aviation. While heat pumps reduce emissions 40%-70% compared to gas furnaces and many states offer rebates, they may strain the grid during cold periods and subsidizing them leads to high public expenditures. Dual-fuel systems combining heat pumps with fossil backups could mitigate these challenges, yet most research overlooks how existing installed systems interact with dual-fuel adoption decisions and policy effectiveness.
Approach	We develop a model of residential heating system purchases, including heat pumps, dual-fuel systems, and fossil systems. We distinguish homeowners replacing broken systems from those reconsidering functioning ones and incorporates upfront costs relative to installed equipment, e.g., a homeowner with a gas system can keep it as a backup and only purchase a heat pump. The model is calibrated to Massachusetts, a cold-climate state with ambitious heat pump adoption targets.
Results	Rebates for dual-fuel systems reduce peak electricity load but increase emissions and subsidy costs. Because homeowners can keep installed fossil systems as backups, dual-fuel adoption is high even with low rebates. Thus, increasing rebates for dual-fuel systems vastly increases the number of subsidy recipients without improving overall adoption. Dual-fuels also reduce peak load but fossil fuel backups emit more than all-electric heat pumps, undermining the emissions benefits of heat pump adoption.
Discussion	This work highlights installed base effects – in this case, the effect of installed fossil systems on dual fuel adoption – as critical drivers of green technology adoption and policy outcomes. Results emphasize that optimal decarbonization requires rebate structures favoring all-electric systems over dual-fuel options, supplemented by complementary demand-side policies like load shifting to reduce heat pump impact on the grid. These findings provides insights for designing heating electrification policy amid competing climate and grid reliability objectives.