One morning in early June, as I came into the kitchen to get my morning coffee I heard a concerning sound coming from the basement. I bravely descended to find water spurting from the top of our water heater. Barely awake, and not yet caffeinated, I somehow managed to find the levers that turned off the water and the gas. Thankfully I caught it early and not much water had pooled on the basement floor. But now we had no hot water and thus a significant and urgent house repair project to add to my already full schedule.
After a service technician confirmed the water heater needed to be replaced. I set to work researching options. While we could have very quickly replaced the existing natural gas water heater with another one, I wanted to use this “opportunity” to continue to reduce our dependence on fossil fuels. We were also already interested in exploring a ductless mini-split heat pump system to more efficiently cool and heat our 1913 house, and so it seemed appropriate to ask contractors to provide bids on both projects. As we met with contractors, they also encouraged us to consider replacing our inefficient and 35 year old boiler as well. And they alerted us that all of these changes would also require an upgrade to our electrical panel.
Suddenly a simple $2000-$3000 dollar project had become a massive $40,000+ one that dominated our conversations and kept us awake at night. But knowing that federal tax credits were likely to be eliminated in the near future and knowing that further discounts were possible from contractors to bundle the work, there seemed to be some wisdom in taking the leap.
In the end, we have made decisions that we feel good about and we’ve learned a lot! So while we are far from experts, there are a few lessons we can share that we hope might help others take advantage of similar household “opportunities” and to make use of federal tax credits before they go away.
Here are some of the questions we had and how we answered them based on the specifics of our house and our Minnesota climate. What is best for your household and home will vary depending on your context.
Is it possible to significantly reduce our reliance on fossil fuels?
We live in Minnesota and our beautiful but over 100 year old house heavily depended on natural gas to provide heat during our long winters and to heat water, dry clothes and cook all year long. When we first became concerned about the realities of climate change, we did a home energy audit and determined that the first step would be to further insulate our home and seal our windows.
Now we had a chance to further break our dependence on fossil fuels by moving more of our home’s systems to electricity and improving efficiency. Resources like Electrify Everything Minnesota and Rewiring America provided practical advice for this transition. We also reached out to knowledgeable folks at MN Interfaith Power and Light (you can find your local affiliate here) and the Center for Energy and the Environment who did our energy audit previously and provided contractor recommendations. (You might search “energy audit near me” to find a similar group in your area). We also got good advice (and a contractor list) from the MN AirSource Heat Pump Collaborative.
Emboldened by all of this information we made the decision to upgrade our water heater, heating and cooling systems and electrical service in the ways described below..
Water Heater: To replace our water heater, we first looked into heat pump water heaters. Since our gas boiler was dated, several contractors suggested we might instead combine our boiler and water heater in a combination system. But this would have left us still reliant on gas to heat our water. We also found research and received advice that the combination systems are not always as efficient as they claim and can be less reliable. Ultimately, while there is good evidence that heat pump water heaters can be very successful even in colder climates like Minnesota, we made the choice to switch to a less expensive high efficiency A.O. electric resistance water heater that cost us $2700 including installation. After two weeks of cold showers, that first “fossil-free” shower was heaven! (This resource offers more ideas to help you select a new water heater that makes sense for you.)
House Cooling (and air quality): Our old home uses radiators to heat and so we have relied on inefficient and ineffective window air conditioners in the summer. For several years we have been interested in installing a ductless mini-split heat pump system especially after we experienced how effective they were in our church after they were installed there. The Inflation Reduction Act provided a $2000 tax credit for heat pumps and our local utility Xcel Energy offered another $2000 in rebates. Plus our contractor gave us a $2500 discount to bundle the project, so it was clear this was the moment to make it happen. After we receive all of the credits and rebates, the new Bryant ductless system that was installed with 1 outdoor unit and 3 indoor units will cost us just under $12,500. Since the mini-splits were installed on June 30 we’ve marveled at how cool and comfortable our house feels now. As an added plus, we are grateful for the air quality filtration these systems provide, especially because we have had regular air quality alerts the past two summers due to Canadian wildfires and sadly aren’t always able to open our windows even when it is cool outside.
House Heating: We are excited that our new mini-split system will also be able to heat our house during the fall, spring, and on milder winter days down to 5 degrees outdoor temperatures. (At least that is what we have been told. Since we just installed them, we can’t report yet on how well they work for heating.) Because Minnesota regularly experiences temperatures colder than this, we will also need to have a backup heating source. Our old gas boiler was 35 years old and showing signs of wear. We could have kept it as our backup heat source, but decided to upgrade to a new more efficient ECO-tec gas boiler for reliability (to avoid having to replace it in the middle of the winter) and to further decrease our gas usage on those days when we will need to use it. There is also a $600 federal tax credit and a $400 rebate from our utility that we will be able to use by doing it now too, bringing the net cost for the boiler upgrade to around $12,400.
Electrical System: All of these changes meant we were one slot short in our electrical panel. While there were work-around options, we elected to bundle into our big project an upgraded 200 Amp electrical service with a new breaker panel. Again, the contractor offered a discount for the bundling, plus our local utility offers a $1500 rebate so it will cost us $4500. Down the road this electrical upgrade will make it easier for us to install an EV car charging system in our garage, and to electrify appliances like our gas dryer and range.
How will we pay for it?
After we decided what we wanted to do, the next big question was can we afford it? Rebates from our utility for the projects came to $3900 and should be returned to us in the next couple of months. Federal tax credits should be $2600 and will be returned to us when we file our 2025 taxes next spring. In the meantime, we still needed to come up with $38,500 (even though the net cost to us will be closer to $32,000). Thankfully, we were able to secure a Home Energy Loan at only 3% interest from the Center for Energy and the Environment. It is possible that there are similar opportunities in your area (you might try googling energy or home improvement loans in your city or state). Home equity loans can also be a good option. While it was scary to take on such a big expense, we are confident that these investments will make our house more valuable when it comes time to sell it, while making it more comfortable and energy efficient in the meantime.
How will these changes impact our energy costs?
Since we have just made these changes, this is a question we are not yet able to answer with any confidence. We are tracking our energy usage and costs and will know more in the coming months. But this is what we know now. We know that we will be using much less natural gas because our water is now being heated with electricity and we should be able to significantly reduce the gas we use to heat the house in the winter by relying on the mini-split system except when outdoor temperatures are very low and then using the more efficient new boiler. Clearly we’ll be using more electricity than we have in the past and that generally costs more than natural gas. We learned from our contractor that our utility offers reduced winter rates for electricity when it is used for a primary heating source (something the mini-split system qualifies for). We were also comforted by the Energy Star label on the new electric water heater that estimates $494 in total annual energy costs. We figured even if it is going to cost more to heat our water using electricity than gas, the increase
has to be only a few hundred dollars (not thousands as we initially feared) since our old inefficient gas water heater was certainly costing us a fair amount. (Research indicates if we had gone with a heat-pump water heater, we could have lowered those expenses even further). The mini-splits are also significantly more efficient than our old window air conditioners, but we are probably going to be using them more. At this point, we are prepared to pay a bit more on our energy bill, understanding we are doing so to reduce our use of fossil fuels. It is also possible our bills will stay about the same or might even be a bit less during some times of the year. We’ll keep you posted!
How does the electricity we use get produced by our utility?
Finally, efforts to electrify your home won’t help much to reduce your impact on climate change if your utility provider generates electricity using fossil fuels. Someday we hope to explore rooftop solar or community solar for our household (hopefully sooner rather than later given the OBBB). In the meantime, we have taken part in advocacy efforts to push our utility to set net-zero targets and to hold them accountable to reach those goals and we are gratified to know that the state of Minnesota has mandated that our utility provide 100% carbon free electricty by 2040. Depending on where you live, part of your work to break free of fossil fuels will likely require you to do similar advocacy work with your local utility. Research what kind of commitments your utility has made toward reducing reliance on fossil fuels. And connect with others to push them to do more. You can find good partners for this advocacy work by contacting your local IPL affiliate, 350.org chapter, your Annual Conference Green Team, or United Women in Faith Just Energy 4 All programs.
Other Advice
- Be prepared to defend your desire to electrify your house. Several times during the process, we had contractors ask us things like, “why do you want an electric water heater?” They also made it clear that electricity costs more than natural gas. We were able to stand firm with our requests because we had done research through sites like Rewiring America and because of the encouragement of friends and advocates at MNIPL and in the UM Creation Justice Movement.
- Do your own calculations. I set up a spreadsheet to compare offers, organize rebates and tax credits, calculate financing and cash flow scenarios. Having it all in one place rather than sifting through emails and bids made it much easier to compare offers and understand the financial impacts. Here is a link to a screenshot of my spreadsheet.
- Ask for details. Don’t be afraid to ask contractors for product specification flyers for the equipment they are recommending. Ask about reliability, ease of repair, availability of parts, energy efficiency, how the particular brand they are offering compares with others on the market and why they have chosen to offer the ones that they do. Read what the contractor provides and then do your own online research too. While all of the contractors we spoke with seemed like they would have been good to work with, we ultimately chose the one that provided us with the most detail on the systems they were recommending and were able to answer our questions with details that we could understand.
- Write down your questions. I know this seems basic, but there were times when the information load was overwhelming. When I was able to identify the specific things I still needed to know in order to make a decision versus the things that were already clear, the path forward was much clearer.
Doing all of these home projects taught us a lot. We know there is a lot more to learn, other options we could have chosen and certainly more work to do to completely eliminate our dependence on fossil fuels. But we are grateful that a broken water heater pushed us to take some important steps forward! We wish you courage and clarity on your own efforts to break free of fossil fuels.
Cathy Velasquez Eberhart is a leader in the United Methodist Creation Justice Movement and a commissioned Global Ministries Earthkeeper in the Minnesota Annual Conference. Cathy and her husband Guillermo live in St. Paul, MN where they run Velasquez Family Coffee, which sells coffee grown by their family in Honduras.