Central + Northwest + Southwest + West Central Regions

Partnership expands access to heat pumps in Greater Minnesota

January 2023

The Conservation Improvement Program (CIP) is a ratepayer-funded program established to help Minnesota's businesses and households improve the efficiency of their energy use, thus reducing both costs and pollution. Utilities need to demonstrate that they are helping their customers improve energy efficiency. Many people are familiar with the utility rebates they can get for energy efficiency measures in their home or business — these are a common way that utilities support efficiency improvements. 
Often, utilities also work with local Weatherization Assistance Program service providers (such as Community Action Partnership [CAP] agencies), using their CIP spending to provide additional services to income-eligible households. In that way, CIP spending by utilities enables the Weatherization service provider to have a bigger long-term impact on households’ energy costs. 
Changes in the program from the 2021 ECO Act have expanded health and safety measures that can be funded — such as electrical system upgrades — and allowed for fuel switching, as long as efficiency improvement requirements are met. Which brings us to heat pumps! Heat pumps are a highly efficient technology that can be used to electrify (a form of fuel switching) space and water heating, while also providing efficient cooling during the summer months. 

We are going to be talking more with our CAP partners on what opportunities might be available with Weatherization Assistance Program money now available for heat pump installations. Plus, the new ECO bill allows us to spend money on improvements like electric panel upgrades. 

Jon Fabre, Otter Tail Power Company

The Hendricks project: from weatherization to heat pumps

In 2021, Otter Tail Power Company (Otter Tail) and United Community Action Partnership (UCAP) teamed up to weatherize and install air source heat pumps in a six-plex located in the city of Hendricks.
UCAP led the work itself, starting with an energy audit to identify possible efficiency opportunities, then overseeing the weatherization process, which included a variety of measures: attic sealing and insulation, lighting improvements, faucet aerators, and more. By starting with these weatherization measures, the project was able to maximize the benefits to the building’s residents.

After the weatherization was complete, it was time to look at heat pumps. Because the building's primary heat was electric resistance (baseboards), and cooling was provided by inefficient window AC units, installing mini-split heat pumps was an easy decision: installing heat pumps consistently reduces energy costs for households dependent on electric resistance heat or delivered fuels.

Each apartment in the building therefore had a single outdoor condenser and a single indoor head installed. This occurred in September 2021. The timing was chosen to ensure that the building residents would not be without air conditioning during hot summer months, and so the units would be installed prior to the start of the heating season.

Efficiency results…and an important lesson

Visual of savings during the winter before and after heat pumps


So, now, a year after the installation took place, how are things looking? Are the households seeing savings on their energy bills?


Yes! According to Amy Hasling from Otter Tail, the one-year results show "significant savings during the heating months (over 27%) and some savings during the cooling months as well."

Figure based on information from Otter Tail, average consumption per unit in the six-plex.

There is also an important lesson learned here: because many people are less familiar with heat pumps than other heating systems, and because there is sometimes turnover in a particular residence, it's important to provide education to people in the household on how to use the equipment most efficiently.

We need to make sure the renters — current and new — are educated on the equipment, using the cold climate heat pump as their primary heating source and only operating the baseboard as a supplemental heat when the temps drop considerably.

Amy Hasling, Otter Tail Power Company

The need for household education is not unique to rental housing. See, for instance, "Things I learned about heat pumps: a homeowner's perspective."

Not just a one-off

The Hendricks six-plex project is one of several air source heat pump projects that Otter Tail has funded in the past few years. One is a multifamily (eight-plex) retrofit project in Evansville in collaboration with West Central CAP. The other projects have been in collaboration with Habitat for Humanity: a retrofit in Battle Lake, a pair of new homes in Fergus Falls (a build that Otter Tail staff also volunteered on), and another pair in Bemidji. 

 Habitat for Humanity Project in Fergus Falls

According to Geri Hickerson, executive director at Northwoods Habitat for Humanity in Bemidji, efficiency is a high priority: from a good building envelope, to efficient appliances and heating system. Her organization anticipates continuing to use air source heat pumps in their construction projects, due to their high efficiency, affordable installation, and ease of use.

When we build for families, we want them to be as affordable to live in as possible. 

Geri Hickerson, Northwoods Habitat for Humanity

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