Residential - Propane Education and Research Council...Demand In 2018, the residential sector...
Transcript of Residential - Propane Education and Research Council...Demand In 2018, the residential sector...
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Residential Overview According to the EIA, the residential sector is the third-largest energy-consuming sector in the United States. While the residential sector is the largest consumer of odorized propane, propane constitutes a relatively minor share of residential energy supply, with the bulk of energy coming from natural gas and electricity. The bulk of residential demand typically goes towards space heating with the rest primarily used for water heating and cooking. Residential propane consumption exhibits strong seasonality, with the bulk of demand occurring in the winter, for space heating. The northeast tends to have the highest market share of propane used for space heating. This is owing to the large number of relatively isolated rural communities, and the extreme winter weather commonly seen. In the southeast, propane is used in moderation for space heating, but is especially popular as a cooking fuel. The region’s moderate temperatures are a boon for outdoor cooking applications.
Propane has been declining on both an absolute and market share basis since 2008. The decline in overall propane demand for heating nationally is likely linked in part to falling heating degree days in the US since 2010. Expanded natural gas distribution (including in new shale gas-producing regions) has also been a limiting factor for propane demand. While propane could replace heating oil in some regions where natural gas infrastructure does not exist. Where the infrastructure does exist, customers will likely choose to convert to natural gas due to price advantages and perceived convenience. However, there are opportunities for propane in the residential market. Along with focusing on new appliance installations, propane needs to capitalize on areas that are already seeing and expecting increased growth to offset expected losses, such as housing starts (especially in the South), manufactured housing, and zero net energy homes.
Demand In 2018, the residential sector accounted for 56% of total propane sales, or around 5.2 billion gallons. This is an increase of almost 19% over 2017. In 2017, propane residential gallons made up 4.4 billion gallons or 53% of all propane demand gallons. Overall, propane has about 7.6% market share of the residential sector.
Total Residential Demand
Source: Propane Education & Research Council
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Propane Residential Demand
Residential US Energy Demand 2012-2018
Residential (9.0% of Total US Energy Demand in 2018)
Year CAGR 2012-2018 2012 2013 2014 2015 2016 2017 2018
Natural Gas 62.2% 64.9% 65.4% 63.6% 64.2% 65.0% 67.4% 3.6% Electricity 11.5% 9.7% 9.4% 10.2% 11.2% 10.9% 10.0% 0.3% Propane 7.1% 7.0% 7.0% 6.9% 7.2% 7.1% 7.6% 3.5% Wood/Biomass 9.0% 9.8% 9.4% 9.2% 8.7% 8.4% 7.3% -0.6% Diesel/Heating Oil 9.9% 8.4% 8.7% 9.8% 8.4% 8.3% 7.3% -1.9% Solar 0.1% 0.1% 0.1% 0.2% 0.2% 0.3% 0.3% 15.7% Coal/Coke 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% -6.4%
Source: Propane Education & Research Council
Source: Propane Education & Research Council
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Number of Propane Space Heating Households
Propane Space Heating Market Share
Source: U.S. Census Bureau
Source: U.S. Census Bureau
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Opportunities US Housing Units Starts US housing unit starts have been on a steady rise since 2011 and are expected to grow through 2025; however, unit starts are still short of pre-recession numbers. As the residential housing market continues to grow, the overall number of propane customers is likely to increase from now to 2025. However, long-term improvements in efficiency will offset customer growth and lead to a slow decline of total residential propane sales on a volume basis.
US Housing Unit Starts by Year
The South is seeing one of the largest increases in the number of US housing starts, although it had also experienced the greatest drop in counts during the recession.
US Housing Unit Starts by Census Region
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Source: U.S. Census Bureau, HUD
Source: U.S. Census Bureau, HUD
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Primary Space Heating Source in New Housing Starts Over the past decade, market share for natural gas has increased, unlike most other fuels.
Market Share of Primary Space Heating Source for All Housing Starts
There are market share differences across regions (see Appendix for census regions defined). New England and East North Central are the regions with the greatest propane market share of new construction. In New England, propane has seen a large increase from 22% in 2009 to 43% in 2018 due to the displacement of heating oil as environmental regulations have come into effect and older technologies were phased out. In the East North Central region, natural gas has increased by a quarter while electricity has fallen 16%. A similar trend is seen in the West North Central and the West South Central regions. Even in the South Atlantic region, where electricity is the majority of new homes, electricity’s market share has decreased while natural gas has slightly increased. Propane is also down in the South Atlantic region, where housing starts are rising steadily.
45% 43% 40% 38% 38% 38% 40% 40% 39% 40%
44% 47% 51% 54% 54% 54% 54% 55% 56% 55%
6% 6% 6% 6% 6% 6% 5% 4% 5% 4%3% 2% 2% 1% 1% 1% 1% 1% 1% 1%
0%
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100%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat Source: U.S. Census Bureau
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Space Heating Market Share for New Housing Starts: New England
Space Heating Market Share for New Housing Starts: Middle Atlantic
9% 7% 6% 5% 3% 5% 6% 6% 10% 6%
41% 42% 42%35% 40% 44% 43% 51% 45% 45%
22% 31% 31% 43% 45% 40% 41%36% 40% 43%
22%17% 17% 9%
8% 4% 5% 3% 3% 5%6% 3% 4% 8% 4% 6% 5% 4% 2% 2%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
15% 19% 12% 11% 11% 10% 14% 10% 11% 13%
76% 71% 78% 79% 78% 78%79% 82% 79% 82%
5% 5% 6% 6% 8% 9% 5% 5% 8% 4%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
Source: U.S. Census Bureau
Source: U.S. Census Bureau
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Space Heating Market Share for New Housing Starts: East North Central
Space Heating Market Share for New Housing Starts: West North Central
28% 20% 19% 17% 14% 12% 15% 13% 11% 11%
49%55% 64% 64% 70% 69% 70% 71% 72% 75%
18% 21%13% 15% 13% 16% 12% 14% 15% 13%
5% 5% 4% 4% 3% 3% 3% 2% 1% 1%
0%
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100%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
36% 35%22% 23% 21% 24% 23% 20% 21% 18%
61% 61%74% 74% 75% 72% 73% 74% 73% 76%
1% 2% 2% 3% 4% 4% 4% 5% 5% 6%
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
Source: U.S. Census Bureau
Source: U.S. Census Bureau
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Space Heating Market Share for New Housing Starts: South Atlantic
Space Heating Market Share for New Housing Starts: East South Central
80% 75% 72% 72% 71% 72% 74% 73% 71% 74%
16% 22% 23% 23% 24% 23% 24% 27% 29% 25%
3% 3% 5% 5% 5% 4% 2% 1% 1% 1%
0%
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
78% 72% 70% 63%76% 75% 70% 64% 70% 73%
18% 23% 27% 34%23% 22% 28% 35% 29% 25%
2% 1% 2% 1% 1% 2% 1% 1% 1% 1%
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
Source: U.S. Census Bureau
Source: U.S. Census Bureau
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Space Heating Market Share for New Housing Starts: West South Central
Space Heating Market Share for New Housing Starts: Mountain
58% 54% 51% 45% 40% 39% 40% 42% 38% 38%
40% 42% 44% 52% 58% 58% 58% 56% 60% 61%
1% 2% 3% 1% 1% 1% 1% 2% 1% 1%
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
22% 15% 11% 10% 11% 11% 13% 17% 16% 15%
68% 78% 82% 87% 87% 85% 83% 80% 80% 82%
10% 5% 5% 2% 2% 4% 3% 3% 5% 3%
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
Source: U.S. Census Bureau
Source: U.S. Census Bureau
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Space Heating Market Share for New Housing Starts: Pacific
New Appliance Installation in New and Existing Homes HVAC Appliance Installations HVAC boiler and HVAC furnace installations have both increased since 2015 (28% and 31% respectively).
New HVAC Boiler Installations by Year
In 2018, propane was 14% of all new boiler installations and 8% of furnace installations, while electricity was 25% and fuel oil 11% for boilers, and 19% and 3% respectively for furnaces. Piped gas still has the
16% 19% 17% 15% 14% 17% 14% 15% 17% 17%
67%72% 72% 77% 78% 75% 80% 76% 75% 74%
6%5% 6% 4% 3% 4% 3% 5% 5% 5%10% 4% 5% 4% 5% 4% 3% 3% 3% 3%
0%
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Electricity Natural gasBottled or liquefied petroleum gas Oil (including heating oil or kerosene)Other or no heat
157,690 185,377 182,151 174,43347,007
82,307 72,342 77,370
268,444
383,375 342,619 342,73772,956
96,76878,922 98,107
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Electric Fuel oil Piped gas Propane Other
Source: U.S. Census Bureau
Source: Home Innovation Research Labs
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majority of market share for both HVAC boilers and furnaces. There is a lot of opportunity for propane for both boilers and furnace installations, especially in regions like West South Central where electric has a sizable market share of new installations, or New England and Mid Atlantic where fuel oil still maintains a strong share of new installations.
2018 New HVAC Boiler Installations by Fuel
HVAC Furnace Installations by Year
020406080
100120140160
180
NEWENGLAND
MIDATLANTIC
E NCENTRAL
W NCENTRAL
SOUTHATLANTIC
E SCENTRAL
W SCENTRAL
MOUNTAIN PACIFIC
Thou
sand
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Electric Fuel oil Piped gas Propane Other
557 619 775 69691 89
105 120
1,8292,252
2,438 2,459
236
301243 302
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Electric Fuel oil Piped gas Propane Other
Source: Home Innovation Research Labs
Source: Home Innovation Research Labs
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2018 New HVAC Furnace Installations by Region
Electricity maintains at least 70% of the market share for new HVAC heat pump backup installations each year, followed by piped gas at around 20%. Although propane is a small percentage, its market share has been increasing each year. It has increased from less than 4% in 2015 to over 6% in 2018.
New HVAC Heat Pump Backup Installations by Year
The South Atlantic continues to be an area of opportunity with over 700,000 heat pump installations, comprising 39% of all new heat pumps installations in the US. In 2018, electricity made up 83% of new South Atlantic heat pumps, while propane was only 5% in that same region. Other areas with over 70% electric market share included East South Central, West South Central, and the Mountain regions.
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1,129 1,255 1,284 1,360
243351 399 369
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Source: Home Innovation Research Labs
Source: Home Innovation Research Labs
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2018 New HVAC Heat Pump Backup Installations by Region
Water Heater Appliance Installations Tank water heaters make up over 80% of new installations. However, propane maintains a larger market share of tankless water heaters compared to tank water heaters. Since 2015, propane has had an average 5% share of tank water heaters compared to 13% of tankless water heaters.
New Tank and Tankless Water Heater Installations by Year
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Source: Home Innovation Research Labs
Source: Home Innovation Research Labs
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Over a quarter of tankless water heater shipments and 22% of tank water heaters were installed in the South Atlantic region in 2018. Electricity made up a majority of both tank and tankless water heaters in the South Atlantic (67% and 45% respectively). Similarly, in East South Central, electricity was over 60% of tank water heater shipments compared to 2% for propane.
2018 New Water Heater Installations by Region
New Generator Installations With recent natural disasters and extended blackouts, the need for backup power has become more important. Each year, there has been an increase in both newly added and replaced generators. According to Home Innovation Research Labs, new generator installations have increased 61% since 2015.
45% 41%31% 31% 25% 29%
40%31%
67%
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46% 45%32% 28% 34% 34% 26%
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Tank
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NEWENGLAND
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MOUNTAIN PACIFIC
Electric Fuel oil Piped gas PropaneSource: Home Innovation Research Labs
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New Generator Installations by Year
In 2018 South Atlantic had the most generator installations, accounting for about 23% of those installed that year. Around 29% of new generators in South Atlantic were propane.
2018 Generator Installations by Region
Manufactured Housing Higher-end manufactured homes could be a source of residential sector propane demand growth. Manufactured homes are poised for growth, mainly as prices for site-built homes continue to rise, and there is low stock of pre-owned residences available to buyers. Manufactured housing shipments have been on the rise, increasing 11% on average since 2014; however, it remains around 10% of current new
191 229 256 292100
144 139178123
116 142
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Source: Home Innovation Research Labs
Source: Home Innovation Research Labs
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housing sales. In 2018, close to 96,000 manufactured homes were shipped compared to less than 64,000 in 2014. In 2018, multi-section homes made up slightly more than half at 53% of the shipments.
Total US Manufactured Homes Shipped by Year
In 2018, the West South Central region made up 28% of the total manufactured shipments, followed by the South Atlantic region at 23%. Although the West South Central area has received the most shipments, the South Atlantic has been seeing an average yearly increase of 16% since 2014 compared to the West South Central at almost 7%. Multi-section homes make up the majority of new shipments, with the exception of those shipped to the East North Central, West North Central, and the West South Central regions.
2018 US Manufactured Homes Shipped by Region
In 2018, Texas received the most shipments, receiving almost 20% of all manufactured housing shipments, followed by Florida at 8%. The top 10 states make up 62% of all shipments in 2018 (see chart below for the top states).
33,779 38,011 41,740 46,490 51,203
29,846 31,96538,534
46,163 44,709
0
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2014 2015 2016 2017 2018Multi- section Single- section
12001 134067270
4079 6230 3707 2100 1589 821
153288706
66236088 1093
23651840 2012
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West SouthCentral
SouthAtlantic
East SouthCentral
East NorthCentral
Pacific Mountain MiddleAtlantic
West NorthCentral
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Multi- section Single- section
Source: Manufactured Housing Institute
Source: Manufactured Housing Institute
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Top 10 States for Manufactured Housing Shipments
Manufactured Housing: Map of US Shipments
The price of manufactured housing has also risen. From 2014 to 2018, prices have increased 20%.
83715229
1813 2081 2249 2162 2298 3388 1781 2057
10261
2093
3063 2726 2218 2277 1737 6001776 1446
02000400060008000
100001200014000160001800020000
Multi- section Single- sectionSource: Manufactured Housing Institute
Source: Manufactured Housing Institute
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Average Sales Price of Manufactured Homes
Zero Net Energy (ZNE) Homes Over the past few years, there has been tremendous growth in zero net energy homes, especially with multi-family units which make up most of new ZNE projects. ZNE units have increased 259% from 2015 to 2018. California leads the way in the number of zero energy buildings.
Growth in ZNE Units
$-
$20,000
$40,000
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2014 2015 2016 2017 2018
Total Single Double
408 741 1153 16293399 4077
6059 701561778023
13906
22146
0
5000
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15000
20000
25000
2015 2016 2017 2018Projects Builders Units
Source: Manufactured Housing Institute
Source: Team Zero
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ZNE: Single vs Multi-Family Units
Top States for ZNE Buildings
Percentage of Units by Energy Performance
3106 3476 5582 54163071 4727
832315707
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2015 2016 2017 2018
Single-Family Units Multi-Family Units
0 50 100 150 200 250
VermontWashington
FloridaTexas
ColoradoNew York
MaineArizonaOregon
California
Number of ZNE Buildings
85%72% 74% 67%
9%20% 22% 29%
6% 7% 5% 5%
2015 2016 2017 2018Zero Energy Ready Zero Energy Net Positive
Source: Team Zero
Source: Team Zero
Source: North America; NBI; 2018
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The growth in ZNE homes is expected to continue. In a recent study, the Propane Education & Research Council found that builders expect a growing demand for ZNE homes. Nine out of 10 surveyed predict demand to increase in the next five to 20 years and four out of 10 expect it to grow significantly. Nearly all builders are favorable to ZNE homes (98%), along with buyers (95%) and remodelers (89%). Both builders (84%) and remodelers (81%) are even willing to pay between 20-30% more for a ZNE home, and buyers and builders are likely to consider a ZNE home for their next home purchase or build (83% and 89% respectively). Propane is well positioned to be part of that growth in ZNE. Part of measuring zero energy performance includes the “upstream” efficiencies and losses of various energy sources. That might include the energy needed to extract, process, and distribute fuels like propane and natural gas, or the energy associated with using those fuels for power generation, along with the efficiency losses in the power generation process and distributing the electric power to the home. Source Energy Explained
For example, for every unit of electricity used on site, 3.03 units of source energy in the form of a fuel like natural gas or coal must be extracted to generate and deliver that electricity. Propane, however, only requires 1.15 units of energy at the source to account for losses from extracting, processing, and distribution. Units of Source Energy Compared
Source: Propane Education & Research Council
Based on national averages. Source: GHG and Criteria Pollutant Emissions Analysis. Gas Technology Institute for PERC, 2017.
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Appendix US Census Regions (4)
US Census Regions (9)