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An RMI study finds that in 24 states and Washington, D.C., spare winter grid capacity could accommodate more heat pumps and spread fixed electricity-system costs across more usage. It estimates rates could average 13% lower than they otherwise would, but says the figures are directional, not forecasts; lower rates do not guarantee lower household bills.
A new RMI study finds that installing more heat pumps could use spare winter capacity on the electric grid and help lower residential electricity rates in 24 states and Washington, D.C. The researchers estimate rates could average 13% lower than they otherwise would, but stress that the results are directional estimates, not forecasts, and do not establish how much any household would save.
RMI’s analysis focuses on the difference between seasonal demand and the costs of maintaining the grid. In much of the United States, electricity use peaks on hot summer afternoons, when air conditioners run at the same time. In roughly half of states, the study found that winter capacity is less heavily used, leaving room for heat pumps without necessarily requiring new grid infrastructure, a consideration for government heat-pump programs. The analysis also assumes heat pumps would largely replace less efficient air conditioners in summer, rather than adding equivalent new peak demand then.
Electricity rates cover both the energy customers use and fixed system costs, including poles, wires, power plants and transformers, as well as regulated utility profits. If existing equipment serves more electricity use during underused periods, those fixed costs can be spread across more kilowatt-hours. RMI estimates that maximizing heat-pump deployment over coming years without grid expansion could reduce residential rates by an average of 13% relative to the study’s comparison case—roughly the equivalent of $200 off annual customer bills, according to the report.
The potential varies by state. RMI estimates that Michigan could install 3.6 million home heat pumps and reduce overall residential rates by as much as 27%. The study also considers systems that pair a heat pump with an existing fossil-fuel furnace or boiler. In Illinois, it found that the grid could accommodate heat pumps as the sole heating system in 30% of households; its modeled mix for making use of grid headroom and lowering rates instead had 79% of households with hybrid systems and 21% with all-electric heat pumps.
How Winter Capacity Could Affect Rates
The findings speak to a key concern in plans to electrify home heating: whether additional demand would require costly grid upgrades. In places with spare winter capacity, the study suggests that heat pumps could use more of infrastructure already paid for, potentially reducing the fixed-cost share of rates. The analysis also argues that hybrid systems could allow more homes to use heat pumps while retaining a furnace or boiler for the coldest hours, when some systems may need backup.
That rate effect is not the same as a guaranteed bill reduction. A lower price per kilowatt-hour can benefit customers broadly, while a household’s total costs depend on how much electricity it uses and what heating fuel it replaces. RMI did not calculate individual households’ bill changes. Whether a switch saves money depends on factors such as local electricity and fuel prices, home insulation and heat-pump efficiency.
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Why Winter Grid Headroom Matters
The grid is generally built to serve periods of high demand, particularly summer peaks. Much of its capacity may be used less in winter, when electricity demand is typically lower. RMI co-author Ryan Shea compared the system to a toll bridge whose fixed costs are divided among too few users: adding use can spread those costs more widely, provided the extra demand fits within available capacity.
Heat pumps provide heating and cooling and can replace less efficient heating equipment. But their effect on electricity demand varies by climate and installation. Some units use electric-resistance backup when they cannot meet heating needs, which can draw substantially more power. RMI’s analysis therefore examines hybrid configurations as well as homes relying solely on electric heat pumps.
The study’s conclusions are not a guarantee that all regions have spare capacity. It analyzed 24 states and Washington, D.C., selected for available winter headroom, and the supplied report says RMI lacked utility-specific data that could refine its estimates. The results should be read as a comparison of potential outcomes under the study’s assumptions, not as a state-by-state utility forecast.
“The larger the reduction in electricity rates, the higher likelihood that someone’s energy bill will decrease with a heat pump.”
— Ryan Shea
Limits of the Rate Estimates
RMI describes its results as directional estimates, not forecasts. The team did not have utility-specific information to refine the analysis, and it did not estimate how household bills would change after installing a heat pump. The supplied source also does not specify the study’s publication date or provide detailed assumptions for each utility and state.
Actual costs can differ depending on the home, the equipment, local fuel prices and how often backup heating runs. Vaishnav cited a 2024 Michigan study he co-authored that found switching from fossil gas to a heat pump could raise annual bills for some households by more than $1,000 under the fuel costs at that time. That finding is specific to its study conditions and does not establish the outcome for other homes or current prices.
It also remains unclear how utilities or policymakers would translate the study’s potential rate effects into actual rate changes, or how quickly installations could occur. The analysis identifies possible capacity and cost effects; it does not report a state policy decision or a utility commitment to lower rates.
Utility Data and Deployment Choices
The next step for evaluating these estimates would be analysis using utility-level information on seasonal demand, infrastructure costs and local rates. Such detail could show where the modeled headroom exists and whether additional heat-pump use could fit without new grid investments. The supplied report does not announce a timetable for that work.
For policymakers and utilities, the study points to choices about how to encourage heat-pump adoption and whether to support hybrid systems in colder regions. Any rate effects will depend on actual installations, system designs and local electricity use. Household savings will also depend on equipment performance and the cost of the fuel being displaced, so the study does not establish a single expected bill outcome.
Key Questions
What did the RMI study find?
RMI found that in 24 states and Washington, D.C., spare winter grid capacity could accommodate more heat pumps. It estimates greater use could spread fixed grid costs over more electricity consumption and lower residential rates compared with its modeled alternative.
Does the study say heat pumps will lower every household’s bill?
No. The study estimates possible changes in electricity rates, not household bills, and it did not model individual bill changes. A household’s total costs depend on factors including the fuel it replaces, insulation, equipment efficiency and local energy prices.
Why does the study discuss hybrid heat pumps?
A hybrid setup uses a heat pump alongside an existing fossil-fuel furnace or boiler. RMI says keeping backup heating for the coldest hours could allow more homes to use heat pumps within available grid capacity, including where resistance backup could increase electricity demand.
How certain are the rate-reduction figures?
RMI calls them directional estimates, not forecasts. The team lacked utility-specific data to refine the results, and real outcomes would depend on local grid conditions, rates and adoption.
Source: rss
