[darth_avocado]

> most homeowners in california actually see operating cost parity or a slight decrease, even with super expensive electricity

But you’re missing my first point though, installing a heat pump system comes with a price tag of tens of thousands of dollars. I’m not doing that if my operating cost is at parity or a slight decrease. It’s the same reason people are no longer incentivized to install solar. And to add to that, installing heat pumps also come with additional costs that can range anywhere from a few thousand dollars to replace the main electrical panel to tens of thousands of dollars for a full electrical upgrade if your house is on knob and tube wiring to reduce fire risks.

[morshu9001]

I feel like home solar makes no sense without subsidies, even now with economies of scale. Commercial solar may be a different story.

[kevin_thibedeau]

If you DIY everything and go with server rack batteries you can keep the costs low enough for a reasonable break even point. Any middleman is going to gouge.

[next_xibalba]

That is awesome and I wish I had these skills. But it also rules out the vast majority of homeowners.

[doubleg72]

I just got 10 new 585w panels and inverter for under $5k. A battery is gonna cost me $1500 but at $350 month for electricity, not sure how you can claim it not worth it.

[morshu9001]

If I can actually get a home solar setup for $6.5K, I'll do it, but that'd mean every solar company is a scam.

[laurencerowe]

Home solar makes perfect sense in Australia - a market with similar Labour costs to California - because they do it for 1/3rd of the cost. It makes no sense in California when the subsidies alone are higher than the total costs for utility scale solar.

[parpfish]

home solar makes sense when you live out in the boonies and there's an unreliable grid that goes down in storms

[kragen]

> installing a heat pump system comes with a price tag of tens of thousands of dollars.

Mine cost US$250 for the machine, refrigerant included, and another US$80 for the installation. We've had to have it fixed twice due to factory defects. Its heat output is 3400W, nominally consuming 941 watts of electrical power. It's not a great machine, but you're smoking crack.

[ssuds]

I presume you're not in the US - the numbers you quoted here align with the costs I observed for heat pumps in India (https://www.heatpumped.org/p/you-can-have-it-in-any-color-as...)

Skilled labor in the US is expensive! Most of the install costs come from labor, not equipment. Tens of thousands of dollars is pretty typical for a heat pump installation.

(For what it's worth, the person you're quoting is referencing a whole home system, either ducted or multi-zone ductless. I think you're referencing a single-zone ductless. Those are cheaper, but still are typically $5-10k installed from a licensed contractor in the states)

[kragen]

Yes, it's just a mini split. Two guys (skilled, but AFAIK not licensed) installed it in about 6 hours. I'm in Argentina, but I don't think US$1000 an hour is a common labor rate even in the US? Maybe for a famous lawyer or surgeon?

[ssuds]

Ha. It's not straight labor. So much other overhead to consider - workman's comp insurance, back office staff, technician utilization, vehicle repair and maintenance, etc... There are lots of other costs that get baked in when you're looking at a licensed company compared to a guy in a truck

[kragen]

Okay but US$5k for half a day of work? It would have been faster if the guy had had his own ladder instead of us moving my desk so he could stand on it to work. (He's bought one since then.)

[tomrod]

A half day of work, a half day of office rent, a half day of truck use, a half day to pay for loan servicing, a half day to pay overhead costs, a half day to add to reserves for the half day you don't work, and so forth.

[darth_avocado]

Homes in the US are much bigger and more than just installing a mini split. You need to factor that in.

[nwallin]

In Southern California it costs $120 just for a guy to come out and look at your HVAC. Not fix anything--not install anything--just to look at it and give you an estimate for how much the repair is going to take. I went to the website for a local installer and they give a ballpark of $13,000-$25,000 for a heat pump installation.

I don't know why it's so expensive here. It shouldn't be, it makes no sense. But it is.

[ssuds]

The first point is very valid too. There was an energy commission study a few years ago, and up front cost is pretty consistently one of the biggest barriers to heat pump adoption.

I think there's some nuance to that, though. Even replacing a furnace + AC in California amounts to tens of thousands of dollars! It's not that heat pumps are expensive, it's that construction work in general is expensive.

When you frame it in terms of percentage of home cost, it actually feels a lot more reasonable. Robert Bean is a pretty respected voice in HVAC, and shared this article a few years ago (https://web.archive.org/web/20150210053806/http://www.health...). The gist is (and this is focused a bit on new construction, so not entirely apples to apples) that you should budget 3-5% of the home's cost for a bare minimum code compliant HVAC installation. When you look at it in that lens, $20k to replace the most complicated mechanical system in a $3M home is less than 1%.

I recently read a piece about the "Cost disease in services" that was really enlightening (https://growthecon.com/feed/2017/05/15/What-You-Spend.html).

"Productivity growth in the goods sector raises the wage in that sector, but also raises the output of that sector. So the ratio of wage to output - a measure of the cost of a unit of output - stays constant over time. Higher wages in the goods sector put pressure on wages in the service sector, so wages rise over time there. But (taking the exteme position) productivity is not growing in services, and so output is not growing. The ratio of wages to output in services - a measure of costs - is thus rising over time. This is the “cost disease of services”."

While I don't think that's all of it, it is a helpful framing of the economics around these dynamics.

There are some companies out there that are truly price gouging. But many are just pricing around the true cost of labor and to run a construction business. I've done a little writing around this topic too: https://www.heatpumped.org/p/pricing-transparency-peeking-be...

Ultimately, I would love to see upfront prices & operating costs for heat pumps both fall. But there are a lot of tough realities baked into the cost of these systems. They are still a very logical choice for most homeowners at the time of failure. Especially with rebate & incentive stacks in many places, a heat pump actually works out cheaper than a new furnace + traditional AC for many homeowners.

[psunavy03]

. . . and how many people do you assume own $3M homes? Good grief.

[ssuds]

The median home in the SF Bay Area is $2M, so given that this thread is focused on California I think it’s a reasonable number to anchor on… https://www.sfgate.com/realestate/article/bay-area-metro-are...

Even if we changed the number to $1M, the overall point remains the same

[owenthejumper]

Good article, but I must point out that in no way will private equity reduce prices. It will be the exact opposite