Abstract

The global drive for decarbonization is accelerating the shift to electrified heating in commercial buildings, but significant challenges remain. Heat pumps, while efficient in ideal conditions, often require larger units and costly infrastructure upgrades to meet commercial heating demands, particularly in older buildings or challenging climates. These barriers increase capital and operational expenses, complicating electrification efforts and limiting the feasibility of a heat pump-only approach.  

Supplemental heating technologies offer a practical solution to these challenges. By integrating additional heating sources, particularly as distributed heating units, the reliance on oversized heat pumps can be minimized, reducing both capital expenditures (CapEx) by at least 20% and operational costs (OpEx) by 7-9% while lowering system capacity sizing by 15%. Various approaches, including electric boilers, resistive heating, and ohmic heating, achieve this, and contribute to additional reduction of greenhouse gases (GHG). These strategies also have the benefit of improving performance, reducing infrastructure strain, and optimizing heating performance based on occupancy and time-of-day demand.  

This paper examines the role of distributed supplemental heating in improving efficiency and cost-effectiveness for commercial buildings in cold climates. Data from URBS on distributed heating units shows notable GHG savings, reduced peak capacity, and enhanced system performance in addition to cost savings. This approach offers a scalable, financially viable electrification pathway for large commercial buildings. 

Introduction

Commercial building owners face growing pressure to electrify heating systems in response to decarbonization goals, regulatory mandates, and environmental, social, and governance (ESG) commitments. Heat pumps, with their ability to deliver three to five times more heat than the electricity they consume, are widely recognized as one of the most effective technologies to reduce heating energy consumption and emissions in buildings. However, their market adoption, especially in colder climates, continues to lag. Based on the 2018 Commercial Buildings Energy Consumption Survey (CBECS) data, it is estimated that fewer than 15% of commercial buildings utilize heat pumps for space heating equipment, and when they are in use they are more commonly found in warmer regions ​[1]​. The reason is straightforward: the economics often don’t work in colder climates.  

While heat pumps offer long-term energy efficiency benefits, the upfront and ongoing costs of systems that can handle extreme cold conditions remain a significant barrier. In regions with 7,000+ Heating Degree Days (HDD), heat pumps typically require large, high-temperature systems to meet peak loads during just a few weeks of the year. These oversized systems carry higher capital costs, often require infrastructure upgrades, and suffer from seasonal inefficiencies—leading to increased operational costs over time.  

This study focuses on a critical opportunity to make commercial heat pump adoption more viable: distributed supplemental heating. By distributing supplemental heating throughout the building, systems can be designed around the majority of the heating season—not the extreme peaks—allowing for right-sized heat pump installations. This hybrid approach reduces capital and operational expenditures, increases retrofit feasibility, and improves overall system performance, especially in cold climates. 

This paper includes analysis of multiple electrification pathways—including high-temp heat pumps, low-temp heat pumps with centralized supplementation, and heat pumps with distributed supplemental heating strategies—and compared them against baseline gas boiler systems. The results show that distributed supplemental heating enables significant CapEx and OpEx savings, avoids oversizing, and provides a scalable pathway for commercial buildings to electrify without compromising performance or financial viability. 

Scope of the Cold Climate Challenge

There are unique challenges posed by cold climate regions to the deployment of heat pump technology for commercial building electrification. This section examines the limitations in performance and cost-effectiveness of heat pumps under cold temperature conditions, identifies critical thresholds for efficiency and economic viability, and contextualizes the heating demand using Heating Degree Days (HDD). The analysis sets the stage for evaluating why supplemental heating strategies may be necessary to support widespread electrification in colder climates. 

Heat Pumps Limitation in Cold Climates 

Heat pumps have emerged as a leading electrification solution for commercial building heating, with the ability to significantly reduce energy consumption and GHG emissions. Under ideal conditions, heat pumps achieve a coefficient of performance (COP) of 3.0 to 5.0 meaning they provide three to five times more heat energy than the electricity they consume ​[2]​. However, their efficiency and reliability diminish in extreme cold conditions, particularly in regions with prolonged sub-freezing temperatures. 

As outdoor temperatures drop the COP of heat pumps decreases, resulting in diminished capacity. This is evident in Figure 1 which shows the COP of around 550 different heat pumps representing a mix of air-to-air and air-to-water systems [3]. 

FIGURE 1: HEAT PUMP COP IN COLD TEMPERATURES 

Figure 1 shows that COP declines as outdoor temperatures decrease. When outdoor temperatures fall too far, the heat pump will either be consuming more electricity to deliver the required output temperatures, or struggle to deliver those temperatures at all. However, the same study notes that “Above 14°F (−10°C), heat pumps were able to provide the required heat at relatively high efficiency”, indicating that while heat pump performance struggles in cold conditions it is largely in the extreme or prolonged conditions when this significantly impacts performance. In that interest, it is important to understand the frequency of occurrence of these cold conditions across different regions.  

Magnitude of the Problem 

To indicate the magnitude of the problem we use Heating Degree Days (HDD) to serve as a critical metric of heating demand across different geographic regions. It quantifies how much and for how long the temperature stays below a set baseline, usually 65°F (18°C) as set by the U.S. National Oceanic and Atmospheric Administration.  

Recent research by the American Council for an Energy-Efficient Economy (ACEEE) highlights the need to reevaluate heat pump system design based on HDD thresholds. In a 2022 study of 2,539 homes using data from the Energy Information Administration, ACEEE found that: 

"ENERGY STAR® electric ASHPs will have the lowest life-cycle space heating costs in climates below approximately 4,500 heating degree days (HDD)... cold climate electric ASHPs... have the lowest life-cycle space heating costs between 4,500 and 6,000 HDD... and that above 6,000 HDD, hybrid systems (cold climate heat pumps backed up by fuel-burning systems) have the lowest life-cycle energy costs"​ [4]​ 

This indicates that conventional standalone heat pump systems become less cost-effective beyond 4,500 HDD and that hybrid or supplemental heating strategies become essential above 6,000 HDD. In a newer report, ACEE notes that the dividing line went from 6,000 to 7,000 HDD due to use of newer Residential Energy Consumption Survey (RECS) data and revisions to heating system and biogas costs [5]. However, the point remains: cold climates introduce limitation on the cost-effectiveness and performance capabilities of heat pumps systems. 

Figures 2 and 3 illustrate the distribution of Heating Degree Days (HDD) across the United States and Europe respectively. The U.S. map, adapted from the ACEEE 2024 report on heat pump performance, shows a clear northward gradient of increasing HDD values, emphasizing the heightened heating demands in northern states such as Minnesota, Wisconsin, and Maine​ [5]​. 

FIGURE 2: UNITED STATES HDD DISTRIBUTION 

The European map below, sourced from the EU’s Eurostat data on cooling and heating degree days, provides a comprehensive visual of the European continent’s HDD distribution​ [6]​. It shows notably high HDD values in Scandinavia, the Baltic States, and parts of Eastern Europe, reinforcing the regional challenge of deploying cost-effective heat pump solutions in colder climates. 

FIGURE 3: EUROPEAN HDD DISTRIBUTION

While regions with high HDD present significant challenges for heat pump efficiency, it is important to remember that extreme cold conditions do not persist throughout the entire heating season. Even in climates with 7,000+ HDD, there are periods throughout most of the year with milder temperatures where heat pumps operate at a much higher COP, reducing the peak capacity requirements. For example, figure 4 below is a representation of the heating demand throughout the year of a building in New York which is consistent with 6,000 to 7,000 HDD. This heating demand curve was simulated as part of the New York building analysis that will be explored further where this paper presents Data Comparing Heating Options.  

FIGURE 4: NEW YORK BUILDING HEATING DISTRIBUTION

Figure 4 shows that at 14°F (−10°C)—where we start the see reduction in conventional heat pump performance as demonstrated in figure 1— it equates to roughly 500 hours (about 3 weeks) annually. This means that the most severe performance challenges for heat pumps typically only occur during a few weeks per year. At the same time, this building—which has a particularly weak envelope like many old and existing buildings in New York—requires 40-50% more heating capacity to cover those cold conditions. As we will explore next, traditional system sizing approaches often include centralized systems designed to meet the peak demand, leading to oversized and costly systems at the expense of seasonal efficiency. 

The Challenge of Large, High-Temp Heat Pumps 

This section analyzes the practical and economic limitations of deploying large, high-temperature heat pump systems (HTHP) in commercial buildings—particularly in retrofit scenarios. While these systems offer a pathway to match legacy boiler temperatures and peak heating loads in cold climates, their implementation often requires significant capital investment, infrastructure upgrades, and operational compromises. Here, we break down the conventional approaches for meeting peak demand, the retrofit and refrigerant constraints unique to HTHPs, and the cost implications associated with these systems. Finally, we introduce the concept of right-sizing central heat pumps and using distributed supplemental heating to enhance overall efficiency and feasibility. 

Conventional Solutions for Peak Heating Demand 

Most commercial heat pump systems are typically sized for 90–120% of peak heating capacity to maintain comfort during the coldest days​ [7]​. In traditional buildings, this peak demand was historically met by steam or hot water boiler systems supplying water up to 180°F (82°C). Under mild conditions, conventional heat pumps can supply temperatures between approximately 120°F and 140°F (49-60°C). This means that in order to achieve the same result as conventional heat pump systems, buildings most often need to be retrofitted with larger distribution pipes ​​.  

Now, as outdoor temperatures fall to around 41°F ( 5°C) or lower, conventional heat pumps begin to struggle even more to reach the necessary supply temperatures, as shown in figure 1 above. To overcome this limitation, it is common for commercial buildings to add supplemental heating or install large systems with advanced compressors and refrigerants that can deliver extremely high supply temperatures—even in frigid conditions. This section will focus on the latter while supplemental heating options are further explored in Current Supplemental Heating Strategies 

While large advanced systems are capable of delivering high output temperatures, they still require substantial infrastructure modifications, cost more, and allow for less dynamic operation all in the interest of ensuring that a heat pump can meet the peak heating demand that only occurs during a few weeks each year. These trade-offs will be examined in the following sections. 

Infrastructure and Retrofit Limitations 

In a recent analysis, ACEEE found that the challenges of heat pumps unique to commercial buildings include building retrofits, refrigerant challenges, and space constraints​ [9]​. These challenges are particularly acute with high-temperature systems designed to meet peak heating demands with advanced heat pump technologies. 

Building Retrofits: Retrofitting older commercial buildings—especially those originally designed for high-temperature fossil-fuel systems—is inherently complex. This complexity is already challenging when installing low-temperature heat pumps, which often require extensive upgrades to the building’s heat distribution system, such as larger piping, expanded radiators, and enhanced control systems to accommodate supply temperatures in the 120 to 140°F (49-60°C) range. However, even high-temperature heat pump systems (HTHPs), which aim to replicate legacy supply temperatures up to 180°F (82°C), can present significant challenges. These systems may place additional strain on existing structural and electrical systems due to their size, weight, and higher power demands, complicating integration and requiring careful coordination with building infrastructure and existing tenants. 

Refrigerant Challenges: HTHPs often utilize specialized refrigerants such as hydrocarbons (e.g., butane, iso-butane) or ammonia, which are capable of reaching output temperatures near 212°F (100°C). While effective, these refrigerants require compatible systems and can introduce safety and regulatory concerns. This results in increased installation costs and more complex maintenance requirements, especially in retrofit applications. 

Space and Structural Constraints: Large HTHP systems can necessitate reinforced mechanical rooms to accommodate heavier and bulkier equipment. This challenge is magnified in older buildings with limited space or historic preservation mandates, where spatial constraints become a significant barrier to implementation. Analyses from Rocky Mountain Institute (RMI) indicated that it may even be more burdensome as mechanical room redesign alone can add 30–50% to initial system installation costs ​[10]​. 

Increased Capital and Operational Costs 

Commercial heat pump equipment costs generally rise as system capacity increases, reflecting the complexity and size of the components needed to meet higher heating loads in colder conditions. 

A 2022 Rosen Consulting Group (RCG) report found that air-source heat pump systems for multi-family and small office buildings in New York cost approximately $12–$21 per square foot, and $17–$24 per square foot for ground-source systems ​[11]​. As the paper will explore later in the section comparing data of heating solutions, this number increases significantly to more than $100 per square foot when looking at large commercial buildings in the same climate. However, this wide range of values stands to reflect the increase in cost that comes with increased capacity as well as the complex set of variables that commercial building heat pump retrofits face. Notably, this includes the type of building, replacement technology, utility rates, cost of capital, available incentives, where the building is located, and if deferred maintenance dollars can be put towards upgrades​ [12]​. 

Furthermore, systems specifically designed for extreme climates carry even higher price tags. Due to advanced compressors (including two-stage systems), variable-speed controls, and high-performance refrigerants, cold climate heat pumps can cost 10–20% more than conventional models. This estimate is derived from residential sector data, where cold climate models are reported to cost more than standard ones​ [13]​. For commercial systems, premiums will escalate further at higher capacities, but cost data focused on commercial buildings has not been extensively explored. In that interest, the section that includes Data Comparing Heating Options will further explore the CapEx premium that advanced high-temperature heat pump systems have in commercial buildings compared to alternate solutions.  

Additionally, this paper will explore how these higher costs also extend to operations. Large, oversized HTHP systems can lead to increased OpEx as well, due to inefficiencies, excessive cycling, and energy-intensive high-output modes. Later in this paper, in the section that details Data Comparing Heating Options, this paper will examine data showing that high-temp heat pump systems incur 7-9% higher operational costs than comparable alternatives. These findings reinforce the need for a more strategic system design to manage capital investment and long-term expenses. 

Compared to conventional electrification efforts, the costs and retrofit burden for installing advanced, peak heating capacity heat pump systems is disproportionately high. In many cases, this level of system enhancement is pursued to match performance expectations rooted in fossil-fuel infrastructure, rather than tailoring solutions to actual seasonal heating needs. This disconnect leads to overbuilt systems and costly capacity, highlighting the importance of considering more modular and flexible heating strategies in commercial retrofit planning. 

The Right-Sizing Solution: Optimal Heat Pump Sizing 

Rather than following the traditional approach of oversizing centralized systems to meet peak heating loads, a more effective strategy is to right-size the central heat pump—designing it to meet 60–80% of the building's peak load—and cover the additional peak load with supplemental heating. This method improves energy efficiency during the majority of the heating season while avoiding the high costs and inefficiencies tied to rarely used peak capacity.  

Heat pump solutions that incorporate supplemental heating are already in common practice. A study by Pacific Northwest National Laboratory (PNNL), further explored in figure 5 below, found that at outdoor air temperatures below 5°F (-15°C), supplemental heating contributes significantly to total heating of even the most highly rated cold-climate heat pumps (CCHP), with some sites showing percent of supplemental heating operations 25% of the time​​. This underscores the necessity and practicality of using supplemental heating for rare cold events instead of overbuilding the central system with high-temp alternatives. 

By leaning on supplemental heating for the few coldest days of the year, building owners can avoid excessive costs, streamline retrofits, and improve system longevity. In the next section, this paper will explore how supplemental heating is currently integrated into commercial applications and the potential for more effective adoption. 

Current Supplemental Heating Strategies: A Distributed Opportunity 

As outdoor temperatures fall conventional systems often require supplemental heating either as defrost support or backup heating. In the following section the paper outlines the current landscape of these strategies used in commercial buildings and how they integrate with heat pump systems. It introduces the limitations of traditional centralized approaches and presents distributed supplemental heating as a more efficient, flexible, and cost-effective pathway. By exploring both existing methods and the benefits of distributing supplemental heat across zones, this section frames a compelling case for decentralization—particularly in cold climates where peak loads complicate electrification efforts. 

Existing Supplemental Heating Methods 

Supplemental heating for heat pumps in commercial buildings today is primarily provided by electric resistance. This method is widely used because it is simple to integrate and can provide immediate heat when a heat pump's efficiency declines in extreme cold. Electric resistance heating is a widely used and reliable supplemental heating source, with a COP typically just below 1.0, meaning it converts nearly all electrical energy into heat without additional amplification. While it ensures consistent heating performance even in extreme cold, its higher electricity demand makes efficient optimization an important consideration. This is true for other types of supplemental heating as well, such as electric boilers and ohmic heating, which show similar COPs, but provide useful supplemental heating particularly for hydronic systems. Regardless of the method, all supplemental heating currently falls into two strategies: 

Defrost Cycle Support: During the defrost cycle, heat pumps temporarily switch to cooling mode to remove ice buildup on the outdoor coil. To prevent cold air or water from being delivered into the building, supplemental heaters engage to provide supplemental heat. 

Backup Heating: In extremely low temperatures, when the heat pump’s COP drops below a usable threshold (typically below 2.0), supplemental heating is activated to maintain indoor comfort by providing additional heating capacity. 

The U.S. Department of Energy’s (DOE) CCHP challenge highlights the practical application of supplemental heating. Figure 5 below shows that at 45°F (7°C) both methods of supplemental heating, defrost and backup heating, began to be used, reaching over 25% of the operation time in cold climates below 5°F (-15°C) [14]. 

FIGURE 5: AMOUNT OF USE OF SUPLEMENTAL HEATING IN COLD TEMPERATURES 

This reinforces the essential role of supplemental heating in commercial heat pump applications. While supplemental heating plays a critical role in maintaining comfort and reliability, optimizing its use can improve overall efficiency and cost-effectiveness in large-scale electrification efforts, while reducing the peak capacity needs for the centralized heat pumps.  

Limitations of Centralized Systems 

Centralized heating systems, while historically dominant in commercial buildings, face significant limitations in the context of modern electrification and energy efficiency goals. This discussion becomes relevant in the context of conventional heat pump system because both high-temp and supplemented solutions are largely centralized approaches. 

One of the primary issues is centralized systems’ inability to provide zonal heating. These systems are typically designed to serve large areas or even entire buildings uniformly, regardless of varying occupancy, thermal loads, orientations, or usage patterns. As a result, they often supply more heat than necessary to some zones while underdelivering to others. This mismatch not only leads to occupant discomfort but also increases energy consumption. To compensate for the lack of localized control, centralized systems are usually designed to operate with higher supply temperatures or greater output. This means more energy is used to meet heating needs that may not even exist in all areas.

In addition, centralized systems place considerable strain on an existing building’s infrastructure. High-capacity central heat pump units may require substantial upgrades to electrical systems and physical structures, especially in older buildings not originally designed for such loads, as discussed in the section on infrastructure and retrofit limitations above. The scale and complexity of these installations increases both capital expenditures and long-term maintenance requirements.

In contrast, distributed heating systems offer a flexible, scalable alternative. By enabling zone-specific control, they reduce unnecessary heating, lower peak energy loads, and improve overall system efficiency. These characteristics make distributed approaches particularly well-suited for integration with modern building management systems (BMS), which can dynamically adjust heating based on occupancy and real-time demand. As electrification efforts accelerate, especially in challenging climates and aging buildings, the limitations of centralized systems make them less viable. Distributed, zonally controlled systems present a more adaptable and efficient pathway forward.

Defining Distributed Supplemental Heating

Distributed supplemental heating is a solution that moves supplemental heating away from the centralized system and instead deploys smaller, localized heating units throughout the perimeter of a commercial building to allow for a smaller centralized heat pumps with the advantages of distributed building heating. Instead of relying on a single, oversized backup heating system, distributed supplemental units activate only where and when they are needed, ensuring more efficient energy use and improved occupant control. This approach enhances the adaptability of heating strategies, allowing buildings to maintain comfort while optimizing energy and retrofit costs. This approach allows for:

Improved Efficiency: By supplementing heat only where demand exceeds heat pump capacity, distributed supplemental heating reduces overall energy consumption and reduces the need for heat pumps designed specifically to deliver high-output temperatures. This method prevents oversizing of primary systems, reducing strain and allowing for right-sized installations. 

Enhanced Occupant Comfort: Occupants gain localized control over supplemental heating, improving thermal comfort in individual spaces. By addressing microclimate variations within a building, distributed supplemental heating can enhance workplace productivity through occupant satisfaction. 

Lower Infrastructure Costs: Unlike heat pumps with centralized supplemental heating or high-temperature systems, distributed heating units allow for optimized heat pump sizing that doesn’t require extensive piping modifications, expanded radiators, electrical upgrades, or additional structural support, which helps to reduce CapEx and OpEx.  

Scalability & Flexibility: Distributed systems can be easily expanded as heating demands change, making them well-suited for phased building upgrades or adaptive reuse projects. 

Distributed supplemental heating enhances energy efficiency and adaptability across diverse commercial settings. In office buildings, it can provide targeted heating in high-use areas like meeting rooms and lobbies, reducing overall energy waste. Retail stores and warehouses can benefit from unit heaters in loading docks and entryways where temperature fluctuations are common. Hotels and multi-family residences can accommodate varying heating needs based on room exposure, ensuring localized comfort. Additionally, in schools, distributed heating can optimize classroom conditions without unnecessary energy use in unoccupied areas, all while avoiding excessive sizing of the centralized heat pump system. 

As this paper will explore in the following sections, this method not only optimizes heat pump performance but also minimizes operational and capital costs, offering a scalable pathway to widespread commercial heat pump adoption in cold climates. 

Data Comparing Heating Options 

This section introduces two related but distinct studies evaluating the performance and cost implications of all-electric heating solutions for large commercial buildings. Both studies compare multiple electrified options, including high-temperature ASHPs, and configurations that incorporate distributed and centralized supplemental heating in conjunction with low-temp ASHPs. While both studies use building-level energy modeling and examine the same heating strategies, they differ in their geographic focus, data sources, and modeling platforms. 

The first study, New York Geography Operational Analysis, leverages Integrated Environmental Solutions Virtual Environment (IES-VE) modeling tools and considers a range of ASHRAE climate zones across New York State and other cold-climate regions. It emphasizes emissions, energy use, and operational costs across a wide geographic spread. 

The second study, Boston Building Cost Analysis, focused on a Boston-based commercial building, uses a separate modeling platform and cost database to emphasize the local energy pricing landscape and building-specific capital expenses. This localized model includes detailed CapEx analysis, showing how system design affects both upfront and long-term cost. Together, these two analyses provide complementary insights: one emphasizes regional climate and emissions variability, while the other highlights cost optimization in a dense urban context. 

New York Geography Operational Analysis: Comparison of GHG Savings, Energy Consumption, and Operational Expenditure 

Detailed below are the findings from a broad geographic simulation study conducted across various climate zones, primarily within New York State but inclusive of comparable cold-climate areas. It focuses on operational parameters such as GHG emissions, energy use, and electricity consumption across different heating configurations. The aim is to assess not only which systems perform best in cold climates but also how distributed supplemental heating impacts cost and emissions at scale. This provides insight into how electrification can be optimized not just for individual buildings but for broader building stock subjected to diverse climate conditions. 

Methodology 

This study employs a rigorous methodology to compare the energy performance and cost-effectiveness of various all-electric heating options for a typical tall commercial building, with a focus on distributed supplemental heating systems. The analysis relies on advanced energy modeling techniques using the IES-VE tool, designed to assess energy consumption, thermal comfort, and emissions in commercial buildings. The building model used represents a typical tall commercial building, approximately 730,000 square feet with 10 to 12 floors and a typical floor plan of 60,000 square feet. The model includes detailed envelope characteristics such as U-values for exterior walls, roof, and windows, as well as the window-to-wall ratio for each facade orientation (North, East, South, and West)., which experiences cold winters with HDD ranging from 5,100 to 7,500. The analysis considers multiple ASHRAE climate zones, expanding beyond New York State to assess system performance in a diverse range of temperature conditions and HDD. This approach provides a comprehensive evaluation of how different heating solutions function under varying climatic conditions. The study benchmarks low-temp ASHPs with distributed supplemental heating against conventional heating solutions, including gas boilers, low-temp ASHPs with centralized supplemental heating, and high-temp ASHPs. This study sets out to quantify the potential energy savings, emissions reductions, and cost efficiencies of the various heating options analyzed. 

Heating Options Compared:

Baseline Gas Boiler: Traditional gas condensing boiler system with low efficiency

HP + Central Sup. Solution (Heat Pump with Centralized Supplemental Heating): A low-temperature air-source heat pump paired with centralized supplemental heating.

High-Temp ASHP: A high-temperature air-source heat pump designed as a centralized heating solution for cold climates. 

HP + Dist. Sup. (Heat Pump with Distributed Supplemental Heating): A low-temperature air-source heat pump paired with distributed supplemental heating located near the perimeter throughout the commercial building.  

System Efficiency and Energy Consumption 

HP + Dist. Sup. demonstrates a system efficiency (COP) of 3.57 in cold conditions, representing an improvement over both HP + Central Sup. and High-Temp ASHP systems. This performance gain is driven by two main factors: optimized heat pump sizing and the decentralized design of the distributed supplemental heating approach. 

Compared to high-temperature ASHPs, the improved COP is primarily due to the lower supply temperatures made possible by distributed supplemental heating. By enabling heat pumps to operate at lower output temperatures, the system takes advantage of more favorable thermodynamic conditions, which boosts overall efficiency. Relative to low-temperature centralized systems, the advantage of distributed supplemental systems lies in their ability to heat locally. Centralized systems must generate and distribute heat for the entire building from a single point, often resulting in higher system loads and energy use, especially during colder periods. In contrast, distributed units can meet the same overall heating demand in smaller, more targeted increments. This localized delivery reduces the burden on any one component, enables more responsive and efficient heating, and allows the heat pump to operate under more favorable conditions throughout the season. 

TABLE 1: OPERATIONAL PERFORMANCE OF BUILDING HEATING SOLUTIONS 

GHG Emissions Reduction 

Carbon emissions are a critical factor in electrification decisions. Emissions estimates in this analysis are based on electricity consumption multiplied by regional grid emission factors. This provides a standardized approach for comparing different system configurations by calculating emissions in terms of CO₂ per kilowatt-hour consumed. 

While high-temp ASHPs significantly reduce emissions—up to 68.8% compared to gas boilers—HP + Dist. Sup. further reduces emissions offering 71.1% savings compared to gas boilers. This enhanced reduction is due to the system’s higher efficiency (COP 3.57), which results in lower total energy consumption. The optimized heat pump sizing and distributed supplemental heating reduces unnecessary energy usage, particularly during on-peak periods, leading to fewer emissions overall. In contrast, high-temp ASHPs, while effective, rely on more energy-intensive components and higher operating temperatures, which increase electricity use and associated emissions despite being fully electric.  

TABLE 2: EMMISSIONS PERFORMANCE OF BUILDING HEATING SOLUTIONS 

Cost Considerations: Operational Expenditures 

Cost remains a primary concern when implementing electrified heating solutions. While the baseline gas boiler system is the lowest-cost option, this is primarily because current energy prices favor natural gas over electricity in many regions. Despite its high emissions, the relatively low cost of gas allows this system to maintain the lowest annual energy expense. However, it is important to consider how the cost of gas varies across regions, particularly in Europe.  

Among the electrified options, HP + Central Sup. stands out as the most expensive in terms of annual operational cost. This is due to its lower system efficiency (COP 2.3), which forces the system to work harder and consume more electricity to maintain supply temperatures during peak demand periods. As a result, it incurs both higher energy use and greater wear on system components. 

By contrast, HP + Dist. Sup. and High-Temp ASHP systems benefit from improved energy efficiency. HP + Dist. Sup. achieves the lowest energy cost of the electrified options. This is largely attributable to its higher system efficiency (COP 3.57), made possible through optimized sizing and decentralized operation while allowing it to operate at lower distribution temperatures. These factors combine to make HP + Dist. Sup. the most cost-effective pathway for electrification when seeking natural gas alternatives. 

TABLE 3: OPERATIONAL EXPENDITURE OF BUILDING HEATING SOLUTIONS 

Boston Building Cost Analysis: Comparing OpEx and CapEx 

Here the paper dives into a site-specific analysis for a commercial building located in Boston, Massachusetts, representing a dense urban, cold-climate setting. By modeling the performance and cost of electrified heating options using localized utility rates, capital cost estimates, and real-world weather data, this study highlights how system design choices directly affect energy bills and upfront investment. The analysis compares high-temp centralized heat pumps with low-temp systems augmented by distributed supplemental heating to illustrate how capital and operational efficiencies vary based on architecture, installation complexity, and equipment sizing requirements. 

Methodology 

This analysis evaluates the energy and cost performance of electrified heating options for a multi-story commercial building in Boston. The methodology is grounded in building-level energy modeling and cost analysis using local weather data, utility rates, and construction estimates. The building is modeled at approximately 730,000 square feet over 10 floors, representative of a typical large commercial structure. 

The assessment uses Boston TMY2 (Typical Meteorological Year) temperature data to simulate realistic seasonal heating demand, particularly in a cold-climate context consistent with ASHRAE Climate Zone 5A, which can see an HDD of up to 7,500. Hourly temperatures are used to calculate heating loads, and system performance is evaluated for two configurations: 

High-Temp ASHP: A high-temperature air-source heat pump designed as a centralized heating solution for cold climates.  

HP + Dist. Sup. (Heat Pump with Distributed Supplemental Heating): A low-temperature air-source heat pump paired with distributed supplemental heating located near the perimeter throughout the commercial building. 

Energy use was segmented into categories such as space heating, cooling, and domestic hot water. Operational costs were calculated using local utility rates of $0.02669/kWh for electricity. Capital costs reflect itemized estimates for building envelope upgrades, equipment, and contractor fees. Efficiency metrics such as coefficient of performance (COP) are the same as in the New York focused Analysis and adjusted based on supply temperature ranges, ensuring performance comparisons reflect seasonal variability. This localized, high-resolution modeling approach provides an in-depth comparison of the costs and benefits of conventional versus distributed supplemental heating in an urban cold-climate setting. 

Operational Expenditure (OpEx) Comparison 

High-Temp ASHP is the most expensive to operate. This high-temperature ASHP system paired with radiators has the lowest efficiency profile of the two electrified options, requiring more electricity to maintain comfort in cold conditions. Its relatively poor cold-weather performance leads to higher overall electricity use and greater strain on the system. 

In contrast, HP + Dist. Sup. Solution delivers the lowest OpEx among the electric systems at $229,024. This is attributable to its higher system efficiency and the advantages of distributed heating. By placing supplemental units closer to heating demand, the system improves part-load efficiency and better matches supply to localized needs. These characteristics reduce total energy use and deliver a 2.8% operational cost savings over HP + Central Sup. 

TABLE 4: OPERATIONAL EXPENDITURE OF BUILDING HEATING SOLUTIONS 

Capacity (KW) Comparison 

The capacity analysis highlights a critical efficiency advantage of the HP + Dist. Sup. system: the ability to reduce central heat pump capacity while maintaining overall heating performance. The distributed system achieves this by strategically deploying supplemental electric heating units near zones of high demand. This localized support allows the central heat pump to be sized for average seasonal loads rather than peak demand, which is often overestimated in centralized systems. 

In the High-Temp ASHP configuration, the full building heating load must be met entirely by the central heat pump, resulting in a system sized at 6,061 kW. In contrast, the HP + Dist. Sup. solution reduces the central heat pump capacity to 4,918 kW—a 19% reduction—because peak loads are addressed through 230 kW of distributed supplemental heating. This approach yields a total system capacity of 5,148 kW, representing a 15% reduction overall compared to the centralized system. 

This downsizing translates into lower capital costs for central equipment and reduced electrical infrastructure requirements, particularly for older buildings with constrained service capacity. Moreover, distributing capacity across smaller units reduces the operational stress on the central system and offers more flexibility in maintenance, redundancy, and load management. \

TABLE 5: HEATING CAPACITY REQUIREMENTS OF BUILDING HEATING SOLUTIONS 

Capital Expenditure (CapEx) Comparison 

This CapEx comparison evaluates the cost breakdown of both electrification strategies and includes three primary cost categories: building upgrades, equipment, and contractor fees. 

TABLE 6: CAPITAL EXPENDITURE OF BUILDING HEATING SOLUTIONS 

The High-Temp ASHP system includes a $4.89 million cost for building upgrades, specifically for façade improvements. These upgrades are necessary to reduce heat loss and ensure the system’s centralized radiators can maintain comfort at lower outdoor temperatures. In contrast, the HP + Dist. Sup. system avoids this cost altogether. Because supplemental heat is delivered locally via terminal units, the system can compensate for envelope-related losses at the point of use, reducing the dependency on full-building envelope improvements. 

Contractor fees for both systems are identical at $28.2 million, indicating that installation labor and general project services are comparable regardless of the heating strategy. 

Even excluding the savings from building upgrades, there is a substantial difference in equipment costs. The HP + Dist. Sup. system shows a $17.25 million reduction in equipment costs compared to the High-Temp ASHP solution. This equates to a 22% reduction, driven by the lower capacity requirements of the central heat pump and the more efficient use of distributed supplemental units. Altogether, the total CapEx for the HP + Dist. Sup. solution is 20% lower than the High-Temp ASHP approach, making it a more cost-effective strategy for large building electrification. 

Conclusion

This concluding section synthesizes the key findings of both studies, highlighting the performance, cost, and emissions benefits of integrating distributed supplemental heating into commercial heat pump systems in cold climates. It reflects on the comparative advantages of this approach over conventional centralized and high-temp solutions and presents a forward-looking perspective on the role of system intelligence and building-level adaptability. Together, these insights underscore distributed supplementation not only as a practical retrofit strategy but also as a scalable blueprint for decarbonized heating infrastructure across the commercial building sector. 

Summary of Key Points 

This study explores the electrification of commercial building heating in cold climates and identifies the most practical and effective strategy as a combination of right-sized heat pumps with distributed supplemental heating (HP + Dist. Sup.). This distributed approach outperforms traditional and centralized systems across the board—delivering greater efficiency, lower costs, and meaningful emissions reductions. 

This imperative arises as a result of cold climates posing unique challenges for heat pump systems. In regions with periods of sub-freezing temperatures, conventional heat pump solutions are often oversized to handle peak heating loads that only occur during a few weeks each year. This oversizing results in reduced energy efficiency and excessive costs that stifle commercial building electrification in these kinds of regions. 

Typically, solutions take one of two routes: either installing low-temperature heat pumps that are centrally supplemented and investing heavily in re-engineering the building’s heat distribution system to work with lower supply temperatures or opting for high-temperature heat pumps that align more closely with legacy gas boiler infrastructure. However, the latter option also places added strain on both mechanical and electrical systems and introduces new layers of complexity to retrofit projects, while coming at a cost premium. 

Together, these limitations underscore the need for a more balanced, scalable solution—one that distributed supplemental heating is uniquely positioned to offer. 

Distributed supplemental heating enhances the performance and cost-effectiveness of heat pump systems in several key areas:

Improved System Efficiency: By avoiding oversizing and allowing the central heat pump to operate at its most efficient point, heat pump systems with distributed supplementation achieve a system-wide COP of 3.57 in freezing conditions. This translates to a 78.4% reduction in energy consumption compared to conventional gas boiler systems, which is a 3.8% increase over high-temp heat pumps systems.

Reduced Capacity Requirements: Because distributed supplemental heating is deployed locally only where and when it is needed, the overall system capacity can be reduced by 15%. The same heating demands are met with significantly less equipment, leading to a leaner and more adaptable system design. 

Lower Operational Costs: Heat pump systems with distributed supplementation deliver 7% to 9% lower operational expenditures than high-temp ASHP configurations. This is driven by more efficient part-load performance, zonal heating control, and lower peak electricity usage. 

Capital Cost Savings: The Boston focused analysis found that heat pump systems with distributed supplementation systems cost 20% less overall, with a 22% reduction in equipment costs. These savings are largely made possible by smaller capacity systems. 

Lower Emissions: With less energy use and smarter operation, this solution yields a 71.1% reduction in greenhouse gas emissions compared to gas boilers. 

Improved Retrofitting Potential: The modular nature of distributed units makes this solution easier to install in existing buildings, avoiding major structural or electrical renovations required by centralized or high-temp systems. 

Ultimately, heat pump systems with distributed supplementation allow building owners to meet the same heating demands with 15% less capacity at 29% less of the total cost (combining both CapEx and OpEx savings), delivering a clear advantage in both new construction and retrofit applications. 

Future Outlook and Potential for Broader Application 

The future of commercial building electrification depends not only on improving heating efficiency but also on enhancing system intelligence and dynamic control capabilities. Heat pump systems with distributed supplementation stand out as a highly adaptable and forward-compatible solution, particularly when integrated with Building Management Systems (BMS). This integration enables more precise energy management, further reducing energy consumption and operational expenses beyond the inherent efficiencies of the system itself. 

Dynamic Control Capabilities: 

Occupancy-Based Heating Optimization: BMS integration allows for real-time adjustments based on occupancy patterns, ensuring that supplemental heating is only activated when and where it is needed, preventing unnecessary energy use in unoccupied zones. 

Day-Ahead Weather Forecasting: Advanced weather prediction algorithms within BMS platforms can preemptively adjust heat pump and supplemental heating operation to optimize efficiency based on upcoming temperature fluctuations, reducing peak demand and energy waste. 

Load Shifting and Demand Response: By leveraging BMS capabilities, HP + Dist. Sup. can adjust heating loads to align with lower electricity rate periods, reducing peak demand charges and further lowering OpEx. 

Zonal and Adaptive Heating Strategies: Unlike centralized heat pumps, which often rely on fixed schedules, HP + Dist. Sup. can dynamically modulate heating output at a zone level, ensuring precise and responsive temperature control without unnecessary overuse. 

By combining distributed supplemental heating with BMS-driven automation, heat pump systems with distributed supplementation can unlock even greater energy savings, improved grid responsiveness, and lower operating costs, making it an even stronger candidate for widespread commercial adoption. As BMS technologies continue to advance with the help of AI and machine learning, the ability to optimize heating in real-time, integrate renewable energy sources, and provide data-driven insights will further solidify heat pump systems with distributed supplementation as the leading electrification pathway for commercial buildings in cold climates. 

Final Thoughts 

The electrification of commercial building heating in cold climates presents significant challenges, primarily due to the efficiency limitations of heat pumps in extreme temperatures, the risk of system oversizing, and the high operational costs associated with traditional backup heating methods. This study has demonstrated that while high-temp ASHPs and hybrid ASHP-centralized supplementation systems attempt to address these challenges, they often result in higher capital expenditures, increased infrastructure demands, and suboptimal efficiency while relying on centralized configurations. 

The heat pump systems with distributed supplementation approach presents a scalable, cost-effective, and highly efficient alternative by integrating right-sized heat pumps with distributed supplemental heating. This solution not only improves seasonal performance but also reduces peak capacity requirements, lowers operational costs, and enhances retrofitting feasibility for existing buildings. Compared even to top performing high-temp heat pump alternatives, heat pump systems with distributed supplementation reduces energy consumption by an additional 3.8% and GHG emissions by an additional 2.3%, while decreasing operational expenses by 7-9%—demonstrating its clear performance advantages over competing electrification strategies. That is all before comparing capital costs, which can be a difference of 20%.  

Looking forward, the integration of heat pumps with distributed supplemental heating and BMS offers an even greater opportunity to optimize energy use. With features such as occupancy-based heating control, day-ahead weather forecasting, and dynamic load shifting, this approach will further drive energy savings, enhance building comfort, and support grid stability. These advancements make heat pumps with distributed supplemental heating not just an immediate solution for cold climate electrification, but a long-term foundation for intelligent, decarbonized building heating. 

The findings of this study confirm that heat pumps with distributed supplemental heating are the most practical and effective pathway toward large-scale commercial heating electrification in cold climates. By solving the key challenges of efficiency loss in extreme cold, system oversizing, and peak electricity demand, this approach provides a future-ready, high-performance solution that aligns with global decarbonization goals while ensuring cost-effective, adaptable, and resilient building heating systems. 

Biography

OhmIQ is advancing the application of ohmic heating technologies to help decarbonize buildings and improve the economics of electrified heating. This paper was written and guided by Frederique Pirenne, CEO of OhmIQ. Drawing on a global career in marketing, entrepreneurship, and consulting, Fred brings both strategic vision and practical insight to the deployment of emerging heating technologies. Prior to leading OhmIQ, he managed the $1.2 billion AEG brand at Electrolux and co-founded the marketing tech startup MyTelescope.io. His consulting experience with global firms like Volvo, Scandinavian Airlines, and Aritco gives him a deep understanding of how new technologies can address customer pain points at scale. Fluent in six languages and rooted in a global perspective, Fred led the narrative development of this paper to reflect both technical merit and market relevance. 

Contact Frederique Pirenne: 

frederique.pirenne@ohmiq.com 

URBS is a research and simulation firm focused on building systems optimization and sustainable design. The URBS team conducted the modeling, data analysis, and scenario evaluation that underpin the findings in this paper. Their work provided the quantitative foundation to assess the benefits of distributed supplemental heating in conjunction with heat pump systems, particularly in cold climate applications. 

This collaboration between OhmIQ and URBS combines applied research, commercialization insight, and implementation expertise to explore practical solutions for building electrification. 

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