Dual Fuel: What is it, and do I need it?

Every industry has it’s own inside lingo that can sound Greek to the outside world.  Most, if not all, electric utilities have a special “dual fuel” rate that allows consumers to have a reduced rate for part of their electric load.  What does this actually mean for the average electric user and what are the other alternatives?  I’ll address these questions and shed some light on this from a geothermal perspective.

What is Dual Fuel Anyway?

Dual fuel is rate classification given by electric utilities for customers that primarily use an electric heat source but have the ability to switch to a secondary heat source during times of peak demand.  Most secondary heat sources are fossil-fuel burning sources; there are others, but we’re not heading down that road right now.  The utility is always trying to provide electricity in the most cost-effective manner possible, but when demand peaks beyond what they can normally supply, the price skyrockets.  The utility may have to turn on backup diesel generators or buy energy on the open market, both of which are very costly.  If the utility can reduce their overall load during these times, they can avoid these extra costs.  Dual fuel electric rates are typically much cheaper (per kWh) than retail rates, but usually only apply to your electric heating load.  They are also under the stipulation that the utility can initiate a transfer from your electric heat source to your backup heat source.  This trade off allows the utility to control their peak, and you can save quite a bit on your electric bill.

How Does Geothermal Fit In?

Geothermal systems operate on electricity, and for this reason, they qualify for dual fuel rates.  One of the most common misconceptions with geothermal is that a backup source is required.  This is far from the truth!  Geothermal systems can provide all the heating and cooling you need with no need for a backup heat source.  Often times, dual fuel rates can lead people to believe that geothermal systems need to fall in this category.  The fact is that there are usually completely separate rates for customers that on a purely electric heating system with no fossil-fuel installation.  In our area, Wright-Hennepin offers a controlled and uncontrolled option for ground-source heat pumps.  Xcel Energy does not have an uncontrolled option, but they do offer a substantial rate reduction.  For more information on specific rate reductions and other rebates, visit your local electric utility online, or get in touch with us, and we can help you find the information you need!


NexGen Energy’s self-driving loop technology is allowing ground-source heating applications to be installed almost anywhere!  Please visit our website or join the discussion on Facebook.  You can also leave a comment on this post if you have any thoughts or questions.


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