New IoT Connectivity Standards Can Accelerate Residential Electrification

A study from the New Buildings Institute (NBI) shows how to reach the aggressive goal of 70% electrified buildings by 2045 in California, which would reduce building sector carbon emissions by 85%. By contrast, the entire US building stock would need to be made 50% more energy efficient by 2050 to meet Paris Agreement climate goals, according to Carbon Switch. An acceleration of building electrification is needed and highly likely in the near future. Technology vendors should respond proactively with innovative offerings. 

Standardizing Consumer Technology Association-2045 Relieves a Key Bottleneck 

One notable recommendation from NBI’s The Building Electrification Technology Roadmap (BETR) report is to standardize Consumer Technology Association (CTA)-2045 control technology into new heat pump water heaters (HPWHs). The technology would be up to 300% more efficient than traditional natural gas or electric units and allow HPWHs to participate in demand response and time of use programs. CTA-2045 has been available since 2013 but not widely adopted, as vendors have largely seen this technology as gold plating with low customer interest and slow ROI.

Rapid change is around the corner, for the following reasons:

• States are mandating CTA 2045. Washington State mandated CTA 2045 into all new water heaters sold after January 1, 2021 and Oregon, California, Colorado, and New York are poised to follow suite.  
• Utility incentives will improve under Federal Energy Regulatory Commission (FERC) 2222. As states comply with FERC’s recent landmark order 2222, more aggregated DER resources can bid in regional wholesale electricity markets thereby improving ROI on utility investment in CTA 2045 for water heating.
• Vendors are ramping up production of CTA 2045. A recent partnership between Internet of Things manufacturer Borqs Technologies’ and open standard developer SkyCentrics is geared specifically to supply CTA-2045 to western states, suggesting new market potential in this demand response-enabling technology. 
• Improved federal appliance standards are coming. New standards will involve reversing Trump administration protection for inefficient water heaters and space heaters in homes, which could also include CTA-2045 standardization.

Vendors Should Expand Product Offerings, Increase Availability, and Grow Installer Training Programs

The BETR report contains similar recommendations for space heating, induction cooking, and other end uses, all of which will be impacted by the same convergence of factors that is opening a broad market opportunity in home electrification. The time is right for a mindset-shift among manufacturers and installers. Electrified technology has long seen higher upfront costs outweigh lower lifetime costs, modular design, and other benefits, largely due to regulatory and consumer inertia. The underlying cost-benefit calculation is shifting rapidly. Vendors should be proactive toward this trend and shift emphasis before universal integration dates are established in law. Expanding product offerings, increasing availability, and growing installer training programs are the best places to start. For more information on the home electrification market, see Guidehouse Insights’ Home Electrification report.