- Building Energy Management
- Emissions Reductions
- Financing and Investing
- Home Energy Management
The Home Electrification Market Heats Up as Technological Barriers Fall: Part 2
Part 1 of this blog series explored recent technology performance improvements in residential water heating, space heating, and cooking, and the effect this has on growing demand in the market. Other factors favor increased electrification, such as regulation and beneficial social impacts. Significant market obstacles remain, among them low builder awareness and retrofit financing. New construction faces fewer of these obstacles. In the larger retrofit market, new financing models hold promise as facilitators of rapid adoption, as do new partnerships between market stakeholders.
Alongside technology and market-driven demand, regulation is accelerating adoption through mandated electrification. City codes on building electrification, controversial gas bans, and electric appliance incentives offered through utilities and local governments are increasingly widespread throughout the US, having been passed in cities in California and Massachusetts. Heat pump incentives are especially prevalent; the Database of State Incentives for Renewables and Efficiency lists 847 different financial incentives for heat pumps offered by a state, local government, or utility.
The potential of electrification to create jobs should also be considered. In California alone, a University of California, Los Angeles, study found that electrifying 100% of the state’s existing and new buildings by 2045 would create over 100,000 full-time equivalent jobs, even after accounting for losses in the fossil fuel industry. It would also be an essential element in an effective plan on climate change, since buildings generate 40% of annual greenhouse gas emissions globally.
Challenges Remain but Large Upside Is in Sight
Creating these job opportunities while reducing emissions requires an investment to retrofit an existing building stock largely networked to natural gas at a society scale. Holland’s Energiesprong program offers a model to follow, using maintenance cost savings and reduced energy costs to finance net-zero, appliance, and solar panel upgrades for homes. Scaling up similar programs nationally would increase public awareness of electrified technology and general consumer appetite for large upfront investments in electrified equipment, both of which are currently low. A large opportunity also exists in new construction, particularly multifamily, through large cost savings from avoided gas commissioning and shared appliance capacity.
Large obstacles remain present. In particular, vendors, builders, and investors need to build more partnerships to streamline construction practices and improve customer and installer education. It is time for residential electrification. The market is signaling that the benefits of electrification, until now only accruing gradually and to a small number of early adopters, might suddenly expand throughout the country.
For more information, keep an eye out for an upcoming report on home electrification from Guidehouse Insights.