Posted by Charley Cormany, EFCA Executive Director
California has positioned itself as a national leader in decarbonization. To meet its goals, the state needs to reduce emissions from all sources, including buildings, which account for roughly 25 percent of GHGs produced. The good news is that renewables now produce a large share of California’s electricity. Simple logic suggests that replacing fossil fuel furnaces, water heaters, and cooking with electric alternatives is an important way to reduce emissions and make use of the clean energy on the grid.
A few weeks ago, the Electric Power Research Institute (EPRI) and the California Energy Commission (CEC) held a building electrification summit in Sacramento. One of the big announcements was that the Governor’s office was setting a new goal of installing six million electric heat pumps by 2030.
The CEC is already using building codes to require that all new homes be zero net energy by 2026. Existing buildings are a harder challenge, but the good news is that the technology to convert existing buildings to all-electric is readily available and proven.
Nine manufacturers have stepped up and agreed to produce the equipment to meet the increased demand. Six million heat pumps in six years is an ambitious goal, to put it mildly. If you have questioned the future of energy use in buildings, I think the state answered that question in spades.
This transition isn’t limited to California, either. Last year, heat pumps outsold furnaces across the nation. Using heat pumps to replace gas furnaces and water heaters is happening at a breakneck pace, and it is not likely to subside. The future of energy use in buildings is electricity, and heat pumps are the technology that will make this happen.
The Four E’s of Energy
The Building Electrification Summit was the first event I have attended in Sacramento since the pandemic. It was refreshing to see so many familiar faces. The attendees and presenters were a regular who’s who of the energy industry. The attendees included CEOs of several utilities, high-level folks from the Air Resources Board, manufacturers, industry finance representatives, and trade organizations. It seemed that every stakeholder group was well represented. It was sure nice to see people in person. I forgot how much easier it is to network by directly interacting with someone versus staring at a screen.
I attended several breakout sessions and noticed a pattern. It seems each session talked about one or more of the “four Es,” as I call them: Energy Efficiency, Electrification, Education, and include Everyone.
Efficiency is a critical part of decarbonization — electrification alone is not enough. I counted at least three times when a presenter mentioned that we needed to do “Efficiency First” before electrifying. That message resonates with us for obvious reasons. Fortunately, the multiple benefits of energy efficiency that we at Efficiency First have been touting for years are finally getting the attention and respect they deserve. In addition to saving energy, these benefits include improved comfort, lower cost of operation, improved indoor air quality (health), durability, etc.
Resilience and grid impacts are starting to get attention as well. Energy-efficient buildings fare better in extreme events like earthquakes and wildfires. Building resilience is becoming more relevant every year. Buildings that can “coast” through periods of high use have greater value. Another benefit of efficiency upgrades is that they last the life of the building, unlike mechanical equipment.
As we electrify, there will be more load on the grid. Simple efficiency upgrades reduce these loads significantly. Imagine the decisions a utility provider must make as electric consumption increases. What if a developer adds a new residential development or commercial complex to a region? The added load might require upgrades to transformers and other infrastructure to support the new demand. What if you reduced the loads first instead of upgrading the infrastructure to support the new load? You know — Efficiency First. Now, you can electrify the buildings at a much lower cost and use the same electrical infrastructure. That benefits the grid, the utility, and the end user.
The ability to “shed load’ or reduce loads on demand also has value. Efficient buildings help to reduce peak loads on the grid. Electric loads can be reduced for some time and still provide comfort. The ability to strategically reduce loads in response demand on the grid is extremely valuable. Demand response programs (DR) are more effective in efficient buildings, as they can reduce consumption for extended periods and still provide comfort or hot water. Efficient buildings use less energy during periods of high demand. Yet another grid benefit.
Did I mention that energy efficiency is the lowest-cost renewable energy? In the past, efficiency hasn’t got the respect it deserves, as it is hard to quantify. That is finally changing.
Electrification is gaining traction and is the future of energy. Energy transitions don’t happen that often, and we are smack dab in the middle of one right now. Hearing the leaders of Pacific Gas and Electric (PG&E) talk about the cost-effectiveness of replacing aging gas by converting existing buildings to all-electric and running power lines versus gas pipes is exciting. Not only does this strategy align with the state’s emission reduction goals, but it’s often much cheaper.
In one example, PG&E presented the cost of replacing an outdated gas line as $1.5 million. The total cost to convert the buildings on the line to all-electric, including energy efficiency upgrades, was $150,000. The customers received multiple benefits, and PG&G saved a ton of money. That’s a win-win in my book. PG&E is now evaluating the costs of upgrading gas infrastructure compared to electrification as a standard practice.
The Department of Energy (DOE) attended the summit as well. California is not alone in its quest to decarbonize. The DOE has greenhouse gas reduction goals, too. The federal targets are 60 percent reduced emissions by 2030 and 90 percent by 2050 from 2005 levels. The DOE has stated that reducing building emissions is central to its decarbonization efforts. They, too, have concluded that all-electric buildings are the most effective way to meet their goals. The DOE has even developed an X-prize type of award called EAS-e Prize (Efficient, Affordable, Solutions for Electrification). The prizes have been awarded to companies and technologies using innovative solutions to advance electrification, especially those that apply to affordable housing.
Many new electrification-related products and technologies were showcased at the event. Smart electrical panels, window-mounted heat pumps, heat extraction devices, transparent solar panels, 3D printed homes, the list goes on. The push towards electrification is moving at full speed, and manufacturers are responding to the opportunity.
New loads and new ways to use electricity will require new electric rate structures. Rate reforms will improve the economics of electrification and encourage the conversion to all-electric buildings. It is happening, and as you might imagine, it’s complicated. Making sure the rates reflect the current technology and use cases is challenging. Renewables and storage are critical, as is matching rates to the time of use. Standardized and real-time energy pricing will go a long way to ensure that consumers are not penalized for doing the right thing.
Education was mentioned numerous times at the summit andwill clearly play a crucial role in decarbonization. Contractors, consumers, building officials, manufacturers, and policymakers must be educated on decarbonization’s benefits. We must concentrate on consumer demand and contractor training as we move forward. Many of the technologies and strategies we are counting on will require “buy-in” from multiple parties. If contractors don’t have confidence in a new technology, they will stay with the status quo. If homeowners are unaware of the benefits of electric options, they will likely replace gas appliances with gas appliances. If rebates are not promoted effectively, consumers might miss substantial savings.
We are counting on adopting new technologies, rebate programs, and finance options to support electrification and decarbonization. If consumers are unaware of their options, we will fail. We will fail if contractors don’t understand the policy considerations or new technologies. Education will be required at every level to let folks know this is not some trend or a fad but the way of the future.
We can’t wait to start the messaging, nor can we ignore any group or sector. A change of this magnitude will require converting millions of homes and buildings to all-electric. That won’t happen unless people understand why and agree with the ambitious goals that have been set. We don’t have much time. The educational efforts need to start yesterday.
Everyone needs to be included.The final “E” in my four “E”s is perhaps the most important. We can’t promote a clean energy future that only works for a privileged few. A huge concern is ensuring that those who can least afford to participate in the transition can. I am encouraged by the efforts to include all members of society in this effort.
One trend outlined at the summit was the focus on solutions for members of society who don’t have the things many of us take for granted. Electrification and decarbonization have to work for everyone. I am encouraged by the time and consideration directed towards those with the least. Many people in this state must choose between buying food and paying their utility bills. A lot of the available state and federal money in efficiency these days has rules about income. More specifically, programs must spend a specific portion of their funds on low to moderate-income or low-income folks, and that’s good. The transition to a decarbonized future must include everyone, not just those who can afford it.
The EPRI/CEC Building electrification summit was a successful event. The number of participants and the level of the folks on the various panels were impressive. The ideas and the concepts presented were fundamental, and it was obvious that changes of this magnitude will not be easy or cheap. To be successful, we will need an all-hands-on-deck approach. Time is not on our side, and the impacts of climate change surround us. It is comforting to see the number of people from all parts of society working towards a common goal. The challenges are not insignificant, and it will take a collaborative effort to turn things around. I am confident this won’t be the last time we see these folks in the same place having honest conversations about the future of energy in California.
