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On-The-Job Experience: Why Electrification Is Better And Cheaper

Sean Armstrong is the Managing Principal of Redwood Energy, one of the nation’s leading ZNE design firms and an Efficiency First California board member. His argument for electrification is based on his extensive experience in multifamily housing. 

The conventional wisdom is that when it comes to home heating, gas is cheap. So why is the trend toward building all-electric homes accelerating?

It turns out that building an all-electric home actually costs at least $4,500 less than a gas-powered one, according to KB Homes and City Ventures (SF Chronicle 4/20/16 by CEC and CAISO Commissioners Hochschild and Ferron). In apartments, I have documented $3,500 savings per residence by building all-electric.

These initial building savings have always been there, and in temperate climates, running air source heat pumps has been cost-effective. However, cold climate performance has historically been the Achilles Heel of air source heat pumps. Below 40 degrees Fahrenheit the compressor wouldn’t put out heat, and electric resistance heaters were required—an option that became too expensive in the 1970s in all but the hydro-heavy Pacific Northwest.

That was then—for almost 15 years now there have been inverter-controlled compressors that can operate inside the Arctic Circle and are effective down to 27 degrees below zero, as proven by the Canadian ZNE homes designed by Habitat Studio. Growth in all-electric homes with heat pumps is a national phenomenon, illustrated by ICF International in their 2016 Propane Market Outlook that was commissioned by the propane industry (Figure 1). According to this report, since at least 2010 space heating with electricity has gained more market share than any other source in almost every county in the United States. Mentally compare this map to the 2016 Electoral Map, and you can see that electrification is a non-partisan trend.

Figure 1. Electric heating has gained market share nation-wide since at least 2010.


(Source: 2016 Propane Market Outlook, ICF International)

My experience in multifamily electrification

The trend to electrify buildings is accelerating because they’re cheaper to build, and in most states, they are cheaper to operate. This unconventional understanding came to me slowly, and I thought it might be helpful for me to share the story of how I learned about all-electric construction with you, my peers in building science.

In 2005 I was hired out of my first career as a local high school science teacher to be a project manager for six years with Danco Communities, an affordable housing developer and the largest general contractor in our area. I learned at Danco that estimating construction costs is core to the business of building—profits are 0 to 15 percent and depend on the accuracy of the initial cost estimate. As a Project Manager, I had to cost-estimate proposed subdivisions, apartment complexes, and even a small town. I particularly enjoyed learning about construction pricing for green building features –I had spent a decade training at HSU’s Campus Center for Appropriate Technology (Figure 2), a student-led demonstration house on campus for renewable energy and sustainable living. Our goal at CCAT was to “dispel the myth that living lightly on the Earth is either burdensome or difficult.” I learned that people on tours were excited to retrofit their homes and install solar arrays, but worried about upfront financing—money, not willingness, was the barrier.

Figure 2. The Campus Center for Appropriate Technology at HSU is student-led and funded, giving Co-Director students like the author in 1999 the opportunity to learn what it costs to install new 2.3 kW PV array, 500W wind turbine, pedal-powered TV, and biodiesel refinery.


(Source: ccat.humboldt.edu)

At my Danco developer job it was the same situation as a CCAT tour—my CEO and VP of Construction were reasonably supportive of green building, but they saved their deepest enthusiasm for any new trick that would lower old costs. The faded company town of Samoa was my biggest challenge—100 existing homes and 300 new ones planned. The gas line ran down Main St. out to the old lumber mill, but extending gas to the homes would have cost $15,000 per house, almost double the cost of using existing wiring and installing efficient electric heat pumps to replace propane water heaters and wood stoves.

Our experience at Samoa was typical. In April of 2017, Stone Energy Associates submitted a study to the California Energy Commission using actual quotes to illustrate the range of costs for installation of gas heating. As Table 1 shows, the cost just to install the gas lateral to the building from the main pipe in the street ranges from $1,000 to nearly $15,000. Table 2 shows the cost of plumbing gas inside the walls to gas appliances–$200 to $1,000 more per building. In other words, it can cost up to twenty thousand dollars to install gas from the street and through the house—not cheap.

Table 1. Additional Cost of Installing a Gas Lateral from the Main to the Gas Meter.


(Source: SEA letter to the CEC, Docket # 16-BSTD-06 4/21/17)

Table 2. Additional Gas Fixture Costs


(Source: SEA letter to the CEC, Docket # 16-BSTD-06 4/21/17)

And just when you thought gas costs couldn’t get worse, it turns out that buying a gas furnace with AC is 50% more expensive than buying the same AC without a furnance, but with heat pump functionality. A heat pump is just a reversible air conditioner—it has a reversible pump, an extra thermal expansion valve, and a little more programming. It’s a cheap to change an AC into a heater, about $200, but adding a gas furnace costs $800-$1200. It’s the same with Carrier, Goodman, and other manufacturers—heat pumps are cheaper to buy than identical air conditioners with a furnace.

Cheaper to Build

In my experience at Danco, we learned that all told, avoiding the cost of gas saved at least $3,500 per apartment, similar to the finding of KB Homes that they saved $4,500 per house. $3,500 per apartment moves the dial—it’s enough to pay for all HERs inspections and efficiency upgrades required for certifying a house to Energy Star for Homes, which is the most expensive and significant green building commitment within programs like LEED.

Using the savings from all-electric design to invest upgrading to LEED Platinum, Zero Net Energy housing, Danco’s rural affordable housing could finally beat out the big city competition for scarce Federal grant and loan funds, and Plaza Point is now a local landmark in rural downtown Arcata—twenty-nine 107% solar powered, LEED Platinum low-income senior apartments. Going all-electric and Zero Net Energy has won Danco projects in small towns like Eureka, Fortuna, Fort Bragg (see HEM cover story, Fall ’15), Samoa, Bakersfield and Crescent City. Now I work under the auspices of Redwood Energy, and since 2011 we have helped more than 2000 low-income apartments get built with the competitive strategy of cost-savings with all-electric construction, and cheap electricity pre-purchased via a ZNE-scale solar array.

Lest you think I only play with other people’s money, in 2008 my wife and I bought an old 1916 farmhouse requiring strategic, cost-effective retrofits with limited funds. We had four-month-old premature twins to keep warm, so after insulating the floor to R-13 with open cell foam for $3,000, we replaced the 55 percent efficient gas wall heater with a 330 percent efficient (HSPF 11) air source heat pump for $2,400. This combination allowed us to keep toasty warm, and dramatically lowered our utility bills. It worked for other low-income households, and it worked for us too.

The old thinking is “gas is cheap” but today’s math shows this is wrong. True, a BTU of gas heat is one-third the cost of a BTU of electric resistance heat, but as our experience showed, a 330 percent efficient heat pump uses one-sixth the energy of a 55 percent efficient wall furnace. Our heating budget was cut in half with electrification. Jeff Harkness, a Redwood Energy graduate student intern, kindly compared the energy use of a house like mine and ran it through the EIA average energy pricing for each state. We found that in every state of the U.S., a retrofit like ours would lower a family’s monthly utility bills (Figure 3).

Figure 3. Comparative bills analysis showing that an existing low-performance gas house would save monthly utility costs with a high-performance electric retrofit in every state.


A nice example of the utility bill savings from going all-electric is the inspiring Trinity River Elder Village on the Native Sovereign Nation of the Hoopa Indians in rural Northern California. The village of 13 Energy Star-certified homes is 45 miles from a natural gas line, and in this remote area, propane costs are among the highest in the nation. The question remained whether an all-electric or highly efficient propane package would produce the lower bills, so we set up a side-by-side comparison (Table 3). Even a 95 percent efficient propane furnace cost more than a mid-efficiency ducted heat pump (10 HSPF, 19 SEER), and all-electric shaved $15 off a house’s monthly utility bills (Table 4). Had this 2015 project used top-of-the-market heat pumps available today (HSPF 14, SEER 33), the bills would be even lower. Importantly, adding solar power to an electric home makes for the lowest bills. Keeping propane reduces the bill available for solar offset, a problem when utility bill reductions via solar arrays raise needed revenue.

Table 3.


Table 4.


(Tables 3 and 4 show an aerial photo of the completed ZNE homes, a comparison of efficiency measures and the resulting utility bills that favor all-electric.)

Natural gas is more expensive than electricity for hot water heating as well. Ken Rider, Advisor to California Energy Commissioner Hochschild, studied the delivered cost of water heating, comparing high-performance, 0.96 EF natural- gas combustion (red with stars in Figure 4) to a 3.0 EF midrange heat pump (blue with stars in Figure 4). Note that over the last 30 years, the two are neck and neck with real-world pricing. But with current heat pump water heaters now operating at 3.84 EF, there is no natural-gas product that can compete.

Figure 4. Energy pricing comparison of domestic hot water fuels and efficiencies by Ken Rider, advisor to California Energy Commissioner Hochschild.


Cheaper to Operate

The fact that all-electric is cheaper to build has always been true, and for a few decades after the second World War electricity was also cheaper per BTU than fuels. But the OPEC Oil Embargoes of 1973 and 1979 quadrupled electricity prices in the U.S., and it took decades of efficiency investments to bring all-electric operating costs back down. Now that electricity is cheaper again, it’s fun to revisit that thirty-year period between the 1940s and 1970s.

For example, to spread the good news about low costs with all-electric design, in 1954 180 utilities teamed up and hired Ronald Reagan to be the face of a publicity campaign called Gold Medallion Homes. The future governor and president first lent his talents to the General Electric Theater weekly radio show and then filmed tours of his Pacific Palisades mansion with his wife, Nancy. Reagan had so much charisma that he succeeded in selling colored light bulbs in a black and white film.

More than a million Gold Medallion Homes were built nationwide until the early 1970s. A fancy futuristic home came with the iconic statement Live Better Electrically emblazoned on a brass Gold Medallion plaque mounted next to the doorbell, on ashtrays, key chains, wall clocks and even cufflinks emblazoned with the phrase. During this period Julia Child’s “French Chef” show taught American’s how to cook haute cuisine on resistance element stoves with the support of an electric utility. The Live Better Electrically movement was like today’s Energy Star program but run by master Hollywood marketers with an order of magnitude more money.

In a prescient 1958 Live Better Electrically advertisement, one is introduced to an “all-electric heat pump” that “provides year-round comfort from a single unit which automatically heats or cools as the weather requires.” The 1950s era heat pumps had serious limitations—the compressors stopped working at 35 degrees, and at which point more expensive electric resistance heating kicked in, using 2.5 times as much energy as the compressor. This limited heat pumps to the warm South and the hydroelectric Northwest. Today’s inverter-driven air source heat pumps operate at an amazing 27 degrees below zero, low enough to go all-electric in almost any climate on Earth.

It was true once, in some parts of the country, that operating with natural gas cost less than operating with a heat pump. This is no longer true—electricity is cheaper. It was once true that drilling for domestic natural gas was a national security strategy to prevent the impact of oil embargoes. This also is no longer true—natural gas represents climate change and profound international instability. Now that wind farms and solar fields are cheaper to build and operate than gas plants, there is simply no reason to waste money on gas for heating—better to save it for making plastic.