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3 Common Challenges (and Solutions!) to Building Electrification

3 Common Challenges (and Solutions!) to Building Electrification

As property owners, city leaders, utilities and others consider how to best meet the challenge of reducing emissions in the building sector, heating, cooling and hot water systems electrification emerges as a solution that can provide multiple co-benefits including improved indoor air quality, growing a green workforce, and meeting government or utility climate goals. However, despite increasing adoption in the U.S (12% of of US heated homes use heat pumps, compared to 60% in Norway - the largest share worldwide)., electrifying buildings still feels like a relatively new concept, and is often misunderstood. This resource seeks to outline some of the key objections and challenges to building electrification, and outline tried-and-true solutions to these perceived barriers. 

Challenge 1: The upfront costs of all-electric appliances, like air source heat pumps, are more than fossil fuel or resistance electrical equipment

While an air source heat pump (ASHP), which is a complete heating and cooling system that doesn’t rely on fossil fuel combustion, can save property owners money over the operating lifetime of the appliance, currently the upfront cost of an ASHP typically is more expensive than that of a new gas or electric resistance furnace. However, there are a number of tested and proven real-world solutions that bring down the upfront costs of electrification, and drive accessibility for low to moderate income property owners. 

Solutions:  

  • Rebates & incentives: The landscape for incentives and rebates on building electrification equipment and installation is growing and occurs at the federal, state, and utility level as we’ve previously recapped. While the details of these incentives differ across jurisdictions, the impact remains the same: lowering the upfront costs of ASHP equipment, installation, and maintenance. 
  • Innovative financing through Energy Service Agreements: In seeking to make electrification and retrofit accessible to underserved communities, BlocPower provides a unique financing option through an Energy Service Agreement (ESA), in which BlocPower provides an equipment operating lease including twice-yearly maintenance. This financing model eliminates upfront costs, stretches payments to match savings, and reduces customer risk. While BlocPower does not guarantee cost savings, retrofit solutions are guaranteed for a 15-year term, including all maintenance and repairs, with no liens on customers’ buildings. We’ve written about the benefits of ESAs previously here
  • Efficiency: As we’ve previously written, ASHPs operate more efficiently and utilize less energy than traditional counterparts (up to 50% more efficient than electrical furnaces and baseboard heaters!) ASHP efficiency drives lower monthly usage bills than conventional heating alternatives, particularly electric resistance heating, which can be extremely costly in terms of monthly usage bills. These efficiency savings from ASHPs can support lifetime savings over the useful life of the equipment, often offsetting the upfront cost.

BlocPower can help you find incentive programs to retrofit your building with energy-efficient technology and find the right financing option for you. Get started by answering a few questions. 

Challenge 2: Installation of electric appliances triggers increased electricity usage costs 

Another common objection around building electrification is that shifting some or all appliances to electricity increases electricity usage costs. While transitioning some or all appliances to electricity will increase a home’s electric usage, depending on the original fuel source the total balance of utility cost can still decrease. Energy efficiency strategies paired with electrification and weatherization retrofits are key in providing cost savings for property owners. Below are a few tried and tested efficiency solutions that address this challenge. 

Solutions: 

  • Weatherization: Combining installation of electric heating with weatherization measures is a great starting point to reduce electricity usage costs. Weatherization refers to a suite of upgrades to a home that improve energy efficiency ranging from insulation to air sealing to window replacement. Often local utilities have income-eligible weatherization programs to support cost reduction for those measures and work to make project bundling available for low- and moderate-income building owners and the federal government offers financial assistance to income eligible households through the Weatherization Assistance Program
  • Bundle projects: Pairing electrification measures like installing an ASHP with on-site or community solar, energy storage, and other weatherization and energy efficiency measures described above is another great strategy for homeowners to maximize savings. For property owners, local and federal tax credits can be a great way to reduce upfront costs and BlocPower works with building owners to determine the best set of upgrades to maximize energy and cost savings. Read more here about how BlocPower took this bundled project approach for a multifamily building in New York. Additionally, if a homeowner is moving to new all-electric appliances, there is the opportunity to opt into models with high energy efficiency, which can also support in reducing energy usage.

Challenge 3: The high cost of electricity in some communities makes the ongoing operational costs of electrification challenging 

Moving to all-electric appliances can often save building owners money from gas or oil connection and usage fees, however in geographies where electricity is more expensive than gas, there are other established solutions that can help building owners overcome this obstacle. 

Solutions: 

  • Electric-specific user rates: Many utilities across the U.S. offer customers who have moved to electric heating and cooling special rates that are more favorable compared to baseline electric use rates. Large utilities in major metropolitan areas such as Southern California Edison  and ComEd in Chicago have implemented such favorable electric-specific rates to support customers. 
  • Load shifting (also known as Time of Use rates): Shifting household electricity use to off-peak hours (times of day when there is less demand) can save property owners money on their electric bill. Many utilities offer time of use (TOU) pricing plans, which customers can opt into to enjoy cost savings by slightly altering their electricity use behavior. Heat pump users in particular can benefit if a utility plan sets higher rates to disincentivize energy use in summer months, when grids are typically strained, and offers reduced rates in winter months.  Additionally, companies like Opower and Uplight work with utilities to develop apps to help customers with this behavior modification. 

Overall, there are a number of groups including utilities, local governments, and local organizations working to provide real-world solutions to barriers that arise with building electrification. These solutions are powerful, and provide clear pathways toward building electrification for property owners, cities, and utilities. 

Read more about BlocPower’s work supporting utilities and cities in building electrification work. Interested in learning how you might partner with BlocPower? Submit a brief request here and we’ll be in touch!