Are gas bans needed? Study shows electrification surge

Source: By David Iaconangelo, E&E News reporter • Posted: Wednesday, January 6, 2021

Electrifying the country’s new buildings may be easier than many policymakers assume — although in some regions it could require subsidies reaching into the thousands of dollars per household, according to a new analysis.

Published in a blog post this week by energy economist Lucas Davis of the University of California, Berkeley, the working paper takes stock of the long, steady ascent of electricity as a source of heat.

In 1950, just 1% of all new houses in the United States got their heat from electricity, according to census data. In 2018, that proportion had risen to 39% of new homes, and in the warm Southeast, it was the dominant heat source, cornering as much as 90% of the market in states like Florida. That’s largely a story about energy prices: Over the past several decades, the cost of electricity declined while the cost of natural gas and heating oil went up.

Under pressure to cut buildings’ carbon dioxide emissions, policymakers in an increasing number of states and cities are now contemplating ways to discourage fossil fuels in new construction, including through natural gas bans, while accelerating a transition to electric technologies (Energywire, Dec. 18, 2020).

That has sparked conflicts with natural gas proponents, who say the “electrify everything” approach will raise costs for residents, harm lower-income areas and deliver few climate payoffs.

Electricity’s existing prominence has been largely ignored in those debates, said Davis, with all-electric mandates viewed as “a 180-degree turn, a really dramatic policy.”

In warmer states, however, requiring new homes to run on electricity may not be too radical of a shift, at least for space heat. The paper did not touch on cooking or hot water heating, which have often been excluded from electrification policies.

Multi-unit apartments, attached homes and rental units were also more likely than single-family houses to use electricity — in part because they trap heat better than single-family homes — suggesting they could be “low-hanging fruit” for electrification mandates.

Electrification mandates aimed at newly built homes, as they typically are, would probably concern higher-income residents, including better-off renters, he added. That could mean mandates aren’t as regressive as skeptics often claim.

“One implication of the research is that, nationally, it may be a lot easier than is generally believed to encourage electrification,” wrote Davis.

The working paper was not peer-reviewed. Davis said he planned to submit it to academic journals for publication.

A ‘disturbing reality’?

Forcing homeowners to electrify would come at a cost, according to the paper. In warm states, households would pay close to $500 more annually, on average. In cold states, that would rise to $3,000 or more.

“There’s a glass-half-empty story where, in large parts of the country, it would be relatively cheap to move to electricity,” said Davis. “But there are also parts, like the entire Midwest and Northeast, where it would be very expensive.”

Some energy researchers, including some who work for the gas industry, argued that even for warmer climates, electricity’s seven-decade ascent may not suggest that electric heat pumps — the preferred technology of electrification advocates — will naturally follow the same trajectory.

William Liss, vice president of energy delivery and utilization at the nonprofit Gas Technology Institute (GTI), cited data compiled by the Energy Department and the U.S. Energy Information Administration.

Even as electricity grew from 26% to 36% of all homes’ main source of heat, from 1993 to 2015, heat pumps’ share of that electric-tech market remained stagnant, at just under 30%, the data showed — a fact that Liss called a “surprising and somewhat disturbing reality.”

Electric resistance heat, the more common type, is inexpensive to install but inefficient to use, added Liss. That makes it a favorite of homebuilders keen on cutting upfront costs, while leading to higher bills over the long run for homeowners.

That desire to maximize profit, he wrote, is an “important variable that has helped drive residential sector electrification over the decades.”

Jurgen Weiss, a senior lecturer at Harvard Business School who has led studies on building electrification, took similar issue with the paper’s assertion that electric heat systems are cheaper to install than fossil heat.

“I think historically that statement may be true when based on electric resistance heating,” he said in an email. “But heat pumps tend to have significant capital costs, especially ground source heat pumps.”

In climate debates, he added, “nobody talks about resistance heating as the likely electrification choice.”

One important underlying question for policymakers may be how the costs of electricity and gas — which vary widely across regions — are determined.

In California, for example, utility wildfire costs get buried into electricity rates, noted Davis. “Underneath the surface, in this paper, is energy pricing,” he said.

“This is all layered on top of a system that is pretty screwed up,” he said.