California utilities release economic study of housing electrification costs, benefits

Published on April 17, 2019 by Kevin Randolph

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Consulting firm Energy + Environmental Economics (E3) released a study Monday examining the energy savings, greenhouse gas savings, impacts to the electric grid and overall economics of residential building electrification for customers across many regions of California.

The Los Angeles Department of Water and Power (LADWP), Sacramento Municipal Utility District (SMUD) and Southern California Edison (SCE) commissioned the study.

The study, titled “Residential Building Electrification in California,” examines housing in six different climates and three different housing vintages and includes both single-family and low-rise multi-family homes. The climate zones modeled in the study are broadly representative of 87 percent of California’s single-family and low-rise multifamily housing, according to E3.

The study modeled the performance and costs of all-electric new construction homes and existing homes retrofitted with heat pump HVAC systems and heat pump water heaters. The study compared these homes to mixed-fuel homes that use natural gas and electricity.

The study found that new all-electric construction results in savings of $130-$540 per year compared to a gas-fueled home over the life of the equipment. The study noted cost savings to developers as well as homeowners.

E3’s study suggests that 76 percent of new all-electric homes will save at least $15 per month on equipment and energy bills over the life of the equipment as compared to new mixed-fuel homes.  For retrofits, all households in single-family homes would save between $10-$60 each month on energy bills and 84 percent will save up to $30 per month on total lifecycle costs.

The study does not account for any state or utility incentives.

“Building electrification is a key component of reducing greenhouse gas emissions and providing savings for our customers, which is a win-win for everyone,” SMUD CEO and General Manager Arlen Orchard said. “This study will help us meet our climate goals, maximize our reductions and improve air quality across our region.”

The study also recommended steps to encourage electrucation and reduce costs including creating programs to educate customers about electrification, examining utility rate structures to ensure that electrification provides benefits to customers and updating building codes and standards to enable cost-effective electrification.

“People care tremendously about their comfort, their safety and their energy costs,” Jill Anderson, vice president of customer programs and services at SCE, said. “That is why a study like this, providing a roadmap to housing electrification benefits as well as the challenges, is so important.  We will be using this study to inform what steps utilities, state regulators and policymakers can take to enable cost-effective electrification while preserving customer choice.”