Energy Efficiency  -  May 22, 2020 - By Jake Duncan, IMT

Stronger Together: Why Efficiency with Electrification Catalyzes Systems Change

In the late-2010s, the “electrify everything” movement emerged as a long-term solution to the ever-growing carbon emissions of the U.S. The movement aims to convert fossil fuel-based elements of our daily lives—how we power our cars, how we heat our water for our daily showers and dishwashing, how we cook our food—to run on electricity.

In 2017, gas and oil represented the majority of U.S. fuel consumed in commercial and residential buildings for space heating, water heating, and cooling (combined covering 74% of the fuel used). That leaves a large amount of opportunity for improvement. Both governments and businesses are looking to building electrification for carbon-saving potential. For instance, 30 California cities and one Massachusetts city have banned natural gas in new construction and over 50 cities and counties across the U.S. are considering following suit, and innovative firms are demonstrating the feasibility for electrification retrofits in existing buildings.

Electrifying buildings would provide a broad range of benefits, including:

• Long-term reductions of carbon emissions if electricity is produced from renewable power.
• Lower risk of building fires or carbon monoxide leaks.
• Cleaner indoor air.
• Easier implementation of smart technology, which in turn enables better services for building occupants and revenue streams for building owners through demand-response programs.
• Insulation from the uncertainty of fossil fuel prices and infrastructure costs as energy becomes more electrified and renewable.

However, electrification as a decarbonization strategy depends on using renewable power for the new electric devices. Yet, because there is still so much fossil fuel-based electricity on today’s grid, electrification may increase emissions depending on where and when you use power. And adding substantial amounts of renewables means utilities would have to do expensive, massive upgrades of their infrastructure to handle the energy demand, particularly during peak energy times, and figure out new methods to manage an expanded and drastically different grid.  Electrification is a key strategy, but electrification alone won’t solve everything.

Why Energy Efficiency is Crucial to Electrification
As discussed in the previous blog, clean energy solutions are most impactful when holistically combined. How does electrification with efficiency, with renewables, and with demand management result in beneficial electrification—that is, electrification that serves consumers money over the long run; enables better grid management; and reduces negative environmental impacts? Our four-part blog series addresses each component. Here are the reasons why efficiency and electrification must work together.

• Electrifying building components and adding electric vehicle charging can lead to expensive utility bills and potentially overload a building’s electric system. Building owners can leverage cost-effective energy efficiency to make room for the added electrical load.
• On the grid, widespread electrification means two things: where, when, and how much electricity we consume will change drastically and we will need more renewable energy to meet demand.
  •    The qualities of electricity consumption matter, because the grid is only built to handle so much traffic in certain areas. Clusters of electrification can quickly overload electricity transformers, causing danger to citizens and costly replacements or upgrades. Efficiency can reduce the uncertainty of this trend and ease the burden on our existing infrastructure.
  •    More electricity-consuming devices mean we will need a lot more clean electricity produced by renewables, which presents its own set of challenges. Energy-efficient buildings mean we need less renewable energy to achieve the same goals, and we get there faster. I will dive deeper into this in an upcoming blog post.
• Renewable power investments in tandem with electrification can scale clean energy, lowering the market costs of renewables and incentivizing innovation while providing jobs and lowering community health costs, such as air quality-related illnesses, that are associated with fossil fuels.

Demand management, also the topic of a forthcoming blog post, works in tandem with both of these strategies by minimizing energy use during peak periods when the grid draws on fossil fuels and encouraging energy use during lower demand periods when there is plentiful renewable energy on the grid, enabling further dollar, energy, and carbon savings.

Applying the Efficiency With Philosophy to Electrification
Each sector of society plays a critical role in making building electrification a reality. To do so, we have to think creatively how each sector to take an integrated approach to electrification independently and in collaboration.

Cities should:

• Gather and analyze building energy use data, as well as the factors that explain the use, such as predominant equipment types and electrical and gas systems designs. This should be done in collaboration with local utilities.
• Convene cross-sector experts to estimate carbon and financial savings from building electrification and long-term costs of the status quo, pricing in pollution costs, and other market externalities.
• Partner with utilities and the private sector to design incentives for electrification that help overcome the pain points listed above as well as any additional barriers specific to the city or region.
• Consider developing a building performance standard for electrification and energy savings in existing and new buildings.
• Consider using building codes to promote or require electrification in new buildings.

Commercial real estate should:

• Analyze long-term operational costs, pricing in the risks of gas as a safety hazard, and reputational risk.
• Invest in submetering to monitor electricity consumption.
• Invest in advanced controls to manage building energy use in new ways.
• Consider how electrification could support corporate environmental, social, and governance goals, and the cost to the reputation of inaction on climate.
• Consider adopting green leases to address split-incentive barriers to electrification investment.

Utilities should:

• Develop electrification programs that also maximize energy efficiency.
• Consider data-sharing options with the city and other partners that preserve customer details, but enable smarter electrification and efficiency projects.
• Engage the utility commission in a conversation about rates that encourage electrification.

None of the tasks above are easy, but cities around the country have experimented successfully with many of these pieces. IMT’s experience on the City Energy Project and the American Cities Climate Challenge has already demonstrated the value of efficiency measures for decarbonization.

To scale solutions further, we are supporting even more ambitious frameworks, including building performance standards, which can be used as a platform to pull together all parties to find mutually beneficial solutions.  Pursuing similar policies in tandem with electrification and renewables is not only the smartest way to move forward but likely the most practical and cost-effective way to take action on climate in the timeframe we have left.

Reach out to our partners at the Building Electrification Initiative to learn more about electrification and IMT for more on policy options for high-performing buildings.

This column originally appeared as an IMT blog.

Jake Duncan, senior associate at the Institute for Market Transformation, supports IMT clients by establishing the economic and environmental foundations for energy efficiency policies, programs, and investments. He provides quantitative analysis and market research for IMT’s programs, applying previous experience in the energy and utility spaces. Jake holds a bachelor’s degree in economics from Georgia College and a master’s degree in Climate Science and Policy at Bard College’s Center for Environmental Policy.

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