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All-electric residential housing shows savings over gas-electric, says report

22 November 2020 Kevin Adler

A report by the Rocky Mountain Institute (RMI), released in October 2020, finds that across the US all-electric homes are less expensive to build and live in than mixed-resource homes that use natural gas for heating and hot water.

"In every city we analyzed, a new all-electric, single-family home is less expensive than a new mixed-fuel home that relies on gas for cooking, space heating, and water heating. Net present cost savings over the 15-year period of study are as high as $6,800 in New York City, where the all-electric home also results in 81 percent lower carbon emissions over the mixed-fuel home," RMI said in a report released on 21 October.

Since 2019, more than 20 cities in California, Massachusetts, New York and Washington have instituted mandates for all-electric heating and cooling in new residences and even commercial buildings. Critics of the programs in the natural gas industry have argued that consumers prefer gas for heating and cooking, and that all-electric systems are more costly than direct reliance on gas that is expected to be inexpensive for at least a decade.

The study looked at new single-family homes in Austin, Texas; Boston; Columbus, Ohio; Denver; Minneapolis; New York City; and Seattle.

In Austin, Boston, Columbus, Denver, New York, and Seattle, RMI found that a mixed-fuel home (gas furnace, water heater, air conditioning and new gas connection costs) has a higher up-front cost than the all-electric home, which uses a heat pump system for both heating and cooling. RMI favors heat pumps in all installations, due to its reduction in energy use, but it said that in cold-climate Minneapolis the need for a large heat pump raises costs considerably.

The all-electric home results in substantial carbon emissions savings over the mixed-fuel home in all cities as well. "The greatest savings are found in Seattle (93 percent) and New York City (81 percent). Minneapolis, Columbus, Boston, and Austin all save more than 50 percent over the lifetime of the equipment compared with the mixed-fuel home," RMI said.

Recommendations

Accompanying the report, RMI issued four recommendations.

  • Educate contractors. "Our research finds that there is low contractor comfort with heat pump systems for year-round heating in cities with severe winter climates, a notion that persists from an era of older technology," so RMI recommends increased training programs for contractors.

  • Educate consumers and developers. "Policymakers and regulatory agencies should establish education campaigns for residents and building developers about the health, economic, and climate benefits of all-electric homes. Familiarizing consumers with induction cooking is a particularly important issue," RMI said.

  • Update gas line extension allowances. RMI called for reducing the allowance or subsidy that utilities can charge for connecting new gas customers, and that this should be reassessed by regulators as a potential "stranded cost" if the nation moves towards all-electric residential and commercial service.

  • Address the split incentive challenge through creative financing. This would include a carbon tax to reflect the lower greenhouse gas emissions of electric power (depending on how it is produced).

Posted 22 November 2020 by Kevin Adler, Editor, Energy and Natural Resources Group, IHS Markit

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