As electric utilities, policymakers and other stakeholders look for ways to address climate change and decarbonize the grid, electrification is one strategy that is increasingly gaining attention in the industry. From heat pumps and electric vehicles (EVs) and induction cooking to heat pump water heaters, all-electric technologies are becoming increasingly common features of American homes.
Consumers have indicated that they are ready to engage in decarbonization efforts, and while some early adopters have already shifted away from fossil fuels, many Americans will require support and guidance from utilities and other stakeholders to make the transition –both inside their homes and with their automobiles. Several stakeholders have already made considerable progress in educating and engaging consumers in electrification, including ENERGY STAR, SMUD and Great River Energy, who we recently hosted on a one-hour webinar.
A new certification program that goes beyond energy efficiency
ENERGY STAR has long been known for helping American consumers and businesses make well-informed decisions about energy efficiency. In fact, over the last 30 years, ENERGY STAR has helped save five trillion kilowatt-hours of electricity, while also achieving four billion metric tons of greenhouse gas reductions and helping consumers and businesses save more than $500 billion in energy costs.
To help accelerate the transition away from fossil fuels, the U.S. Environmental Protection Agency (EPA) recently introduced a new ENERGY STAR program for new homes that will officially begin certifying residences in early 2023. With approximately 20 percent of the homes that will exist in 2050 not being built yet, new construction represents a 100-year opportunity to build in energy efficiency, electrification and decarbonization.
ENERGY STAR NextGen Certified Homes and Apartments aims to demonstrate to consumers that it’s possible to build homes that meet the needs of tomorrow today. In addition to requiring highly energy-efficient construction, the new designation also evaluates homes based on whether they have an ENERGY STAR-certified heat pump (which must be “smart” or connected to a smart thermostat), a heat pump water heater, electric cooking (an induction stovetop and an electric oven) and EV charging capability.
As all-electric homes increasingly become the standard in the years ahead, the EPA’s new designation encourages homeowners and builders to be ahead of the curve and develop residences that will not have to be retrofitted when fossil fuel technologies become obsolete.
Education and incentives to encourage consumers to adopt electric technologies
In Minnesota, Great River Energy and its 28 member cooperatives are also helping advance an electric future for consumers through three areas of opportunity: building heating and cooling (i.e., air-source heat pumps), transportation (including personal vehicles, forklifts, heavy duty vehicles and more) and alternative processes, which includes electrifying agriculture and other industries. Their approach has focused on marketing materials that educate consumers about how all-electric technologies can fit their lifestyles and on incentives that lower the barriers to adoption.
When Great River Energy launched their heat pump promotion, they began by first speaking with many contractors and consumers to learn about their perceptions around heat pumps and what it would take for them to consider one. Due to poor performance in the past, a bad reputation has followed heat pumps, and some contractors refused to install them –despite significant improvements in the technology. A primary goal of the promotion was acquainting contractors with modern, air-source heat pumps.
Through their conversations with contractors and consumers, Great River Energy learned cost parity was a major issue for those considering a heat pump. Hence, the cooperative provided a considerable incentive of either $1,000 or $2,000 to consumers, depending on the heating efficiency of the specific heat pump model, which increased consumers adoption of high-efficiency, all-electric technology that will help them save money for years to come.
An innovative financing model to help consumers electrify their homes
California’s SMUD, one of the largest community-owned electric utilities in the United States, has long been a leader in electrification, and with their 2030 Zero Carbon Vision, the utility has probably the most aggressive clean energy goal of any utility in the United States.
To date, SMUD has completed more than 2,500 equivalent electric home conversions, and characteristically, their electrification strategy includes lofty goals for the next few decades. By 2030, they aim to have 35 percent all-electric buildings in their service territory, and by 2040, they aim to support 100 percent of low-income customers in electrifying their homes.
One initiative that SMUD has recently embarked on is zero-percent financing for consumers that want to electrify their homes. Through this program, a local bank partner provides 10-year loans for consumers, and SMUD pays the interest cost of loans to the bank.
For customers with a high credit risk, there is zero interest for the full length of the loan, while customers with a moderate credit risk pay zero interest for five years and low-risk customers pay no interest for a year. This variable structure is one way that SMUD is incorporating equity into their electrification strategy and helping support low- and moderate-income customers through this transition.
While electrification has the potential to provide many benefits for consumers – including lower bills, indoor air pollution and greenhouse gas emissions – the road to get there won’t be easy for all consumers. Electric utilities and other industry stakeholders are in a great position to be trusted advisors during this transition and provide education, incentives, financing and other strategies to help consumers move away from fossil fuels.