Report: Electric Heating Can Lower Emissions, Costs In Many Cities

Report: Electric Heating Can Lower Emissions, Costs In Many Cities

August 22, 2018

Fossil fuels still rule the roost when it comes to heating America’s homes and businesses, but a new report suggests that converting to electric heating would immediately reduce carbon emissions in many cities, particularly when coupled with efficiency-maximizing devices such as smart thermostats.

Some 70 million American homes and businesses burn natural gas, oil or propane for heat and hot water, according to renewable-energy nonprofit Rocky Mountain Institute, producing 560 million tons of carbon dioxide annually, or one-tenth of total U.S. emissions. “But now, we have the opportunity to meet nearly all our buildings’ energy needs with electricity from an increasingly low-carbon electric grid, eliminating direct fossil fuel use in buildings and making obsolete much of the gas distribution system—along with its costs and safety challenges,” RMI said.

In its 2018 Economics of Electrifying Buildings report, RMI examined the cost and carbon impact of electric versus fossil fuel space and water heating in four cities — Oakland, California; Houston; Providence, Rhode Island; and Chicago — for both new construction and home retrofits under various electric rate structures.

In places like Oakland, Houston, and Providence, the electric grid is already low-carbon enough to offer emissions reductions from electrification,” RMI said. “Even in places like Chicago, where coal often remains the marginal generator today, continued retirement of coal plants is likely to make electrification the low-carbon option over the long term.

RMI found that in many cases, particularly in new homes, electric heating cost less than other types of heating over the long term:

Costs are also reduced for customers in several retrofit scenarios: for customers switching away from propane or heating oil, for gas customers who would otherwise need to replace both a furnace and air conditioner simultaneously, and for customers who bundle rooftop solar with electrification. New homes and homes currently lacking natural gas service also avoid the cost of gas mains, services, and meters not needed in all-electric neighborhoods.

That said, RMI acknowledges conversion to electricity may be cost-prohibitive for existing homes currently heated with natural gas at today’s prices:

“Customers with existing gas service face higher up-front costs to retrofit to electric space and water heating than to install new gas devices, and either pay more for energy with electric devices—generally in colder climates—or save too little in energy costs to make up the additional capital cost.”

A key variable in RMI’s analysis was “demand flexibility,” or “the ability to shift energy consumption in time to support grid needs,” by way of technology such as smart thermostats. “The value of electric demand flexibility is likely to increase as the share of variable renewables grows on the electric system—customers’ ability to capture this value with intelligent devices can reduce the lifetime costs of electrification but depends on new market structures, rate designs, and utility programs,” the report said.

RMI’s findings are no surprise for Maria Medieta, data scientist for Drift, who points to shifts in the market. “The future of heating will be very different, with a strong move towards electrification,” she said. “Electricity generation is getting cleaner, and renewable energy is getting cheaper. Customers who generate their own electricity with solar panels can combine smart thermostats and appropriate heating technologies to heat their home, avoid greenhouse gas emissions and save money in the long run.”

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