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Sacramento Municipal Utility District and Homebuilders Collaborate on All-Electric Homes

Posted to Electric Power Research Institute (EPRI) in the Energy Efficiency Group

image credit: A residential development project called Broadway Redux that participated in SMUD’s All-Electric Smart Homes program. Photo courtesy of SMUD and Builder Indie Capital LLC.

In the 1950s, Ronald Reagan starred in a series of commercials in which he introduces the electric appliances in his California home. In one commercial, Reagan, wife Nancy, and daughter Patti reveal the many “electric servants” that helped make his family’s life easier and more enjoyable.

The ads were part of a multi-million-dollar campaign called “Live Better Electrically” launched by GE and Westinghouse. More than 60 years later, the California utility Sacramento Municipal Utility District (SMUD) is promoting electrification of homes and businesses as a pathway to achieve decarbonization goals and deliver financial benefits to customers. In SMUD’s most recent 5-year strategic plan, covering 2020 through 2024, the utility envisioned nearly $2 billion in utility investments to support both building and transportation electrification.

In 2017, SMUD launched a pilot program called “All-Electric Smart Homes” that provides incentives to homebuilders to construct new homes with all-electric appliances and no natural gas infrastructure. In total, homebuilders can receive $5,000 for a single-family home and $1,750 for each multi-family dwelling. SMUD also provides assistance to builders that develop neighborhoods of all-electric homes, including technology recommendations, energy modeling to support compliance with building codes, and lessons learned from other builders. In 2018, the program supported the construction of about 73 new all-electric homes. That number increased to 108 in 2019 and 230 in 2020. The program is on track to support 600 new electric homes in 2021.

In parallel with this program, SMUD and EPRI collaborated on research about the barriers, opportunities, and costs of promoting building electrification as well as a more recent report outlining strategies to promote electric homes. Interviews with Sacramento area builders pointed to barriers such as:

  • Homeowners’ familiarity with and preference for gas-fueled end-use technologies, especially stovetops and fireplaces
  • A perception among homebuilders and customers that electric technologies are more expensive and less effective than gas alternatives

EPRI’s economic analysis demonstrated how all-electric new construction provides savings to homeowners:

  • Upfront costs to customers were $290 less with electric HVAC, water heating, and other appliances, largely because no new gas infrastructure was required.
  • Annual maintenance costs with electric appliances were $69 lower.

For builders, the additional cost to construct an all-electric new home was $127 per dwelling—a negligible fraction of overall construction costs. EPRI’s analysis also found that greenhouse gas emissions from all-electric homes are 40% less than emissions from homes powered by natural gas and that electric homes deliver energy savings of $1,131 over 30 years.

Another study conducted by the consultancy E3 for SMUD, Southern California Edison, and Los Angeles Department of Water and Power (LADWP) found that single-family home electrification could reduce greenhouse gas emissions by 90% by 2050, assuming a much cleaner electric grid by then. The report also found that customer energy savings from switching to electric from gas would range between $130 and $540 per year.

All these results prompted SMUD to move its all-electric new home project out of the pilot phase. “What EPRI found was very clear. Electric buildings were either the same price or cheaper to build and would accrue dramatic greenhouse gas savings and bill savings for customers compared to gas,” said Owen Howlett, customer experience strategist at SMUD. “When we saw that, it directly gave a green light to our program to support new construction.”

SMUD recognizes a need to improve customer education about the performance and cost of electric appliances. “One of the biggest things I stress is that the performance of an induction cooktop is really on par with or better than what you would get with a gas cooktop. Homebuilders still aren’t so familiar with it and think of it as the old school electric cooktop,” said SMUD Senior Architect Ray Nalangan, who runs the utility’s building electrification program. “And they need to be assured that if you properly size the heat pump water heater, you don’t have to worry about running out of hot water.”

SMUD has recently altered the program to allow for some gas use, including cooking, as long as the rest of the appliances are powered by electricity. Gas can be used for either HVAC or water heating, but not both. The change was intended to accommodate homebuilders’ concern that not having a gas cooking option could make it difficult to sell some homes. “Homebuilders are ultimately home sellers,” said Nalangan. “We can say electric is going to be cheaper and better but at the end of the day the homebuilder says, ‘Can I sell this home?’” None of the builders have opted for gas cooking, and only a handful of the hundreds of homes that have taken advantage of the program have chosen standard electric cooktops instead of induction stoves.

 

New Construction Can Help Retrofits

SMUD’s building electrification efforts also include retrofits of existing homes. The utility’s Home Performance Program offers rebates and financing for a range of upgrades, including wiring to install an EV charger and other electric appliances as well as the installation of HVAC systems and heat pump water heaters.

To achieve substantial greenhouse gas reductions, focusing on existing buildings is more important than new construction. “Everyone wants to push new construction immediately. But it’s only 1% or 2% of the residential and commercial building stock. New construction alone won’t get us where we need to go,” said Howlett. “That said, new homes are far and away the most cost-effective to electrify because you don’t have to strip out a bunch of gas infrastructure and piping.”

Howlett expects that as more all-electric new homes are built, electric appliances will get cheaper, improving the economics of retrofits. “Once you build the market for new construction, prices are going to come down and people will get more comfortable with the technologies and that will help extend the retrofits.”

Changes to California’s statewide building code, known as Title 24, could also improve the economics of retrofits by dramatically expanding the market for all-electric new homes. The California Public Utilities Commission has identified Title 24 as a vehicle for achieving its goal of 100% zero-net-energy homes by 2045. A Zero-net-energy home has enough energy efficiency and rooftop solar such that grid electricity imports equal exports. Title 24 will undergo revisions in 2022, and Howlett expects the changes will make all-electric homes much more attractive to homebuilders across the state.

“In California, roughly 40 cities have local ordinances that require new homes to be electric. But these are generally in places where not many homes are being built,” he said. “The big effect will come when complying with Title 24 everywhere in the state is done most easily by going electric. That is what we are expecting in the next round of code changes in 2022.”

 

This article appeared in EPRI's Efficient Electrification newsletter. Sign up to receive future issues here

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