All-Electric is the Past and Future

A version of this article appears in the Winter 2017 issue of Home Energy Magazine.

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Since 1993 the Federal Energy Information Agency (EIA) has reported a non-stop, national growth trend in all-electric buildings, led by the Southern states at 44% of all their built homes (Figure 1). Why is all-electric growing when conventional wisdom is that “gas is cheap?” In fact an all-electric home costs at least $4,500 less to build according to KB Homes and City Ventures, and in apartments I have documented $3,500 savings per residence by building all-electric. These savings have always been there—electricity is always delivered, but plumbing for fossil fuels is optional—but cold climate performance has historically been the Achilles Heel of air source heat pumps. Below 40 0F and the compressor wouldn’t put out heat, requiring electric resistance that became too expensive in 1970s in all but the hydro-heavy Pacific Northwest. But that was then—for almost 15 years now here have been inverter-controlled compressors that can operate above the Arctic Circle down to -15 0F, as proven by the Canadian ZNE homes designed by Habitat Studio. Growth in all-electric homes with heat pumps is a national phenomena, illustrated by ICF International in their 2016 Propane Market Outlook that was commissioned by the propane industry (see Figure 2)—they documented that since at least 2010 almost every county in the United States has seen the greatest gains in space heating market share by Electricity, in yellow. Mentally compare this map to the 2016 Electoral Map, and you can see that electrification is a non-partisan trend.

What Fuels American Homes?

Figure 1. Electricity only has been a growing trend for 24 years nation-wide. (U.S. Energy Information Administration, inewsource.org)

Fuel with Largest Market Share Gains Between 2010 and 2014

Figure 2. Electric heating has gained market share nation-wide since at least 2010. (2016 Propane Market Outlook, ICF International)

In their words, “Much of the loss in propane market share in the residential sector in recent years is attributable to competition with conventional electric heat pumps. This competition is expected to intensify over time as ongoing technological improvements reduce or eliminate heat pumps’ traditional shortcomings.” The trend to electrify buildings is accelerating because they’re cheaper to build, and in most states they are cheaper to operate. This unconventional understanding came to me slowly, and I thought you, my peers in building science, might be helpful to share the story of how I learned about all-electric construction.

So, in 2005 I was hired out of my first career as a local high school science teacher to be a project manager for six years with Danco Communities, an affordable housing developer and the largest general contractor in our area. I learned at Danco that estimating construction costs is core to business of building—profits are 0% to 15%, and depend on the accuracy of the initial cost estimate. As a Project Manager I had to cost-estimate proposed subdivisions, apartment complexes and even a small town. I particularly enjoyed learning about construction pricing for green building features—I had spent a decade training at Humbolt State University’s (HSU’s) Campus Center for Appropriate Technology, a student-led demonstration house on campus for renewable energy and sustainable living. Our goal at CCAT was to dispel the myth that living lightly on the Earth is either burdensome or difficult, and I learned that people on tours were excited to retrofit their homes and install solar arrays, but worried about up front financing—money, not willingness, was the barrier.

The Campus Center for Appropriate Technology at HSU is student-led and funded, giving Co-Director students like the author in 1999 the opportunity to learn what it costs to install new 2.3 kW PV array, 500W wind turbine, pedal powered TV, and biodiesel refinery. (ccat.humboldt.edu)

At my Danco developer job it was the same situation as a CCAT tour—my CEO and VP of Construction were reasonably supportive of green building, but they saved their deepest enthusiasm for any new trick to lower old costs. The faded company town of Samoa was my biggest challenge—100 existing homes and 300 new ones planned. The gas line ran down Main St out to the old lumber mill, but extending gas to the homes was $15,000 per house. Using the existing wiring saved $15k per house, almost double the cost of installing in the homes efficient electric heat pumps to replace the propane water heaters and wood stoves. Stone Energy Associates submitted in April of 2017 a study to the California Energy Commission illustrating the range of gas costs from actual quotes—Table 1 shows costs for just the gas lateral to the building from the main pipe in the street, and they range from $1,000 to nearly $15,000, and Table 2 shows the cost of plumbing gas inside the walls to gas appliances—$200 to $1,000 more each. The total is as many as twenty thousand dollars to install gas from the street and through the house—not cheap.

Table 1. Additional Cost of Installing a Gas Lateral from the Main to the Gas Meter

(Source: SEA letter to the CEC, Docket # 16-BSTD-06 4/21/17)

Table 2. Additional Gas Fixture Costs

(Source: SEA letter to the CEC, Docket # 16-BSTD-06 4/21/17)

And just when you thought gas costs couldn’t get worse, it turns out that buying a gas furnace with AC is a third more expensive than buying the same AC with heat pump functionality (Figure 3). A heat pump is a reversible air conditioner—it has a reversible pump, an extra thermal expansion valve, and a little more programming. So it’s a cheap change to an AC into a heater, about $200. But it’s $1,200 to add a gas furnace to an AC, even for a minimal 80% efficient furnace. It’s the same with Carrier, Goodman, and other manufacturers—heat pumps are cheaper than identical furnaces with an air conditioner, so just the act of buying a heat pump instead of a furnace saves $800-$1,200.

Figure 3. The same compressor is used in all three products, first as an AC, then as a Heat Pump, and finally with a Furnace. It’s $200 to make an AC into a Heat Pump, and a whopping $1,200 to add a gas burning furnace to the AC.

In my experience at Danco we learned that, all told, avoiding the cost of gas saved at least $3,500 per apartment, similar to the finding of KB Homes that they saved $4,500 per house. And $3,500 per apartment moves the dial—it’s enough to pay for all the HERS inspections and efficiency upgrades required for certifying a house to Energy Star for Homes, which is the most expensive and significant green building commitment within programs like LEED.

With a cost-neutral Energy Star design our rural affordable housing proposals could finally commit to the highest green building goals at no additional cost, beating out the big city competition for scarce Federal grant and loan funds. We immediately won funding with this strategy after years of failing, and Plaza Point was the result. It’s a local landmark in downtown Arcata—twenty-nine LEED Platinum low-income senior apartments performing at 107% Net Positive overall. Going all-electric with PV has won Danco more competitive funding in Fort Bragg, and under the auspices of Redwood Energy since 2011 we have helped dozens more low-income apartment get built with the cost-cutting strategy of all-electric.

In 2012 Plaza Point senior apartments was the nation’s first 100% Zero Net Energy apartment complex, and building all-electric made it cost-neutral to certify to Energy Star for Homes. After rebates, the ZNE solar array added 2% cost to the development, profiting within 6 years of operation. Twenty of 29 apartments are Net Positive, 9 are Net Negative, and overall the complex is 107% Net Positive. (photo by Sean Armstrong)

Lest you think I only play with other people’s money, in 2008 my wife and I bought an old c.1916 farmhouse requiring strategic, cost-effective retrofits with limited funds. We had four-month-old premature twins to keep warm, so after insulating the floor to R-13 with open cell foam for $3,000 we replaced the 55% efficient gas wall heater with a 330% efficient (HSPF 11) air source heat pump for $2,400. This combination allowed us to keep toasty warm, and dramatically lowered our utility bills from using the old gas wall heater. It worked for other low-income households, and it worked for us too.

The old thinking is “gas is cheap” and retrofits of gas equipment should mean a better burn, but today’s math shows this is wrong. A gas BTU of heat is one-third the cost of an electric resistance BTU of heat, but a 330% efficient heat pump used one-sixth the energy of the 55% wall furnace. Our heating budget was cut in half with electrification. A Redwood Energy graduate student intern, Jeff Harkness, kindly compared the energy use of a house like mine and ran it through the EIA average energy pricing for each state—we found that in every U.S. state, a retrofit like would lower a family’s monthly utility bills (Figure 4).

Annual Utility Bill in an HSPF 13, EF 3.4 All-Electric Home vs. 55% Efficient Gas Burning House

Figure 4. Comparative bills analysis showing that an existing low performance gas house would save monthly utility costs with a high performance electric retrofit in every state.

Trinity River Elder Village

A nice example of the utility bill savings from going all-electric is the inspiring Trinity River Elder Village on the Native Sovereign Nation of the Hoopa Indians in rural Northern California. The village of 13 Energy Star-certified homes is 45 miles from a natural-gas line, and in this remote area propane costs are among the highest in the nation. The question remained whether an all-electric or highly efficient Propane package would produce the lower bills, and we set up a side-by-side comparison (see Table 3). Even a 95% efficient Propane furnace cost more than a mid-efficiency ducted heat pump (10 HSPF, 19 SEER), and all-electric shaved $15 off a house’s monthly utility bills (see Table 4). Had this 2015 project used top-of-the-market heat pumps available today (HSPF 14, SEER 33), the bills would be even lower. Importantly, adding solar power to an electric home makes for the lowest bills, but keeping Propane reduces the bill available for solar offset, a problem when utility bill reductions via solar arrays raise needed revenue.

Table 3. Trinity River Elder Village Home Efficiency Measures

Table 4. Trinity River Elder Village Two-Bedroom Home Monthly Utility Bill

The photo and Tables 3 and 4 show an aerial photo of the completed ZNE homes, a comparison of efficiency measures and the resulting utility bills that favor all-electric.

The point that natural gas is expensive and electricity is cheap in domestic hot water equipment was illustrated by Ken Rider, Advisor to California Energy Commissioner Hochschild, who studied the delivered cost of water heating comparing high-performance, 0.96 EF natural-gas combustion (red with stars in Figure 5) to a 3.0 EF midrange heat pump (blue with stars in Figure 5). Note that they are neck to neck over the last 30 years with real-world pricing. But with current heat pump water heaters now operating at 3.84 EF, there is no natural-gas product that can compete.

Figure 5. Energy pricing comparison of domestic hot water fuels and efficiencies by Ken Rider, advisor to California Energy Commissioner Hochschild.

Dropping off the Early Electrification Bandwagon

Ronald Reagan in the GE short film “Live Better Electrically” and one in a series of Gold Medallion awards provided to an all-electric home.

The fact that all-electric is cheaper to build has always been true, and for a few decades after the second World War electricity was also cheaper per BTU than fuels. But the OPEC Oil Embargoes of 1973 and 1979 quadrupled electricity prices in the United States, and it took decades of efficiency investments to bring all-electric operating costs back down. Now that electricity is cheaper again, it’s fun to revisit that thirty-year period.

For example, to spread the good news about low costs with all-electric design, in 1954 180 utilities teamed up and hired Ronald Reagan to be the face of a publicity campaign called Gold Medallion Homes. The future governor and president first lent his talents to the General Electric Theater weekly radio show, and then filmed tours of his Pacific Palisades mansion with his wife, Nancy. Reagan had so much charisma that he succeeded in selling colored light bulbs in a black and white film.

More than a million Gold Medallion Homes were built nationwide until the early 1970s. A fancy futuristic home came with the iconic statement Live Better Electrically emblazoned on a brass Gold Medallion plaque mounted next to the doorbell, on ashtrays, key chains, wall clocks and even cufflinks emblazoned with the phrase. During this period Julia Child’s “French Chef” show taught American’s how to cook haute cuisine on resistance element stoves with the support of an electric utility. The Live Better Electrically movement was like today’s Energy Star program, but run by master Hollywood marketers with an order of magnitude more money.

In a prescient 1958 Live Better Electrically advertisement one is introduced to an “all-electric heat pump” that “provides year-round comfort from a single unit which automatically heats or cools as the weather requires.” The 1950s era heat pumps had serious limitations—the compressors stopped working at 35 0F, and kicked in more expensive electric resistance that used 2.5 times as much energy as the compressor. This limitation kept heat pumps in the warm South and the hydroelectric Northwest. Japan’s response to the OPEC Oil Embargoes (as our allies, they too were embargoed) was unlike that in the United States—when oil prices skyrocketed, they invested in nuclear power and invented more efficient heat pumps. Today’s inverter-driven air source heat pumps operate at an amazing -27 0F, low enough to go all-electric in almost any climate on Earth.

It was true once, in some parts of the country, that operating with natural gas cost less than operating with a heat pump. It is no longer true—electricity is cheaper. It was once true that drilling for domestic natural gas was a national security strategy to prevent the impact of oil embargoes. It is no longer true—natural gas represents climate change and profound international instability. Now that wind farms and solar fields are cheaper to build and operate than gas plants, there is simply no reason to waste money on gas—better to save it for making plastic.

Sean Armstrong is the Managing Principal of Redwood Energy, one of the nation’s leading ZNE design firms.

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