Strategic Electrification

Decarbonization is on the rise: 24 states have enacted major greenhouse gas (GHG) emissions reduction mandates and an even greater number have adopted renewable portfolio standards. One in three people in the US now live in a community committed to or achieving 100% clean electricity. Taking center stage in the energy sector’s mission to decarbonize is strategic electrification of fossil fuel (on-site combustion) end uses and enablement of electric vehicle infrastructure.

This industry level shift is made possible by several key factors. Foundational is the electric power supply transition in many regions to cleaner resources than on-site fossil fuel use. Technology has also advanced, offering many new capabilities at lower costs. The economics of stranded or underutilized assets is also an emerging factor as more end uses become electrified, fossil fuel providers face lost revenues and profits for new and existing infrastructure. Finally, policy frameworks at all levels—state, regional, local—are instigating electrification efforts that flows in all directions.

Understanding Strategic Electrification

Strategic electrification is a process that can transform the world’s environment and economy with the tools we already possess. Total strategic electrification would replace all fuel-burning appliances and systems with clean energy. This might look like electric cars, heaters, dryers and ovens for every home in the world.

It sounds like an intense goal—because it is. Large-scale measures like strategic electrification might be an essential step toward achieving net-zero carbon emissions by 2050. For it to be completely effective, electrification needs to come from a high level. Many scientists agree that it will require a paradigm shift.

Total electrification of transportation alone could save 15% of the world’s energy. Plus, there is a myriad of additional environmental benefits. The strategic electrification of fossil fuels can reduce air and sound pollution in the communities that suffer the most. 

Another benefit of an electric power supply transition is that we already have the technology to make it happen. Many people have already switched to electric cars or home appliances. Still, it will take more than a few homes to reduce enough carbon emissions. 

Decarbonizing Fossil Fuels

One of the best strategies for decarbonization is reducing how the world uses fossil fuels. These energy sources are the biggest culprit for carbon emissions and will create disastrous effects if ignored. A carbon reduction strategy is an essential part of our future to prevent global temperatures from rising any higher.

Most scientists agree that if the earth’s average temperature rises more than 2 degrees Celsius, there will be consequences. The world’s leaders need to reduce carbon dioxide emissions significantly to prevent natural disasters. Strategic electrification can decarbonize a large part of the earth. 

Total electrification can save the energy necessary to bring carbon emissions to zero by 2050. By dramatically curbing fossil fuels that drain resources, create health hazards and produce carbon dioxide, we can help mitigate the disaster of a higher average temperature. 

The strategic electrification of fossil fuels will come from many avenues in the energy sector. At TRC, we consult with numerous markets to determine how to achieve their clean energy goals. From advanced energy programs to renewable solutions, each strategy plays a part in a decarbonized future.

Solving multiple energy challenges

While a high-value solution, strategic electrification exists in a complex world. Energy providers and regulators are rightly expecting it to serve multiple purposes. As a carbon reduction strategy, GHG emissions take precedence over annual energy use in terms of solution-worthiness-specifically, time-of-use electricity as a bigger factor than annual impacts.

Centralizing load on the electric grid presents greater opportunity for flexibility and optimization, and when managed well, delivers reliability and resiliency benefits. The key is pairing electrification with other energy management strategies like energy efficiency and demand response to reduce or shift load, and distributed generation and storage for local, clean supply.

Electrification can also be a net positive in terms of customer service. Consumers and their energy providers are linking arms around visible benefits like health from improved air quality; safety from avoided combustion or cooking systems without personal harm risk; and convenience benefits for consumers with resilient storage back-up.

It is worth noting the valid concerns about electrification if not managed properly—including effects around load increases, changes to peak load patterns, and natural disasters like the power shut-offs California has been experiencing. However, well planned and executed electrification integrated with a comprehensive energy management strategy can produce exceptional stacked benefits. And these benefits are especially critical for disadvantaged and vulnerable populations (often low-income households, people of color, immigrants, etc.) who are disproportionately impacted by climate-related natural disasters and the effects of fossil-fuel pollution.

Bringing solutions into the world

The challenge of implementing electrification solutions falls to utilities, community choice providers, and state and local governments. As with all energy transformation initiatives, real change is happening on the ground and the industry is adapting by doing. The following represents three important electrification strategies we are observing today across leading regions.

     1. Policies – setting a course.

States and local governments are pushing strategic electrification rapidly forward through new policies. New York has codified into law aggressive statewide GHG emissions targets and policies across all building types. With a massive building stock, New York City’s Local Law 97 also mandates GHG emissions limits for medium and large buildings and associated fines for non-compliance.

The state’s decarbonization policies and clean energy initiatives have paved the way for electrification solutions in a 2018 Public Service Commission Order which mandates significant site energy savings from heat pumps. The order is expected to make ratepayer energy efficiency programs an important path to market for regional decarbonization. As the investor-owned utilities (IOUs) prepare to assume ownership of heat pump incentive dollars, TRC is helping them administer updates to the New York Technical Resource Manual for inclusion of the heat pump measures.

Backed by its own state GHG emission goals and renewable supply resources, California revised its Efficiency Three-Prong Test this year to allow fuel-switching technology (and expanded cost-effectiveness terms). This opened $1 billion in energy efficiency program funding to strategic electrification.

Another major market pathway for CA electrification is the state’s 2022 update to Title 24 codes and standards. As one example, TRC is supporting multifamily building code revisions to enable all-electric pathways. At the local level, more than 50 CA municipalities are considering adoption of their own local building reach codes with all-electric or electric-preferred and electric vehicle components. TRC has partnered with some of the earliest actors, such as the cities of Palo Alto, San Luis Obispo, and Carlsbad.

Peninsula Clean Energy, Silicon Valley Clean Energy, and East Bay Community Energy have also become the first community choice energy providers in the state advocating similar reach codes to their 40+ member jurisdictions. Many of these communities include vulnerable populations and the public health benefits of electrification are a major selling point to local constituents. TRC is supporting these entities to promote electrification focused reach codes to their member jurisdictions through technical studies, stakeholder engagement and implementation support.

With the proliferation of GHG goals and renewable portfolio standards across the US, many other states are rethinking their fuel-switching standards to actively allow or put electrification on a fairer consideration basis. And some utility commissions are considering and even re-allocating funds for electric, non-wires, or non-pipes alternatives.

     2. Studies – readying the market.

With policies in place, utilities, state agencies, and advocates are seeking to ready the market for strategic electrification growth. The industry is going deep to understand market barriers and opportunities. This will be important to reach critical mass at implementation.

When Senate Bill 350 was signed into law in 2016, the California Energy Commission (CEC) was tasked with assessing opportunities and challenges to meet the doubling of energy efficiency targets. The CEC hired a team including TRC to conduct analysis to support the CEC’s report, which included important early discussion of electrification for energy savings vs. carbon reduction purposes—and helped pave the way for current electrification opportunities across the state.

Energy providers and decision-makers in New York are also exploring market considerations to execute on their electrification visions. NYSERDA, the NYC Mayor’s Office of Sustainability, and NY utilities, for instance, are developing the contractor workforce needed to achieve their heat pump goals. TRC is providing research and strategic planning to help the entities address shortages and gaps in workers, skills, and expertise.

Energy providers, like the Sacramento Municipal Utility District (SMUD), who are not subject to the same regulations as IOUs have been emerging as electrification leaders for years. Specifically, SMUD is pursuing a mission to help its customers transition to low-carbon, electric systems whenever possible. Just a few examples of their work include studying the feasibility of all-electric and electric vehicle conversions across the utility’s multifamily building sector; hosting heat pump water heater symposiums for collection of market feedback; and promoting electric induction cooking to consumers.

Industry stakeholders are also advancing electrification across building markets. A new report from the Building Decarbonization Coalition (with TRC) explores residential building developers’ and energy consultants’ appetite for all-electric homes. 88% of those surveyed were highly interested in building all-electric and felt they were capable of doing so—they just believe that home buyers and the public need more education around all-electric homes to drive adoption. Other coalitions are weighing in too. We support another which promotes heat pumps nationally through new efficiency metrics, modeling tools and ways of communicating customer benefits.

     3. Programs – implementing at scale.

Achieving lofty decarbonization goals requires large-scale strategic electrification implementation. Energy providers are both re-envisioning new programs and seeking electrification on-ramps for existing efforts.

In 2017, TRC proposed and implemented an initiative with Pacific Gas & Electric for early exploration of electrification in efficiency programs–replacing wall furnaces with heat pumps through the utility’s long-running Multifamily Upgrade Program. California’s Three-Prong Test amended this year cleared the way for IOUs to incorporate electrification as a pillar of programs across the state.

Today in New York, utilities are also kicking off early efforts towards decarbonization-focused programs. National Grid, as one example, is planning implementation for their new heat pump program with TRC’s support, as they prepare to launch in 2020 after final regulatory approval.

Non-IOU energy providers have their own electrification efforts well underway in some regions. The Advanced Energy Rebuild (AER) Program from Sonoma Clean Power helps rebuild high-efficiency homes to replace those lost in wildfires—with greater incentives for all-electric design and electric vehicle options. As such, the award-winning program is a strong example of how advanced energy solutions with electrification components provide critical resiliency benefits for vulnerable communities.

SMUD Smart Homes also represents program innovation as the nation’s first to advance electric new construction. The design combines electric vehicle pre-wiring, heat pump water heating and other advanced measures that support grid reliability through demand response reductions. And by offering additional incentives, we are seeing a 100% adoption of induction cooking technology in participating homes. TRC also partnered with SMUD to develop a creative savings methodology that allows the electric-only utility to claim efficiency savings from avoided gas use of the participating all-electric homes.

As we look to spur strategic electrification across the US, it will be up energy providers and solution implementers to continue sharing ideas, insights and lessons learned. We are optimistic for the journey ahead and look forward to continuing our work with clients and industry peers towards an electrified, resilient and low-carbon future.

Nic Dunfee, Matt Christie, Laura Giannini, Abhijeet Pande, and Andrea Thompson contributed to this article.