When I first started writing about housing 50-plus years ago, the public utilities in my Washington, D.C., market were going toe-to-toe trying to win the hearts and minds of local builders. Electric heating and cooking were king, but natural gas was making big inroads.
I don’t know who won the battle, if there ever was a clear winner. But fast-forward to today and the all-electric house is making a comeback. The reason? Climate change: The heating and cooling of buildings accounts for roughly 10 percent of the country’s greenhouse gas emissions.
“Millions of our homes use outdated, energy-guzzling technology dependent on natural gas or oil,” said Matt Power, editor of trade publication Green Builder.
Nearly half operate with natural gas, but not in the South. There, electricity is more prevalent – in the form of woefully inefficient baseboard heating.
As Power writes in the fall edition of his magazine, “The shift has begun, but we all have to move faster. Every new home should have fossil fuel independence built into its design.”
What Is It?
A fully electric house is defined by Guidehouse Insights, an energy-sector marketing and advisory firm, as one in which space heating, water heating and cooking are electrified through the use of air-source heat pumps, heat-pump water heaters and induction cooking technologies. Not included are insulation and energy-management systems, but many all-electric houses have both.
Right now, some 70 million houses burn natural gas, oil, propane or a combination to warm their interiors and heat water, according to the Environmental Protection Agency. Together, they generate 560 million tons of carbon dioxide every year – one-tenth of the total for the entire country. (There is no equivalent data for all-electric houses.)
Natural gas is the preferred heating source by almost half of all U.S. households, according to the Department of Energy. The owners of the 50 million houses powered by gas are likely to stick with it, particularly because it is still the least expensive source of home energy.
Big Hurdles, Big Rewards
Perhaps the greatest sticking point to converting to all-electric is the expense. A 2018 study from the Rocky Mountain Institute found that it would be cheaper to replace gas furnaces and water heaters with new gas devices than to switch to electric appliances.
Homebuilders start from scratch, though, so they are not so constrained. And as a result, they are expected to lead the gradual shift to total electric in the coming years. According to the Census Bureau, they already are.
In 2016, 291,000 – 36 percent of the newly built houses that year – were heated with electricity. But in 2019, the last year for which data is available, that number jumped to 391,000 houses – a 43 percent share. And the long-term trend is “likely to continue,” said Rose Quint, the assistant vice president for research at the National Association of Home Builders.
According to William Allen, a senior project manager at California energy company ConSol, “electrification is a win-win” for new-home buyers as well as builders.
“Consumers save on their monthly utility costs and benefit from indoor air quality,” he said during a recent webinar, “and builders save on overall construction costs.”
Based on Allen’s analysis, builders of 2-story, 2,700-square-foot houses in the Los Angeles area would save roughly $1,500 per unit because they don’t need to run gas lines. And while they may have to upgrade some electrical circuits, the appliances themselves – cooktops, space and water heaters, clothes dryers – are nearly $3,330 less expensive than gas models.
He hedges these numbers a bit, saying that the savings could differ based on location, so it’s “almost impossible to generalize” infrastructure costs. Gas lines, for example, could run anywhere from $1,500 per unit at infill projects where service is already at the street to $25,000 per house for an entire subdivision rising from raw ground.
Buyers Save Big
Whatever the amount, it’s not chicken scratch – and neither are the savings on an owner’s monthly utilities. Based on current rates, Allen estimates that folks in the L.A. market could save nearly $90 a month by going all-electric. Research by the Rocky Mountain Institute suggests an average savings nationally of about $300 a year.
California, which is home to seven of the 10 most polluted cities in America, is hell-bent on becoming carbon neutral by 2045, if not sooner. But 40 local jurisdictions, representing more than 10 percent of the state’s population, are going further by banning gas hookups – with few exceptions, if any.
San Francisco’s prohibition starts July 1. And cities in other states – including Massachusetts, Texas, Louisiana and Oregon – are doing the same.
Meanwhile, some builders fear potential buyers will balk at all-electric houses. Some are concerned that heat-pump waters heaters, which Allen calls “the next great thing” in green building, don’t heat the water as quickly as gas units. Others worry buyers won’t want to give up the control they enjoy when cooking on gas ranges.
But the energy consultant said that builders are more concerned about these potential objections than their buyers – especially when buyers understand how much more efficient their homes will be.
“The energy savings usually outweigh” any objections, he said.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at email@example.com.