Decarbonization of Heating Energy Use in California Buildings - New Report!

Synapse Energy Economics released a new report today on the opportunities and challenges for decarbonizing heating in California buildings. Our study, commissioned by the Natural Resources Defense Council, addresses the fact that California’s buildings are responsible for 25 percent of the state’s greenhouse gas emissions. More than half of those come from combustion furnaces and water heaters. Switching to efficient electric heat and hot water will have a significant impact on reducing gas use in California buildings. As California’s electric grid shifts toward clean, renewable energy sources, emissions from electric heat will continue to drop.

Figure 1. 2016 California GHG emissions by sector. Electric sector emissions are assigned to the end use sectors that consume electricity.

2016 California GHG emissions by sector. Electric sector emissions are assigned to the end use sectors that consume electricity.

If one-third of California’s buildings switched to clean electric heating technology by 2030, emissions would fall by 7 million metric tons per year. That’s the equivalent of zeroing out annual emissions from 1.5 million cars or from nearly four 500 megawatt (MW) gas power plants running 24/7.

Synapse’s report calculates capital, operating, and lifecycle costs for decarbonizing new and retrofit, single- and multi-family homes in three of California’s climates: the LA Basin, Bay Area, and Sacramento. In new homes, heat pumps paired with solar panels to match the increased load cut bills by several hundred dollars per year. In older homes without solar, electric space and water heating can be cost-competitive with gas when combined with simple efficiency improvements.

Figure 2. Customer economics of limited decarbonization package for retrofit of a single-family home

Customer economics of limited decarbonization package for retrofit of a single-family home

Savings vary depending on climate, building type, and—especially—utility rates. Electric rates with a significant difference in peak and off-peak pricing offer opportunities for customers to set their heat pumps to operate when electricity is cheapest and cleanest. Operational energy costs vary by rate design, climate zone, and by how much solar is on the building. Across climate zones, higher cost savings are achieved by using more dynamic electric rates and by maximizing cost-effective solar PV to supply the larger electric load.

Electrification can reduce electric system costs when done right: when paired with efficiency and if much of the additional load is shifted to off-peak hours when clean energy is plentiful. Smart use of electric heat spreads infrastructure costs over more units of electricity sales. Electrification would help absorb surplus renewable energy during periods of low demand, helping achieve California’s goal of a 100-percent carbon-free grid in an affordable manner.

Figure 3. Illustrative summer day potential load shifting for residential water heating

Illustrative summer day potential load shifting for residential water heating

To respect natural equipment replacement cycles, heat pumps need to become mainstream by 2030 in order to be pervasive by 2050. This gives California a dozen years to develop the market and make this heating technology affordable and accessible to all. The technology California needs exists. Now that technology needs policy support to jumpstart sales, reduce costs, and become broadly available. Our report identifies specific policy changes that can help make this happen across education, planning, removing barriers, and transforming markets.

Done right, building decarbonization will also provide major affordability, quality of life, and public health benefits to Californians. But reaping these benefits requires massive market transformation, on the scale of the renewable electricity and electric vehicle revolutions. Decarbonizing California’s buildings will take decades. It must start now to avoid unnecessary stranded costs and set in motion the virtuous cycle of declining equipment, installation, and operating costs that will make clean and affordable buildings accessible to all.

California can also have an outsized influence on the rest of the world, which looks to California for leadership. Addressing the state’s building decarbonization challenge in a way that benefits customers, the grid, and the environment is critical to climate and clean energy goals globally.

Read the report.