How Much Does Whole-Home Electrification Cost?

Graphic representation of electricity in a homeAs policymakers look for ways to curtail the use of fossil fuels, new initiatives are being proposed to address not just how much energy is consumed but also how energy is generated and the types of equipment and appliances installed in a home.

Electrification is a strategy for decarbonizing the economy by drawing down the use of fossil fuels in transportation, buildings, and electricity generation. With this type of transition, renewable energy sources are envisioned to continue their growth at utility and community levels, along with an increase in energy storage and expansion of demand management solutions.       

Electrification in Residential Buildings

For residential buildings, proposed electrification strategies typically include:

  • Replacing gas furnaces with air source heat pumps or ground source heat pumps;
  • Replacing gas water heaters with heat pump water heaters;
  • Replacing gas ranges with induction or conventional electric ranges;
  • Adding electric vehicle charging capabilities to the building or parking spaces; and
  • Replacing gas dryers with electric counterparts (conventional or heat pump).

Home Innovation Research Labs recently released a new study on the impact of electrification on an average-size single-family home. The study evaluates construction costs and annual energy use costs when compared to a house with gas equipment and appliances in Houston (CZ2), Baltimore (CZ4), Denver (CZ5), and Minneapolis (CZ6). The analysis was conducted for several basic electrification scenarios without onsite generation or storage and using local utility rates. Annual energy use costs were modeled using DOE/NREL-developed BEopt software.

Several themes were highlighted in the study (also see cost tabulations below):

  • Climate zone had a strong influence on both construction costs and energy use costs. In colder climates (CZ 5 and 6), heat pumps with variable refrigerant flow rated for operation during low outdoor temperatures are needed. Often referred to as cold climate heat pumps, these systems are more expensive: $8,000-$9,000 more compared to a gas furnace. The total added cost for an all-electric package modeled in the study ranged from $10,886 to $15,100 in colder climates (Denver and Minneapolis).
  • Annual energy use costs were found to be higher in colder climates (by about $275 in Denver and by $650 in Minneapolis). Therefore, unlike electric cars which have a higher price tag but are less expensive to “fuel,” all-electric homes in these locations are more expensive to operate.
  • In warmer climates (like Houston, CZ 2) where heating is less of a factor and standard heat pumps can be used, the incremental cost of constructing an all-electric house ranged from $4,000 to $11,200, and the energy use costs were on average comparable between a gas and an all-electric house.
  • In moderate climates (Baltimore, CZ 4), the study evaluated costs for a range of heat pump options including variable refrigerant flow and standard systems. The specific heat pump choice affects the cost and the heating performance of the system during colder months.
  • A larger capacity heat pump water heater (80 gallon) with a mixing valve is needed to match the performance of a gas water heater, particularly in mixed or cold climates. These HPWH units can cost as much as $2,800 more compared to a standard gas water heater.
  • Adding a single Level 2 circuit for an EV charger costs about $600-650 to the consumer on average, not including the cost of the charger/connector. The price will be higher for homes where the electric panel is located more than 50 feet from the charging receptacle and/or when the electric panel needs to be upsized.
  • An induction range could add $1,000 to the price of the house compared to a gas range, plus the cost of compatible cookware. The induction range is intended to provide cooking performance more resembling a gas range.
  • There are potential savings in all-electric homes by avoiding community gas infrastructure. Other studies noted in the report estimated average savings of about $1,400 per house. These costs can vary significantly depending on the local utility tariffs.
  • With the higher electric demand, an upgrade in the electric service on the utility side may be needed. Depending on the local utility tariffs, these costs may be significant and need further evaluation.

Range of Electrification Construction Costs Relative to a Baseline Gas Reference House

Table showing cost impact of home electrification by region

 

Incremental Annual Energy Use Savings for Electrified Homes

Table showing energy usage of electrified home versus gas home

Based on study findings, all-electric homes cost more upfront in comparison to gas homes. Electric homes in cold climates were also found to have higher ongoing utility costs. Jurisdictions considering electrification should evaluate these impacts on consumers and work with stakeholders to develop supporting economic measures.

For more information on electrification in homes and other energy code issues, contact Vladimir Kochkin.

Comments (10)

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  1. Armando Cobo says:

    I’ve been working with Builders, mostly in CZ3-4, on Zero Energy Ready homes exclusively, and their costs increases are between 0% and 2%. I do realize that most of the homes I design are between 4k-6k sf, with the occasional larger home. Interestingly, the longer the Builder works on ZER homes, the lower the cost increases.
    Reading your study, I find that most of the electrification equipment is a high-end, not necessarily needed, especially with middle priced homes.
    A more efficient package: Installing 2-stage heat pumps, 16 SEER, plus an 80 gal. Energy Starr WH, with recirculating pump, with a trunk and branch system. Induction cooktops, require much smaller exhaust fan than gas cooktops, and possibly not having to install a make-up air system. This could be huge savings. No gas lines. All Energy Star plumbing, appliances, equipment, and lighting.
    For a different opinion on costs, the Rocky Mountain Institute’s study, published late 2018. See: https://rmi.org/insight/economics-of-zero-energy-homes

    • NAHB Now says:

      Armando: The Home Innovation study evaluates a range of equipment scenarios, including minimum efficiency heat pumps (single-stage 14 SEER – see Tables 1 and 7 in the report). This allows the reader to understand the relationship between various levels of equipment efficiencies and the corresponding degree of improvement in energy use. The study also evaluates 50-gallon and 80-gallon heat pump water heaters. A 50-gallon HPWH is not going to be acceptable to a family of four, particularly in locations outside of warm climates, and cannot be viewed as a default replacement for a 50-gallon gas water heater. Selection of a rangehood can be influenced by many factors, including cooking preferences, the size of the range, capacity of the burners, number of burners, location of the range in the kitchen, etc. All these factors come into play for either electric or gas range, with design choices available for both range types. The report does take into consideration savings from not installing gas piping in the house and potential savings from avoided gas infrastructure. Finally, the report provides a complete level of detail regarding the methods used and scenarios analyzed such that the results can be replicated and compared to other studies in a consistent manner.

  2. Chris West says:

    I assume that the homes we are vtalking about are based code homes aka the worst home you can build and not break the law. If this study was performed to also include high performance homes these numbers change. Importantly the cost of utilities for CZ 5 and 6.

    I would also argue that an additional $10k is not a deal breaker for most consumers who have little knowledge of home prices. If you just show them a price for all electric homes w/o comparison to fossil fuel homes they wouldn’t blink

    Electric homes are also safer, having fewer fire events and zero CO death events. Important metrics not considered in this article.

  3. Jason La Fleur says:

    BeOpt is useful for these comparisons in new construction and I agree with the important earlier comment that the analysis above would be for code-compliant construction, not for those pursuing more advanced high-performance construction, which may change the value proposition.

    One note is that the analysis applied to existing homes could be even more costly if not coupled with building envelope improvements to constrain operating cost impacts in the long term. Also, additional costs for upgrading electrical service line to an existing home (eg. commonly 60 or 100 amps upgraded to 400 amps) to accommodate electrification is another important cost consideration. Depending on location, the electrical utility may cover some of these service line increases, but in other areas these costs fall entirely on the building owner. I added EV load for my own home and maximized my 100 amp panel, but would not be able to change other end uses (space heating / water heating) without incurring significant out of pocket costs for upgrading service capacity.

    Thanks to HIRL for doing this important analyses and sharing the results.

  4. Susanna says:

    So you want zero fossil fuels. I ask what is the source of fuel for electricity. I have noted the driver for these options are the electricity companies. … of course! I don’t recall reading about the cost of utilities to the client. We provide our clients hi efficiency gas options. Cost of equipment is less than electric equipment. Cost of operation w gas is very significantly less. I do agree geothermal is a good option.

    • Ron Jones says:

      Respectfully, first cost is not full cost and the traditional balance sheet never takes into account pollution, carbon emissions and long term impacts on human health, the environment and/or climate. If only it was that simple.

      There will be no resolutions to the global issues we are having to deal with and the kind of world we are leaving to future generations as long as we are looking at them through the lens of one house at a time or one appliance at a time. The building industry must take on accountability just like all the other major sectors, and our impact is immense.

      The journey to net zero will be long and difficult but we will never get there unless we start in earnest.

      • NAHB Now says:

        Ron: Development of effective and equitable public policy requires that all relevant information be part of the discourse. Cost is an important consideration because it directly and immediately impacts consumers, with a disproportionate effect on some segments of the market. Carbon reduction strategies must evaluate these impacts and offer solutions that minimize economic disruption on families, prioritize options that achieve maximum balance of benefit vs. impact, help overcome valuation and financing barriers, and emphasize market incentives that support a broad range of programs.

        • Ron Jones says:

          Thank you for making my argument for me. No one has suggested that the impacts of cost be ignored. Fundamentally we are in agreement. Where we differ is that the considerations of costs do not terminate at the closing of a sale and reach far beyond the bottom line of the builder. It follows through the entire serviceable life of the residence, which has potential implications not only for multiple families as owners and occupants but for the larger community as well. The accountability I speak of spans a far more complex range of priorities to achieve that “maximum balance of benefit vs. impact” you allude to.

  5. Griffin Hagle says:

    Lots of focus on upfront costs in this analysis and none on the benefits that are driving massive interest in beneficial electrification (which is generally coupled with envelope upgrades). Why?

    I live in CZ 7 (Alaska) and have few qualms about electrifying my 70-year-old home since our remodel will reduce its design heating load nearly 70% percent. I’m glad to pay more for energy per delivered unit since my absolute usage will be much lower. Give me the 6 oz filet mignon over the pound of hamburger any day.

    I can’t say the same about leaving the current gas infrastructure in there. I live in a seismic area of a a state that is second in the country in carbon monoxide poisoning and I’ve personally felt the percussive wave of a house being blown off its foundation by a fossil gas leak from over a mile away. Not keen to experience that firsthand.

    https://www.safewise.com/blog/states-carbon-monoxide-poisoning/
    http://www.thearcticsounder.com/article/2011explosion_destroys_house_in_utqiagvik

    “The induction range is intended to provide cooking performance more resembling a gas range.”

    According to whom? My wife and I chose induction because it’s a far superior experience to a gas range.

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