The Customer Bill Impacts of Efficient Building Electrification

Widespread building electrification is critical to achieving deep emissions reductions in the building sector. Building electrification can reduce onsite fossil fuel consumption and lower the carbon intensity of energy consumption by taking advantage of increasing amounts of power sector renewable energy. Despite these societal benefits, regulators, utilities, and consumer advocates are concerned about the potential increases in customer electricity bills from building electrification. This paper shows that prior analyses of the customer bill impacts of electrification may overestimate bill increases by not considering the efficiency improvements from advanced building electrification technologies (e.g., heat pumps, induction cooktops) retiring older, less efficient appliances and other efficiency improvements common in comprehensive energy retrofits. 

We quantify residential customer energy and bill impacts for a comprehensive building electrification retrofit package. Importantly, the package includes efficiency improvements that are likely to occur with comprehensive retrofits of end-use technologies (e.g., efficient equipment upgrades for electric technologies and ducting replacement or retrofit for reduced leakage). We use the National Renewable Energy Laboratory’s ResStock simulations of residential building end-use consumption to capture the heterogeneity in buildings due to differences in vintage, size, construction practices, installed equipment, appliances, and climate. The results have implications for the design of retail electricity rates and programs to encourage building electrification, including the consideration of the differential prices for electricity and fossil-fuels, the building end-use and technologies that drive bill impacts, and the efficacy of changing volumetric vs. fixed charges.