{"id":79194,"date":"2023-02-21T16:23:07","date_gmt":"2023-02-21T20:23:07","guid":{"rendered":"https:\/\/www.carilec.org\/?p=79194"},"modified":"2023-02-21T16:25:30","modified_gmt":"2023-02-21T20:25:30","slug":"the-technology-and-policies-are-falling-into-place-but-well-need-a-revolution-in-u-s-home-retrofit-business-models-and-financing-to-scale-up-enough-to-meet-the-climate-challenge","status":"publish","type":"post","link":"https:\/\/carilec.org\/the-technology-and-policies-are-falling-into-place-but-well-need-a-revolution-in-u-s-home-retrofit-business-models-and-financing-to-scale-up-enough-to-meet-the-climate-challenge\/","title":{"rendered":"The technology and policies are falling into place. But we\u2019ll need a revolution in U.S. home retrofit business models and financing to scale up enough to meet the climate challenge."},"content":{"rendered":"

The technology and policies are falling into place. But we\u2019ll need a\u00a0revolution in U.S. home retrofit business models and financing to scale up enough to meet the climate challenge.<\/strong><\/p>\n

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JEFF ST. JOHN<\/span><\/a><\/div>\n

Jeff St. John<\/a>\u00a0is director of news and special projects at Canary Media.<\/p>\n

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The future of all-electric, high-efficiency, grid-interactive homes seems near at hand from the floor of the\u00a0CES<\/span>\u00a02023<\/span>\u00a0event<\/a>\u00a0in Las Vegas. The massive annual extravaganza has long been the showcase for high-tech consumer electronics, including the latest in\u00a0\u200b\u201c<\/span>smart\u201d home automation systems, energy controls and electric appliances.<\/p>\n

Take the home product lineup from global electric equipment and technology giant Schneider Electric, which includes batteries,\u00a0EV<\/span>\u00a0chargers, hybrid inverters and the latest iteration of its\u00a0smart electrical panel<\/a>. Much like similar smart panels from global\u00a0competitors like Eaton or startups like Span<\/a>, it allows homeowners to monitor and control electricity demands at the circuit level via smartphone app, switch\u00a0between grid and battery power<\/a>\u00a0and keep electrical loads under the\u00a0limits of household wiring or utility grid service<\/a>.<\/p>\n

Individual Wi-Fi-connected\u00a0\u200b\u201c<\/span>smart plugs\u201d add even more discrete control. Schneider\u2019s\u00a0CES-award-winning app<\/a>\u00a0and\u00a0energy disaggregation technology<\/a> from Sense, a\u00a0startup partner, can help analyze data and automate the actions of all these devices to reduce utility bills, keep homes powered during blackouts or even sell home-generated and stored power back to utilities.<\/p>\n

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Schneider Electric\u2019s app for monitoring and controlling household solar systems, batteries, EV chargers and major electrical loads (Schneider Electric)<\/p><\/div>\n

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Products like these and others showcased at\u00a0CES<\/span>\u00a02023<\/span>\u00a0are the building blocks of the home of the future \u2014 that is, a\u00a0home that efficiently heats, cools and powers itself using electricity instead of fossil fuels, whether that electricity is coming from the utility power grid or the solar panels on the roof. In this not-so-hypothetical home, that electricity can also be stored in batteries, charge up electric vehicles, and even be shared with neighbors across power grids energized by a\u00a0fast-increasing share of solar, wind and other zero-carbon resources.<\/p>\n

\u201c<\/span>We\u2019re still at a\u00a0point where under\u00a010<\/span>\u00a0percent of homes in America have solar or storage or these advanced technologies,\u201d said Jaser Faruq, Schneider\u2019s senior vice president of innovation. But homebuilders, electrical contractors and even utilities are starting to see this home-by-home transformation as inevitable, he\u00a0said.<\/p>\n

It\u2019s a\u00a0transformation that can\u2019t come soon enough. Burning fossil fuels in buildings accounts for roughly\u00a010<\/span>\u00a0percent of U.S. carbon emissions,\u00a0according to think tank\u00a0RMI<\/span><\/a>, making the conversion to electric heating a\u00a0primary target for decarbonizing homes. (Canary Media is an independent affiliate of\u00a0RMI<\/span>.)<\/p>\n

Add in the fuel burned by people\u2019s cars and the carbon-emitting electricity that can be supplanted by rooftop solar panels, and the figures for these carbon emissions impacts rise to more than a\u00a0third of the country\u2019s total,\u00a0according to<\/a>\u00a0nonprofit electrification advocacy group\u00a0Rewiring America<\/a>.<\/p>\n

This makes home electrification a\u00a0vital tool in combating climate change. The good news is that the technology it will take to achieve this vision pretty much already exists, as evidenced by the\u00a0CES<\/span>\u00a0show\u00a0floor.<\/p>\n

But the home of the future is still out of reach for far too many Americans, and changing that involves a\u00a0lot more than displaying a\u00a0bunch of fancy gadgets at\u00a0CES<\/span>. Today\u2019s high-end price points \u2014 about $10<\/span>,000<\/span>\u00a0for the full Schneider Home line of equipment, according to Faruq \u2014 must be moderated through economies of scale, government incentives and private-sector financing structures to make it economically feasible for Americans from all walks of life. That includes those living in midpriced single-family houses, multifamily apartments and condominiums; those who own their homes and those who rent; and those living in the coldest and hottest climates.<\/p>\n

The rollout of these technologies should also be accompanied by broader energy-efficiency audits and retrofits that reduce energy waste and help customers lower their utility bills. But as yet, the business of whole-home weatherization and efficiency retrofits\u00a0isn\u2019t fully aligned<\/a>\u00a0with the business of selling solar panels,\u00a0EV<\/span>\u00a0chargers, smart appliances and home control systems.<\/p>\n

Finally, it\u2019s vital that utilities be brought into the equation. The shift to electric heating and transportation will drive the biggest increase in electricity demand in generations, creating massive new strains on the grids that supply that power. EVs and electric heating and cooling could overload local grid circuits if they\u2019re all turned on at the same time. They could also drive regionwide grid shortfalls during extreme weather events, or just on hot summer evenings and cold winter mornings \u2014 stresses that are already\u00a0putting U.S. grids under threat<\/a>\u00a0today.<\/p>\n<\/div>\n

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Eventually, entire neighborhoods could connect to form the building blocks of self-balancing, self-supporting clean energy networks.<\/strong><\/p><\/blockquote>\n<\/div>\n

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Building the grid infrastructure to handle these emerging demands will take decades and cost billions of dollars. But if electric homes can be\u00a0rewarded for coordinating<\/a>\u00a0when and how they use electricity to relieve those stresses, that could remove a\u00a0barrier to their rapid growth while also making them more cost-effective for more people.<\/p>\n

Eventually, entire neighborhoods could connect to form the building blocks of self-balancing, self-supporting clean energy networks, sometimes referred to as\u00a0virtual power plants<\/a>\u00a0for systems that interoperate with the grid when it\u2019s up and running, or\u00a0microgrids<\/a>\u00a0for systems that can keep themselves powered when the larger grid goes\u00a0down.<\/p>\n

But to arrive at this future, we\u2019ll need to solve a\u00a0lot of fundamental challenges first.<\/p>\n

From high-tech dream home to the real-life, nitty-gritty details<\/strong><\/h2>\n<\/div>\n<\/div>\n
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To begin to understand how to make the home of the future more accessible, we need to look beyond the technology-laden convention halls of\u00a0CES<\/span>\u00a0to places like, say, the home of retired higher-education administrator Cheryl Ajirotutu in the Dimond District neighborhood of Oakland, California.<\/p>\n

Ever since California\u2019s\u00a02000<\/span>\u20132001<\/span>\u00a0energy crisis,\u00a0\u200b\u201c<\/span>I knew I\u00a0wanted to go green,\u201d Ajirotutu said. The rooftop solar panels she installed on her\u00a01920<\/span>s-era two-bedroom home have cut her electric bills roughly in half, but she knew that she could do more to make her home more efficient and climate-friendly. She just wasn\u2019t sure where to\u00a0start.<\/p>\n

Through her work at Oakland\u2019s\u00a0Cypress Mandela Training Cente<\/a>r, where she volunteers as a\u00a0financial literacy educator, Ajirotutu heard about\u00a0a\u00a0home-electrification program<\/a>\u00a0from\u00a0East Bay Community Energy<\/a>, a\u00a0community energy provider serving Oakland residents, and\u00a0BlocPower<\/a>, a\u00a0New York\u2013based startup that specializes in efficiency and electrification retrofits in underserved communities.<\/p>\n

Ajirotutu applied to the program last year, and her home was selected as one of\u00a0100<\/span>\u00a0to receive support. The first step was a\u00a0whole-home energy audit whose purpose was to reveal\u00a0\u200b\u201c<\/span>what you needed and why you needed it,\u201d she said \u2014 an experience that changed her understanding of energy consumption.<\/p>\n

The energy audit led to a\u00a0whole-home retrofit. Local contractors reinsulated her walls, floors and attic, put in double-paned windows, and switched out her fluorescent lighting for LEDs. They also replaced the fossil-gas-fueled furnace that blew hot air through a\u00a0single floor vent in her living room with a\u00a0ducted-air electric heat-pump system that has eliminated the cold spots throughout her house \u2014\u00a0\u200b\u201c<\/span>it makes a\u00a0real difference,\u201d she\u00a0said.<\/p>\n

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Oakland resident Cheryl Ajirotutu added solar panels to her 1920s-era home. With the help of Mark Hall, CEO of Revalue.io, she\u2019s also upgraded her insulation, installed double-pane windows and LED lights, and replaced her fossil-gas furnace with an electric heat pump. (Canary Media)<\/p><\/div>\n

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All told, these improvements are expected to reduce the energy consumption of Ajirotutu\u2019s home by an estimated\u00a088<\/span>\u00a0percent. Once she replaces her gas-fired water heater with a\u00a0heat-pump model later this month, she\u2019ll be able to stop using gas entirely, a\u00a0big goal of\u00a0hers.<\/p>\n

All of this work came at no upfront cost. Instead, Ajirotutu will pay $310<\/span>\u00a0per month, a\u00a0rate that equates to a\u00a0zero-interest loan for the cost of the project.<\/p>\n

\u201c<\/span>It wouldn\u2019t have happened without that support,\u201d Ajirotutu said. She doesn\u2019t have the spare cash to put down on a\u00a0project of this scope, and she\u2019s generally leery of home renovation offers that\u00a0seem too good to be true<\/a>.<\/p>\n

\u201c<\/span>At the same time, there are these houses that are, for lack of a\u00a0better word, in decay,\u201d she said.\u00a0\u200b\u201c<\/span>We need help. How do we get that\u00a0help?\u201d<\/p>\n

\u201c<\/span>That\u2019s the genius of what Mark is doing,\u201d she said.\u00a0\u200b\u201c<\/span>He makes it affordable.\u201d<\/p>\n

Mark Hall is\u00a0CEO<\/span>\u00a0of\u00a0Revalue.io<\/a>, the Oakland-based energy-efficiency project developer working with BlocPower to develop and execute its East Bay projects with local and minority-owned contractors and workforce-development organizations. So far, the projects he\u2019s developed have led to an average\u00a040<\/span>\u00a0percent reduction in home energy use, he\u00a0said.<\/p>\n

But Revalue.io\u2019s customers and contractors have a\u00a0lot to do before the heat pumps, smart electrical panels or energy management systems go in, Hall said. First off,\u00a0\u200b\u201c<\/span>we encounter a\u00a0significant amount of remediation work \u2014 cleaning out debris, taking care of asbestos and moisture concerns,\u201d he said. Some efficiency programs and tax credits don\u2019t pay for this remediation, which can effectively bar homes from being able to access them.<\/p>\n

Nor can Revalue.io count on its customers being able to access cash or credit to cover the cost of retrofits, Hall said.\u00a0\u200b\u201c<\/span>Qualifying for traditional lending programs with credit scores and documentation \u2014 that\u2019s a\u00a0barrier for many folks,\u201d he said.\u00a0\u200b\u201c<\/span>BlocPower provides flexible financing for our projects. That\u2019s how our partnership is structured.\u201d<\/p>\n

\u201c<\/span>Another issue is the contractor workforce,\u201d he said. Revalue.io considers it part of its mission to connect local contractors and young people from the East Bay\u2019s economically challenged neighborhoods to the training and customer flows that will enable them to thrive in the emerging home-electrification industry.\u00a0\u200b\u201c<\/span>A lot of the contractors out there focus on a\u00a0few things, not all of them, to deliver electrification. Others aren\u2019t really recommending particular electrification equipment, or they\u2019re out there doing gas systems.\u201d<\/p>\n

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Oakland homeowner Cheryl Ajirotutu and Mark Hall, CEO of Revalue.io, stand next to the electric heat pump that now heats and cools Ajirotutu\u2019s home. (Canary Media)<\/p><\/div>\n

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Home electrification theory versus reality\u00a0<\/strong><\/h2>\n

Contractors can be forgiven for being less than enthusiastic about the prospect of home electrification. It\u2019s much simpler and cheaper \u2014 and thus more lucrative for contractors \u2014 to replace a\u00a0broken gas-burning furnace with a\u00a0similar model than to take on the cost and complexity of reconfiguring a\u00a0home to use electric heat\u00a0pumps.<\/p>\n

Adding in remediation and whole-home efficiency only increases that cost and complexity. Pilot projects that\u00a0BlocPower did in Oakland<\/a>\u00a0found that all-electric retrofits cost an average of $35<\/span>,000<\/span>\u00a0when electric heating, appliances, electrical panels, lighting, insulation, windows, plumbing and ducting are taken into consideration. In its broader retrofit project with Repower.io,\u00a0\u200b\u201c<\/span>some of the projects we put through, there was a\u00a01<\/span>\u00a0percent,\u00a02<\/span>\u00a0percent return\u201d for BlocPower in terms of the revenue it was earning from the projects\u00a0\u200b\u201c<\/span>just to make them pencil\u201d out economically, Hall\u00a0said.<\/p>\n

And while heat pumps are three to four times as efficient in converting energy to heat as gas furnaces, the vagaries of gas versus electric utility rates may not allow this far greater efficiency to translate to lower costs. In fact, only two of the nine pilot renovations BlocPower did in Oakland led to lower overall costs for the occupants when factoring together their utility bills and monthly payments to pay off the expense of installation. The rest saw monthly costs increasing from $50<\/span>\u00a0to $100<\/span>\u00a0post renovations.<\/p>\n

Results like these highlight the gap between the potential for widespread electrification and the real-world challenges in achieving it.\u00a0Rewiring America<\/a>\u00a0estimates that\u00a049<\/span>\u00a0million U.S. homes<\/a>\u00a0\u2014 half of them low- and moderate-income households \u2014 can save significantly on their energy bills by going all-electric, primarily by replacing fossil-fueled or old-fashioned electric resistance heating with heat pumps for space and water heating. This map shows the percentage of homes that fall into this category by county across the country.<\/p>\n

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Rewiring America has mapped out the percentage of homes across the U.S. that can expect to reduce their energy bills by switching to electric heat-pump space and water heating. (Rewiring America)<\/p><\/div>\n

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But there are about\u00a0131<\/span>\u00a0million households in the U.S., which means about\u00a080<\/span>\u00a0million wouldn\u2019t save money by opting for whole-home electrification. Those include homes where the costs of going electric are too high, or those in markets where electricity rates are higher than gas rates and so outweigh the greater efficiency offered by heat\u00a0pumps.<\/p>\n

Nor is electrification a\u00a0slam-dunk for those nearly\u00a050<\/span>\u00a0million households that could hypothetically save money by going electric. Many of these homes\u00a0may face costly and time-consuming<\/a>\u00a0electrical-panel or utility-grid service upgrades to add more electric loads than their wiring or grid connections were designed to handle. Contractors can struggle to obtain the equipment they\u00a0need.<\/p>\n<\/div>\n

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\u201cWe have 100 million homes to [upgrade], and each one of these homeowners has to be individually convinced that electrification or partial electrification is the right path for them.\u201d<\/strong><\/p><\/blockquote>\n<\/div>\n

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Connecting upfront costs with long-term benefits is even more complicated for the roughly\u00a044<\/span>\u00a0million U.S. households that\u00a0rent rather than own their homes<\/a>. In these residences, tenants tend to pay the bills but landlords bear the cost of upgrades.\u00a0\u200b\u201c<\/span>The split incentive between tenants and property owners is a\u00a0key issue,\u201d Hall\u00a0said.<\/p>\n

Unless far more homeowners and tenants and landlords can see electrification making financial sense for them \u2014 and unless a\u00a0whole lot more contractors and distributors and manufacturers see a\u00a0clear path for that customer demand emerging \u2014 the home of the future won\u2019t happen nearly fast enough to meet the need for combating climate change, he worries.<\/p>\n

Getting government behind home electrification\u00a0<\/strong><\/h2>\n

The good news is that the policy tailwinds for home electrification have never been stronger. Last year\u2019s\u00a0Inflation Reduction Act<\/a>\u00a0will dramatically expand the federal government\u2019s role in propelling this transformation. The law includes lucrative\u00a0tax credits for home efficiency and electrification investments<\/a>, from insulation and windows to heat pumps, solar, batteries and\u00a0EV<\/span>\u00a0chargers. It also directs about $9<\/span>\u00a0billion in federal grants to state-level\u00a0programs targeting lower-income customers<\/a>\u00a0for incentives that in ideal circumstances could cover almost the entire cost of the equipment involved.<\/p>\n<\/div>\n

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\u201cThe next wave is to go out to the states and persuade them on a state-by-state basis that you don\u2019t need gas\u2026it\u2019s a terrible public health risk; it\u2019s expensive for your utilities.\u201d<\/strong><\/p><\/blockquote>\n<\/div>\n

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But analysts agree that the impact of these federal tax credits and incentives will rely on effective state implementation. U.S. utilities are largely regulated by state entities, and building codes and mandates are carried out at the state or local government level. And the most significant federal rebates for home efficiency and electrification will rely on state energy agencies to be put into practice.<\/p>\n

\u201c<\/span>I think there\u2019s a\u00a0lot of fantastic stuff in the [Inflation Reduction Act]. It\u2019s a\u00a0defibrillator to the heart of climatetech in America,\u201d BlocPower\u00a0CEO<\/span>\u00a0Donnel Baird said in an August interview.\u00a0\u200b\u201c<\/span>The next wave is to go out to the states and persuade them on a\u00a0state-by-state basis that you don\u2019t need gas\u2026it\u2019s a\u00a0terrible public health risk; it\u2019s expensive for your utilities.\u201d<\/p>\n

Some of the policy, regulatory and commercial structures for making home electrification pay off are starting to emerge in states with the most ambitious climate agendas. Those include\u00a0electrification-friendly building codes<\/a>,\u00a0building decarbonization mandates<\/a>\u00a0and\u00a0fossil-gas equipment bans<\/a>; incentives for property owners and contractors to install more climate-friendly equipment and whole-home efficiency improvements; and utility rate plans and financing or repayment structures to bolster the cost-effectiveness of all-electric systems.<\/p>\n

All of these federal, state and local policies still face an uphill battle to accelerate the pace of work needed to combat climate change, however. The most aggressive state-level electrification and decarbonization policies to date focus on new construction, not the more expensive and complicated task of retrofitting existing buildings.<\/p>\n

As Sarah Baldwin, director of electrification policy for nonprofit think tank\u00a0Energy Innovation<\/a>, emphasized in a\u00a0December presentation<\/a>, the building sector\u00a0\u200b\u201c<\/span>has an inherently slow stock turnover,\u201d meaning that it takes decades for heating and cooling systems and appliances to wear out and need replacement.<\/p>\n

To speed this up,\u00a0\u200b\u201c<\/span>the building sector needs a\u00a0more comprehensive approach to deal with underlying challenges to market transformation, financing mechanisms, revised utility regulatory approaches, expanded workforce training, and well-designed programs for consumers,\u201d Baldwin said. In other words, just about every aspect of how efficiency and electrification programs and projects are administered and financed today needs an upgrade.<\/p>\n

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Scores of public- and private-sector actors have a role to play in getting U.S. homes to switch from fossil fuels to efficient electric appliances. (Energy Innovation)<\/p><\/div>\n

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Getting the public on the home-electrification bandwagon<\/strong><\/h2>\n

But even if all the right programs and policies to support electrification fall into place, it doesn\u2019t necessarily mean Americans will instantly jump on\u00a0board.<\/p>\n

\u201c<\/span>We have\u00a0100<\/span>\u00a0million homes to [upgrade], and each one of these homeowners has to be individually convinced that electrification or partial electrification is the right path for them,\u201d Nate Adams,\u00a0CEO<\/span>\u00a0of electrification software and training company\u00a0HVAC<\/span>\u00a02<\/span>.0<\/span><\/a>, said. And while a small subset of homeowners is deciding to take on electrification on their own, most rely on contractors to tell them what their options are, he said.<\/p>\n

Energy savings alone won\u2019t do the trick, Adams contends. U.S. homes using oil, propane or electric resistance heating can realize quick paybacks on heat pumps, he said. But gas-fired heating is still quite cheap in most of the country, meaning that heat pumps may have to operate for\u00a010<\/span>\u00a0to\u00a020<\/span>\u00a0years to pay back their upfront costs.<\/p>\n

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Electric heat pumps are far less costly than electric resistance, propane and fuel-oil heating, but only slightly less expensive than heating with fossil gas. (Rewiring America)<\/p><\/div>\n

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\u201c<\/span>That\u2019s not going to sell a\u00a0job,\u201d Adams said. Instead, contractors must sell homeowners on the other benefits of electrification and heat pumps, such as improved control over household temperature and comfort that the latest inverter-equipped heat pumps can provide, he said. While some customers are motivated by environmental or health concerns, others may find those sales approaches a\u00a0turnoff, he\u00a0said.<\/p>\n

Meeting consumers where they are, not where electrification advocates want them to be, is also important, Adams added. For example, contractors must be ready to offer cost-effective and suitable electric options for replacing\u00a0furnaces and water heaters when they break down<\/a>, which is when almost all homeowners are actually prepared to spend the money. But they also need to be ready to sell homeowners on broader energy audits that can determine the value of a\u00a0more holistic and proactive approach to efficiency improvements.<\/p>\n

That\u2019s the goal of companies such as\u00a0Elephant Energy<\/a>, a\u00a0Colorado-based startup that\u00a0CEO<\/span>\u00a0D.R. Richardson describes as a\u00a0\u200b\u201c<\/span>one-stop-shop for home electrification.\u201d The company offers homeowners software-based assessments of retrofit costs and energy-saving potential, manages system design and contractor selection, helps them obtain the variety of federal, state, local and utility incentives available, and procures equipment on their behalf.<\/p>\n

\u201c<\/span>We\u2019re using capitalism to accelerate electrification. We\u2019re taking on all the risk of design and equipment procurement,\u201d Richardson said. There are about\u00a0200<\/span>,000<\/span>\u00a0HVAC<\/span>\u00a0and electrical contracting firms in the U.S., many of them smaller businesses that don\u2019t have the capital or staff to keep up with changing state, local and utility incentives or to place bulk orders for the latest heat pumps or smart electrical panels, he\u00a0added.<\/p>\n

Elephant Energy\u2019s goal is to become the\u00a0\u200b\u201c<\/span>Sunrun of home electrification,\u201d Richardson said, name-checking the country\u2019s biggest residential rooftop solar installer\u2019s success in scaling up a\u00a0business across more than\u00a022<\/span>\u00a0states and Puerto Rico. While Sunrun works with regional and local installers across the country, it has consolidated everything from home solar assessments to securitizing the leases and loans it arranges for its customers.<\/p>\n

How to fund a\u00a0rapid scale-up in investment?\u00a0<\/strong><\/h2>\n

Standardizing and consolidating the currently fractured commercial landscape for U.S. home energy efficiency and home electrification is a\u00a0vital step in scaling up installations fast enough to make a\u00a0dent in climate change. But right now, the level of finance required to do this is far less than what it needs to\u00a0be.<\/p>\n

BlocPower has\u00a0raised more than $100<\/span>\u00a0million<\/a>\u00a0to fund large-scale electrification retrofit projects in California, Colorado, Illinois, New York and Wisconsin, including ambitious\u00a0100<\/span>\u00a0percent building electrification efforts in Ithaca, New York and Menlo Park, California. Startups including Elephant Energy,\u00a0Sealed<\/a>\u00a0and\u00a0Service\u00a01<\/span>st<\/sup>\u00a0Financial<\/a>\u00a0and solar lenders including\u00a0Mosaic<\/a>\u00a0and\u00a0GoodLeap<\/a>\u00a0are collectively\u00a0raising hundreds of millions of dollars<\/a>\u00a0to expand the market for home electrification by\u00a0connecting contractors with commercial lenders<\/a>, rooftop solar installers and electric-vehicle companies.<\/p>\n

But Cullen Kasunic, BlocPower\u2019s energy efficiency and renewable energy finance leader,\u00a0told Canary Media<\/a>\u00a0that private-sector investment in home efficiency and electrification could be orders of magnitude higher. The U.S. Department of Energy estimates that Americans\u00a0spend about $100<\/span>\u00a0billion per year<\/a>\u00a0on energy that\u2019s wasted due to inefficiencies in building heating, cooling and insulation. The market for efficiency and electrification retrofits to combat that waste could add up to $500<\/span>\u00a0billion, Kasunic estimated. Anuj Khanna,\u00a0CEO<\/span>\u00a0of Service\u00a01<\/span>st<\/sup>\u00a0Financial, estimated that the market for swapping electric appliances in for fossil-fueled furnaces and water heaters in U.S. homes could add up to $30<\/span>\u00a0billion to $40<\/span>\u00a0billion per year \u2014 and\u00a0\u200b\u201c<\/span>this is only the replacement market.\u201d<\/p>\n

Most households will need to replace their old furnaces, water heaters, stoves and other fossil-fueled appliances at some point. The question for those who want to go electric is whether they can access the low-cost debt financing or other means to cover the higher upfront costs of the newest, all-electric models, rather than choosing the cheaper, dirtier options.<\/p>\n

Khanna\u2019s company has approached this challenge by\u00a0developing a\u00a0leasing program<\/a>\u00a0that shifts the upfront equipment and installation and long-term maintenance costs of this work from homeowners to contractors via banks and other lenders. That kind of structure has become common for home rooftop solar systems but has yet to grow to scale for home efficiency and electrification.<\/p>\n

BlocPower has been able to offer customers no-upfront-cost installations in return for monthly payments via project financing commitments\u00a0from Goldman Sachs<\/a>\u00a0and the\u00a0Microsoft Climate Innovation Fund<\/a>. Sealed has signed a\u00a0credit facility with New York Green Bank<\/a>\u00a0to bring in public- and private-sector debt financing for its projects. Innovative public-private\u00a0partnerships at the state<\/a>\u00a0and\u00a0federal levels are aiming<\/a>\u00a0to expand the scale and scope of private debt financing for home efficiency and electrification and adding solar, batteries and EVs to\u00a0homes.<\/p>\n

The combination of policy pressure and stronger economics are also encouraging electric-home-equipment manufacturers to invest in expanding production and distribution for U.S. markets. This equipment is coming in at price points meant to meet the needs of a\u00a0variety of homes with a\u00a0variety of incomes in a\u00a0variety of climates, including colder climates where older generations of heat-pump technologies are being replaced by new technologies that\u00a0can handle subfreezing temperatures<\/a>\u00a0with aplomb.<\/p>\n

The technologies now on offer include\u00a0120<\/span>-volt heat-pump water heaters<\/a>\u00a0that can plug into standard electrical outlets and\u00a0window-mounted heat pumps from startups such as Gradient<\/a>\u00a0that can both heat and cool rooms in homes and apartments. BlocPower has inked deals to bring technologies to the U.S. that already have significant global market share, such as\u00a0Fujitsu\u2019s split terminal heat pumps<\/a>\u00a0to replace packaged terminal air conditioners. It has also partnered with up-and-coming innovations from\u00a0startups such as Harvest Thermal<\/a>, which makes\u00a0heat pumps that heat both water and air<\/a>\u00a0and can store heat to ease demand on the electric grid.<\/p>\n

Making electric homes grid-responsive<\/strong><\/h2>\n

These kinds of grid-supporting features are the final component that needs to fall into place to make the home of the future a\u00a0reality today. Multiple studies have shown that electrifying transportation and buildings, while a\u00a0vital step in combatting climate change and a\u00a0net economic positive in the long run, will also create new strains for utility grids that weren\u2019t designed to handle them.<\/p>\n

Finding ways to manage these new loads to ease those strains could convert those strains into supports. Both batteries and\u00a0heat-pump water heaters<\/a>\u00a0can store up excess solar power to ride through post-sundown shortages, for example \u2014 one simply stores that power as electricity and the other stores it as extra hot water.\u00a0EV<\/span>\u00a0chargers and clothes dryers can both be scheduled to avoid using grid power when it\u2019s scarce and to kick in when that power is plentiful.<\/p>\n

These\u00a0\u200b\u201c<\/span>virtual power plants<\/a>,\u201d made up of tens of thousands of homes orchestrating their equipment to serve the grid, could convert kilowatts of energy-shifting values per home into megawatts of utility-program and energy-market value, and return fractions of that value back to individual homeowners to reduce the cost of electrification.<\/p>\n

\u201c<\/span>We think that\u2019s an amazing opportunity: virtual power plants with heat pumps and rooftop solar,\u201d BlocPower\u00a0CEO<\/span>\u00a0Baird\u00a0said.<\/p>\n

So does Jigar Shah, head of the Department of Energy\u2019s Loan Programs Office, which has\u00a0hundreds of billions of dollars<\/a>\u00a0of federal lending authority to boost deployments of clean energy technologies. One of Shah\u2019s goals is to back business models that make smart appliances, solar-plus-battery systems and other grid-responsive assets\u00a0more affordable and accessible<\/a>\u00a0for a\u00a0broader range of Americans.<\/p>\n

\u201c<\/span>Consumers have all these assets they\u2019ve already paid for,\u201d Shah said in an interview last month. Smart thermostats, heat-pump water heaters, refrigerators, washing machines and dryers,\u00a0EV<\/span>\u00a0chargers, and other electric appliances represent gigawatts of grid demand being installed in U.S. homes on a\u00a0monthly basis.<\/p>\n

But as of today, the vast majority\u00a0\u200b\u201c<\/span>aren\u2019t subscribed into helping to provide grid services,\u201d he said. That\u2019s at a\u00a0time when grids are under increasing stress from extreme weather and undergoing a\u00a0shift from relying on round-the-clock fossil-fueled generators to variable solar and wind\u00a0power.<\/p>\n

Bundling a\u00a0commitment from homeowners to make their newly installed appliances and devices available for grid services in exchange for lower upfront costs or ongoing revenue opportunities could solve consumer-affordability and grid-reliability problems at the same time, he\u00a0said.<\/p>\n

Grid services could provide a\u00a0vital revenue stream for BlocPower\u2019s mission, Baird said. In\u00a0testimony before the U.S. Senate in\u00a02021<\/span><\/a>, Baird described how his family, growing up in a\u00a0Brooklyn apartment without heat, were forced to use their gas oven at night to keep warm while keeping the windows open to let out the harmful fumes it emitted.<\/p>\n

The shift to all-electric heating could allow communities like those he grew up in to\u00a0\u200b\u201c<\/span>leapfrog gas, and gas pipelines and gas heating and gas hot water,\u201d he said.\u00a0\u200b\u201c<\/span>In the Bronx, there are\u00a05<\/span>,000<\/span>\u00a0apartment buildings that still burn oil,\u201d and\u00a010<\/span>,000<\/span>\u00a0across New York City, he said.\u00a0\u200b\u201c<\/span>We\u2019ll move those directly to\u00a0100<\/span>\u00a0percent clean electricity.\u201d<\/p>\n

Conversely, failing to make the all-in joint public- and private-sector effort to make home electrification a\u00a0priority could lock homes into a\u00a0carbon-emitting, air-polluting and increasingly costly status quo.<\/p>\n<\/div>\n

\n

\u201cIf you miss your window and you replace your gas furnace with another one, you\u2019re locking in your emissions for 10 to 20 years.\u201d<\/strong><\/p><\/blockquote>\n<\/div>\n

\n

\u201c<\/span>In Colorado, gas prices are up more than double over the past two years,\u201d Elephant Energy\u2019s Richardson said.\u00a0\u200b\u201c<\/span>Heat pumps are a\u00a0hell of a\u00a0lot more cost-effective.\u201d But\u00a0\u200b\u201c<\/span>if you miss your window and you replace your gas furnace with another one, you\u2019re locking in your emissions for\u00a010<\/span>\u00a0to\u00a020<\/span>\u00a0years\u201d \u2014 and that\u2019s time the country doesn\u2019t have to make the cuts in greenhouse gas emissions that it needs to\u00a0make.<\/p>\n<\/div>\n

SOURCE: \"\"<\/strong><\/div>\n
<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The technology and policies are falling into place. But we\u2019ll need a\u00a0revolution in U.S. home retrofit business models and financing […]<\/p>\n","protected":false},"author":165,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4587],"tags":[],"class_list":["post-79194","post","type-post","status-publish","format-standard","hentry","category-careep-news"],"acf":[],"aioseo_notices":[],"featured_image":"https:\/\/carilec.org\/wp-includes\/images\/media\/default.svg","month_date":"Feb","day_date":"21","_links":{"self":[{"href":"https:\/\/carilec.org\/api\/wp\/v2\/posts\/79194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/carilec.org\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carilec.org\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carilec.org\/api\/wp\/v2\/users\/165"}],"replies":[{"embeddable":true,"href":"https:\/\/carilec.org\/api\/wp\/v2\/comments?post=79194"}],"version-history":[{"count":0,"href":"https:\/\/carilec.org\/api\/wp\/v2\/posts\/79194\/revisions"}],"wp:attachment":[{"href":"https:\/\/carilec.org\/api\/wp\/v2\/media?parent=79194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carilec.org\/api\/wp\/v2\/categories?post=79194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carilec.org\/api\/wp\/v2\/tags?post=79194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}