While some view beneficial electrification as a plus for single-family home builders as codes and consumers move from fossil fuels to electric power, others see it fraught with challenges.
“Today, builders have the option to build all-electric single-family homes if they want to provide their customers with lower cost, healthier, safer homes,” notes Katrina Managan, buildings team lead in the Office of Climate Action, Sustainability, and Resiliency for the City and County of Denver. “Consumers are getting more interested in how all-electric homes can improve safety and lower exposure to indoor air pollutants.”
Managan says studies show that in Denver, electric homes cost $2,700 to $5,300 less to build when compared to new construction mixed-fuel homes, with the transition to renewable heating and cooling delivering better outcomes at lower costs.
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On the other hand, “these [types of] homes cost more to build and are less attainable to the average homebuyer,” he adds. “Since our builders are primarily working to provide attainable housing meeting the broadest consumer needs, we are very concerned about the reliability of service and cost that electrification demands will put on new housing.”
Bryan Cordill, Propane Education and Research Council’s director of residential and commercial building development, contends home builders and homebuyers want options such as fireplaces, gas ranges, outdoor kitchens and outdoor patio heaters.
The ability to go outside and be comfortable is more efficient and effective with propane versus electricity, Cordill adds. Leighty also notes an uptick in the desire for more outdoor amenities after the onset of the COVID-19 pandemic.
Cordill says trying to sell customers something they don’t want is a challenge for the single-family builder.
“The large-scale development might be a little bit easier for them from the standpoint of rolling from house to house. It will maximize the efforts of a tradesperson. Builders understand the profit benefits of that option sale,” he says.
An upgrade in a custom or tract-type home would often have a 50- to 100-percent margin for the builder, Cargill notes, and adding gas and electric functionalities present more options over electric only.
Additionally, “we’re already short-handed with trade allies,” he says. “If we remove the gasfitter from the equation and increase the demand on electricians, that’s going to further impact that supply trade shortage.”
Cordill says it’s a misconception that propane is a “challenging” fuel.
“It’s an extremely safe fuel,” he contends, adding that safety programs are offered to industry employees, plumbers and allied trades to provide a safe experience for the consumer.
Another misconception is that electricity is clean and propane is not, he adds.
“Fuels are not binary,” he says. “They’re not either all clean or all dirty. Coal is the dominant factor in Colorado. Wind and solar have increased three times in the last several years in Colorado, but it still doesn’t make up the same amount of energy that natural gas or coal does.
“The misconception is the electricity we’re asking them to use would be cleaner than using propane on site. It takes about three times more energy at the power plant to get a unit of energy at the home than it does with propane. There are transportation and transmission losses.”
Cordill contends beneficial electrification impacts on the building stock will raise emissions in the short term.
Push for electrification
Codes and consumers moving from fossil fuels to electric power are a driving factor in electrification.
While current Denver codes don’t require electrification, the city is updating its energy code in 2022, notes Managan.
The City and County of Denver is adopting a new building and fire code that advances the voluntary 2019 Denver Green Code.
It also will incorporate the 2021 series of international codes, including the International Building Code, International Existing Building Code, International Residential Code, International Energy Conservation Code, International Mechanical Code, International Plumbing Code, International Fuel Gas Code, International Fire Code and Denver Green Code, ensuring amendments align with Denver’s specific climate and context.
Technical advisory committees meeting in January 2022 will consider code amendment proposals. During summer 2022, the final proposed Denver Building and Fire Code and voluntary Denver Green Code will be available for public review and will begin moving through the legislative process.
Leighty notes that as several communities—as well as state legislative attempts—are looking to set electrification timelines, “when public policy and code changes outpace technological feasibility, economies of scale and customer demand, it typically results in greater cost, which creates another large impediment to building more attainable housing.”
Leighty says some public utilities in meeting electrification timelines in the state law have indicated it will require steep increases in capital, with increased costs to consumers.
Cordill says as local municipalities enact code changes regarding energy sources, some new energy codes would limit builder choice or even require them to do duplicative work to provide electric appliance electric connections even if they’re doing gas connections, he says.
“At the National Association of Home Builders’ meeting, we heard builders say they don’t want a statewide or national mandate that eliminates consumer choice and satisfaction,” Cordill notes.
But what do homeowners want?
While a homeowner may decide on affordable electrical equipment, they will “pay in the end with increased cost to heat their home,” says Cordill. “Colorado temperatures are not conducive to using an air source heat pump without some sort of backup. If that backup is electric resistance, when it gets cold, their consumption rate will go up fourfold.”
Cold climate air source heat pumps may increase the cost on the front end for the home, he says. Cordill points to the increase in backup power generation after Texas experienced a grid failure following the extreme weather event in February 2021.
“Backing up an all-electric home is going to cost $3,000 to $5,000 more just for the generator, not including the fuel it takes to operate,” says Cordill. “A dual-fuel approach offers many ways to control efficiencies and operating and construction costs that the all-electric approach doesn’t allow.
“The goal in Colorado is to move to 100 percent renewable electricity production,” Cordill adds. “According to the Energy Information Administration, they’re producing about a third of their power with renewable sources. If we increase the demand for new construction to make it all electric, that’s going to increase the electricity required. We’ll use 100 percent of the renewable energy that’s produced and then we will fall to coal and natural gas to make up the difference.”
That will mean increasing the emissions in the state instead of using the mixed fuel, says Cordill.
“If we build a brand-new home in Colorado that was heated by propane with a propane tankless water heater, propane cooking and a clothes dryer compared to an electric home, you would see lower carbon emissions and methane emissions, [sulphur oxides (SOx) and nitrogen oxides (NOx].”
“A ground source heat pump is an alternative to provide warm air for a home in Colorado. But that’s an even greater exponential up-front cost and $40,000 increase in the cost of the heating system.”
Cordill contends if there is going to be a move toward renewable electricity, the opportunity also exists for propane. “We are currently producing renewable propane out of a few facilities—the largest one in Geismar, Louisiana, just broke ground,” he says.
“Renewable propane would be even more clean than using the clean propane we have today and will continue to be better in the future. If we eliminate that option from the building stock, we’re taking away options we have to impact climate change.”
Leighty says HBA builder members report most consumers in Colorado and around the country still want the options that both gas and electric energy provide in their homes.
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“Many large members are not custom home builders, so they are focused on the broader consumer base looking for new homes with many amenities,” he says. “Right now, the demand for gas appliances—including stoves, furnaces, and fireplaces—remains high.”
The Colorado Association of Home Builders’ concerns with state laws promoting beneficial electrification is that the state’s housing affordability and attainability problem is very acute at lower income levels, says Leighty.
“Increasingly complicated zoning schemes make it difficult to develop land and provide the necessary mix of housing types, especially lower cost housing,” he notes. “Complex, prolonged and uncertain development approval processes constrain the availability of developable land and drive up the cost of housing. An ever-growing number of impact fees imposed on new housing adds to that.
“There are so many factors right now outside our control contributing to housing cost increases that we want to caution all policymaking bodies not to enact policies that could further inhibit Coloradans from homeownership.”
Utility costs can be burdensome for new homeowners with electric service being more expensive than gas service in Colorado, Leighty says, citing a recent study by Home Innovation Research Labs finding electric service is $275 more in Denver.
Leighty testified on HB 1238, raising concerns related to the bill and the larger policy context of energy supply for homes, pointing out that labor shortages add to construction timelines and inhibit the industry from meeting demand.
“Materials costs continue their sharp rises,” he notes. “Lumber prices alone have raised costs for the average-sized home by $24,000. When you factor in what we call the ‘priced-out estimates,’ which indicate that for every $1,000 increase in the median price of a home, it will price out more than 2,300 Coloradans from the market.
“As builders, we have to look at the whole of the policy in this area and wonder whether abundant and inexpensive gas will continue to be a source we and homeowners can rely on,” Leighty says.
Though laudable, energy efficiency efforts “need to be thoughtful to ensure policy doesn’t move faster than our utilities, technology and supply chains can work so that homes don’t become unnecessarily more expensive,” says Leighty.
Leighty says the association concurs that operating costs over the long term can be reduced with greater efficiency, “but we need to remember that in order for a homeowner to ever reap those savings, they first need to be able to afford a home.”