The Pros of Electrification

CostThe path to housing affordability is often discussed in terms of building efficiency; however, a significant influence on costs are the fees from utilities that serve a home. Using natural gas in Atlanta as an example, a monthly bill can include up to four line items: gas usage charges, a customer service fee, an Atlanta Gas Light (AGL) pass-through charge and taxes. When researching utilities, customers can compare a service provider’s rate for gas charges and customer service fees, but the AGL pass-through charge is a fixed fee that is regulated by the Georgia Public Service Commission. It is not impacted by how much gas is used by an individual home or by the service provider, and over the years it has slowly increased. Each month, the total of these fees means, in many cases, the natural gas bill sent to a customer includes more in static charges than in actual gas consumption.

An example of this can be found on Gas South’s website, where their example bill includes $25.01 in gas charges for gas consumed and $29.22 in total fees.(1) These fees impact the overall affordability of any home, and they reduce the monetary savings that can be accomplished through energy efficiency. When a home is built to use natural gas for space heating, the only aspect of the end user costs that are impacted by the way that home is built are the gas charges. In other words, energy efficiency results in fewer therms used each month, but it does not reduce utility service fees or pass-through charges. By eliminating natural gas from a home, owners can realize significant monthly savings before they even begin to invest in energy efficiency efforts.

“By eliminating natural gas from a home, owners can realize significant monthly savings before they even begin to invest in energy efficiency efforts.”

Removing the natural gas service from the construction process also saves homebuilders money by removing the costs of installing gas lines and ventilation piping that is necessary for gas-powered equipment. According to the New Buildings Institute, an all-electric, single-family home is $7,500-$8,200 cheaper to build than a comparable home.(2) These construction cost savings may be passed on to homebuyers through either a lowered purchase price or by allowing them to invest their money elsewhere in the structure.

Health

Removing gas from homes is an important way to eliminate indoor pollutants. According to a 2022 study by Stanford University, gas-burning stoves release indoor air toxins both while in use and while idle, at levels that can exceed EPA exposure limits for occupant health. These substances include methane and nitrogen dioxide, both of which are known to cause respiratory conditions and other adverse health effects.(3) All residential gas appliances are also known to produce carbon monoxide through their combustion process, and when proper ventilation is not provided, exposure to this byproduct can cause severe health risks. Electric appliances do not leak combustible or noxious gases, an indoor air quality benefit that is often overlooked during the home sale process. Maintenance of electric appliances is also safer, as homeowners do not need to worry about maintaining ventilation pipes that are necessary to remove carbon monoxide from their living spaces or protect gas lines from leaking highly combustible fuels.

“Building an all-electric home helps communicate to these customers that they are working with a forward-thinking business.”

Environment

Millennials now make up more than 40 percent of eligible homebuyers.(4) These consumers care deeply about the long-term impacts of climate change. They have indicated a preference to use their purchasing power to support businesses that are committed to sustainability and transparency about the environmental impact of the products they offer.(5) Building an all-electric home helps communicate to these customers that they are working with a forward-thinking business. While all homes require electricity to operate, removing gas fuel sources helps reduce carbon emissions in a quantifiable way that may be included in marketing materials and tracked through every all-electric home built. It also allows homeowners to more easily invest in solar panels or support solar energy projects sponsored by their utility.

Resiliency

Homebuyers looking to future-proof their home or who are interested in self-sufficiency will find electrification is one of the first things to invest in. Where gas fuels such as natural gas and propane are finite and rely on a third-party supplier, electricity may be generated on-site and maintained by the homeowner. Retrofitting existing homes can be expensive and time consuming, putting newly constructed all-electric homes at an advantage. Building all-electric also opens opportunities to provide add-ons such as solar panels or solar-ready conduit, solar battery storage and electric vehicle charging. This resiliency feature works for homes built in dense urban areas and rural communities alike, making it easy to integrate into a homebuilder’s portfolio.

Cost, health, environment and resiliency are all inter-connected pieces of the electrification puzzle. Given its different benefits to a variety of consumer priorities, investing in all-electric homes is something that deserves consideration by all builders.

Sources:

1 Gas South, The Hot Spot: Gas South’s Blog, “AGL Pass Through Charges,” 3/01/2013, www.gassouth.com/blog/natural-gas-101-agl-pass-through-charges.

2 New Buildings Institute, “Cost Study of the Building Decarbonization Code,” April 2022

3 Environ. Sci. Technol. 2022, 56, 4, 2529– 2539, Publication Date: January 27, 2022, www.doi.org/10.1021/acs.est.1c04707.

4 National Association of Realtors, “2022 Home Buyers and Sellers Generational Trends Report,” www.cdn.nar.realtor/sites/default/files/documents/2022-home-buyers-and-sellers-generational-trends-03-23-2022.pdf.

5 Gutterman, Sara, “Millennials: The Driving Force in Housing,” 6/16/22, Green Builder Media, www.greenbuildermedia.com/blog/millennials-the-driving-force-in-housing.