As the planet warms and heat waves, hurricanes, and wildfires become more intense, there’s a growing demand to curb climate-changing greenhouse gas emissions. Residential and commercial buildings, which produce about one-third of all U.S. emissions, are a ripe target for carbon reduction.
That’s why in a few short years policymakers and building designers have gone from pushing energy efficient design and products—which saved folks money—to targeting carbon emission reductions, even if it costs more in the long run. This paradigm shift is rapidly changing expectations for the development and operation of affordable housing.
One way to reduce carbon emissions is to go all-electric. This means moving away from burning fossil fuels—to heat homes, cook meals, and dry clothes—to using electric-based appliances and systems. The process of replacing the systems and technologies that use natural gas, coal, or oil is called “electrification,” and while this move can help the environment, it does raise cost concerns for developers and creates challenges for housing operations and maintenance. Electrification can also potentially raise utility costs for residents and increase the demand for electricity from dirty power plants.
State and local laws, as well as federal policy changes, have driven the move from energy-efficiency to carbon reduction, and in many jurisdictions, electrification is now encouraged or even required. The recently passed federal Bipartisan Infrastructure Law and Inflation Reduction Act (IRA) accelerates the shift by providing resources to address increased costs and technical challenges. The IRA, for instance, contains billions of dollars in subsidies to address climate change, and the Biden administration’s Justice40 Initiative earmarks 40 percent of these resources to traditionally underserved communities and affordable housing. (As much as $25 billion is allocated to affordable housing and low- and moderate-income communities, to be administered through the U.S. Department of Housing and Urban Development, the Department of Energy, and the Environmental Protection Agency, according to a recent policy brief by the National Housing Trust.)
These new requirements and incentives will change the way housing is designed and built in the U.S. But the shift to using more electrical-based systems means that affordable housing practitioners face a steep learning curve, a daunting new vocabulary, and new metrics for assessing building performance. What are some of electrification’s benefits and challenges, and how can we move forward?
A Shift from Energy Efficiency to Carbon Reduction
Typically, energy use in buildings is described in terms of energy use intensity—the BTUs used per square foot per year. For years this metric was the basis for energy modeling for new buildings and the way to measure energy use in existing buildings. While we must continue to design deeply energy-efficient buildings, we are also being asked to measure our buildings’ carbon emissions intensity, or CEI, calculated as tons of carbon emissions per square foot per year. The best way to reduce CEI is to electrify our buildings, while supporting efforts to transition the grid to clean energy.
State and local action is accelerating this shift by establishing carbon reduction targets aligned with the Paris Agreement. California’s 2022 Title 24 Energy Code and the Massachusetts 2050 Decarbonization Roadmap are two examples.
In California, the 2022 update to the energy code strongly encourages all-electric design—with heat pumps for space and water heating—and expands requirements for photovoltaic panels and battery storage systems. The 2022 Energy Code also requires that new developments with gas lines and appliances “future-proof” the buildings by providing extra electrical capacity to easily convert from gas to electric.
In Massachusetts, the 2021 Act Creating a Next Generation Roadmap for Massachusetts Climate Policy expanded municipalities’ ability to implement stricter local energy codes and set carbon emissions reduction targets. It also codified investment and development review standards for environmental justice communities. This year, another bill passed that allows local communities to prohibit new natural gas hookups in future developments.
Municipalities are also starting to require that affordable housing owners and developers address carbon emissions intensity. For instance in Boston, as of 2021, the city has incorporated net-zero emissions requirements for affordable housing developments seeking city funding, while the 2022 Building Emissions Reduction and Disclosure Ordinance update requires that all building owners report energy use and carbon emissions intensity, and meet carbon emissions standards that reduce to zero by 2045.
Energy and carbon benchmarking ordinances differ by municipality, creating new challenges for affordable housing owners. In California, Tom White, associate director of building performance and sustainability at Eden Housing, describes the challenge he faces as an asset manager of more than 12,000 units of affordable housing.
“Eden Housing has properties in many municipalities. We are having to keep track of varying requirements to measure and report on building energy and water usage and facing different target dates for reducing carbon emissions and achieving net-zero carbon goals. Oakland’s City Council has committed to all buildings in the city being all-electric and efficient by 2040. The San José City Council passed a resolution aiming for a goal of carbon neutrality in San José by 2030, and there are varying energy reach codes in over 50 local jurisdictions across the state,” White says. “We have to address building conditions before we electrify. As an affordable housing provider, it’s been especially challenging since these greenhouse gas reduction goals have only recently come with some funding to pay for implementing them. Retrofitting old buildings includes window replacements, added insulation, and improved ventilation.”
White says he’s hopeful that funding in the Inflation Reduction Act will provide much-needed resources to meet California’s targets.
Electrification: Changing How We Design and Build
As we move toward all-electric buildings, affordable housing designers, installers, and maintenance teams are learning how to navigate this new terrain. In practice, electrification means that the systems for heating and cooling will most likely be air-source heat pumps, and hot water will be generated by heat-pump water heaters. (Heat pumps pull heat from the cold outdoor air and transfer it indoors, and in warmer months, pull heat out of indoor air to cool the home.) Electric cooking will be the norm, and more municipalities will require that electric vehicle charging stations be included in new construction. This increase in electrical usage will require larger house service panels and, in some instances, larger transformers.
In Boston, an affordable housing project wrapping up design illustrates the disruptive effects of the shift from energy efficiency to carbon reduction. For previous projects, Nuestra Comunidad Development Corporation, a local nonprofit developer, chose a central hot water system with a high-efficiency gas boiler combined with a roof-mounted solar thermal preheat system. But the city required 100 percent electrification for the organization’s new project. This requirement, while not a surprise, created a challenge for the team because it meant changing to heat-pump water heating, a technology that was unfamiliar to the owner and the design team.
Heat pumps generate hot water at a slower rate than gas boilers, so instead of 1 boiler for the 44-unit project, the all-electric system required 9 interconnected heat pumps to meet the building’s expected electrical load. That, in turn, requires more roof structure to support the extra tanks, and increases the overall electric load. Operations are affected too: Property management staff must learn different maintenance protocols. It’s a learning curve for everyone.
Some early adopters are not waiting for mandates. Nonprofit developer Community Corporation of Santa Monica wrapped up an electrification rehab project earlier this year and expects to complete two new, all-electric construction projects by the end of 2022. These early case studies are part of Community Corporation’s strategy to decarbonize its entire 90-property portfolio. Tara Barauskas, the organization’s executive director, says, “I always feel like it’s good in life to stretch yourself outside of your comfort zone. We just put all our efforts towards delving into how we can create the most green, affordable housing we can.” Both projects feature central hot water systems, with one using a single large heat pump and the other using several smaller heat pumps that operate in series depending on demand. Large storage tanks address the slower rate of hot water production and can serve as a thermal battery by generating and storing hot water when energy costs are low.
Electrification and Equity
While the need to reduce greenhouse emissions is clear, the economics of electrification are fuzzier and raise important equity concerns. Clean-energy conversions may reduce carbon emissions, but they may also increase energy costs. In many markets, electricity costs more than natural gas. When residents pay their own utility bill, how equitable is the transition to all-electric if their energy bills go up?
In California, White of Eden Housing says residents in coastal and Bay Area communities pay for their own electricity, and cooling retrofits will increase their electricity bills unless those costs can be offset by on-site solar electricity.
In Boston, electricity costs are higher than natural gas prices, says Andre Jones, Nuestra Comunidad’s senior real estate project manager. With so many unknowns about the potential cost changes its new all-electric development, Nuestra Comunidad decided to keep the apartment heating, cooling, and hot water on the common meter charges, rather than transferring this risk to residents.
With uncertainty about whether increased costs or savings will result from electrification, owners are reconsidering long-held assumptions about how to split utility costs and structure utility allowances. (In affordable housing developments where residents pay for utilities, utility allowances lower a resident’s overall rent.)
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Another concern: Electrification will increase demand for power from the grid, but the grid is not yet fully clean or renewable. The oldest and dirtiest power plants, known as “peakers,” are often located in environmental justice communities. Becky Schaaf, senior consultant at the Vermont Energy Investment Corporation, notes, “One of the trickiest things about the grid impacts conversation is not just how much emissions take place, but where and when they take place. . . . It’s about: are you adding load at times when you’re going to need to be using dirty peakers? So, it’s not just overall emissions on average, but actually where and when your load is being added.”
Moving Forward with Electrification
New technology and rapid change may seem a bit overwhelming. So here are our top five recommendations for how affordable housing developers and designers can make the most of the shift to electric:
- Get tuned in to funding opportunities. 2023 will be a big year for programs to start rolling out. Get on the mailing lists for your state energy office and the major policy organizations that are tracking program implementation, such as the National Housing Trust and the American Council for Energy-Efficient Economy.
- Build the right design team. Electrification requires a higher level of expertise in system requirements and in understanding design implications. Having an experienced team, or design team members who are willing to dig into the details to create the best solution, is essential.
- Use an integrated design process to daylight key issues and opportunities early. As described earlier, electrification forces multiple changes to established design assumptions. Identifying these needs early helps to ensure that the right systems are selected and effectively integrated into the overall design. (Guidance on the integrated design process is provided in Chapter 2 of the Blueprint for Greening Affordable Housing.)
- Take advantage of financial and economic benefits. Electrification requires reconsideration of costs on common versus tenant meters and a fresh look at utility allowances. Energy savings from new technology may not be reflected in the standard utility allowances and analysis may show that owners are better off keeping costs on the common meters, while staying within the regulated rent and income thresholds.
- Just get started! Let the project be the teacher and start incorporating electrification strategies, using available pilots and incentive programs. Learn by doing: Install some equipment in one or two properties, learn what it takes to plan and implement, and see how it works. You’ll be better prepared to move quickly when the big money starts to flow.