ACEEE Report

BUILDING

ELECTRIFICATION:

PROGRAMS AND

BEST PRACTICES

February 2022

ACEEE Report

Charlotte Cohn and

Nora Wang Esram

BUILDING ELECTRIFICATION © ACEEE

Contents

About ACEEE............................................................................................................................................................. iii

About the Authors .................................................................................................................................................. iii

Acknowledgments .................................................................................................................................................. iii

Suggested Citation ................................................................................................................................................. iv

Executive Summary ................................................................................................................................................. v

Introduction ............................................................................................................................................................... 1

Overview of This Report ........................................................................................................................... 4

Drivers of Change ....................................................................................................................................... 5

Findings from Existing Studies ........................................................................................................... 11

Building Electrification Programs Landscape ............................................................................................. 13

Methodology ............................................................................................................................................ 13

Updated Review of Programs in the United States .................................................................... 14

Measures and Incentives Breakdown............................................................................................... 24

Integration with Other Clean Energy Technologies ................................................................... 34

Budgets, Participation, and GHG Impacts ...................................................................................... 36

Program Examples and Experience ................................................................................................................ 44

Discussion ................................................................................................................................................................ 49

Barriers and Opportunities for Building Electrification ............................................................. 49

Homeowners and Building Managers ............................................................................................. 51

Low- and Moderate-Income (LMI) Customers ............................................................................. 54

HVAC Contractors ................................................................................................................................... 57

BUILDING ELECTRIFICATION © ACEEE

Manufacturers and Distributors ......................................................................................................... 59

Regulators and Policymakers .............................................................................................................. 60

Conclusions and Recommendations ............................................................................................................. 64

References ............................................................................................................................................................... 67

Appendix A. Program Details ........................................................................................................................... 74

Appendix B. Data Collection Sheet ................................................................................................................ 89

BUILDING ELECTRIFICATION © ACEEE

iii

About ACEEE

The American Council for an Energy-Efficient Economy (ACEEE), a nonprofit research

organization, develops policies to reduce energy waste and combat climate change. Its

independent analysis advances investments, programs, and behaviors that use energy more

effectively and help build an equitable clean energy future.

About the Authors

Charlotte Cohn is a research analyst at ACEEE who conducts research and analysis on utility

energy efficiency policy. Prior to joining ACEEE, she worked with the Vermont Law School

Institute for Energy and the Environment on building community solar projects for low- and

moderate-income communities in New Hampshire. She holds a master’s degree in energy

regulation and law from the Vermont Law School and a bachelor’s degree from the

University of Vermont.

Nora Wang Esram is ACEEE’s senior director for research. She oversees the organization’s

research agenda in a range of topic areas including buildings, industry, transportation, and

behavior. She leads, supports, and coordinates the work of all research programs and

contributions to policy activities. Before joining ACEEE, she worked at the Pacific Northwest

National Laboratory as a chief engineer and team lead in the Electricity Infrastructure &

Buildings Division for 10 years. She has led numerous large-scale projects and initiatives on

building efficiency and sustainability and has published more than 50 papers, including in

Nature Energy. Nora is a licensed architect. She holds a Ph.D. in architecture from the

University of Illinois, Urbana-Champaign and a master of arts in architecture from the

National University of Singapore.

Acknowledgments

This report was made possible through the generous support of the U.S. Department of

Energy (DOE), National Grid, Eversource, Pacific Gas & Electric Company (PG&E), and the

New York State Energy Research and Development Authority (NYSERDA). The authors

gratefully acknowledge the external reviewers, internal reviewers, colleagues, and sponsors

who supported this report. External expert reviewers included Monica Neukomm and Ed

Vineyard from the DOE Building Technologies Office; Courtney Moriarta, Carley Murray, and

Mary Chick from NYSERDA; Maggie Molina and Maureen McNamara from the U.S.

Environmental Protection Agency; Ana Sophia and Sherri Billimoria from the Rocky Mountain

Institute; Jeffrey Deason from the Lawrence Berkeley National Laboratory; Miguel Yañez-

Barnuevo from the Environmental and Energy Study Institute; Viraj Sheth, Ghani Ramdami,

and Michael Doucette from Eversource/United Illuminating; and Lester Sapitula from PG&E.

External review and support do not imply affiliation or endorsement. Internal reviewers

included Rachel Gold, Steve Nadel, Dan York, and Amber Wood. The authors also gratefully

acknowledge the assistance of organizations that contributed data and case studies to this

report, including the DC Sustainable Energy Utility (DCSEU), Sacramento Municipal Utility

Department (SMUD), Association for Energy Affordability (AEA), Vermont Energy Investment

BUILDING ELECTRIFICATION © ACEEE

Company (VEIC), and others. Last, we would like to thank Mary Robert Carter and Mariel

Wolfson for managing the editorial process, Elise Marton for copy editing, Roxanna Usher

for proofreading, Kate Doughty for graphics design, and Wendy Koch and Alex Kellogg for

their help in launching this report.

Suggested Citation

Cohn, C., and N. W. Esram. 2022. Building Electrification: Programs and Best Practices.

Washington, DC: American Council for an Energy-Efficient Economy.

aceee.org/research-

report/b2201.

BUILDING ELECTRIFICATION © ACEEE

Executive Summary

KEY FINDINGS

Programs to promote the electrification of space heating, water heating, and other

end uses of fossil fuels in buildings are expanding across the country. In a previous

study, in 2020, ACEEE identified 22 programs with total annual spending of $108

million. This updated and expanded study—assessing the inventory of building

electrification efforts to date—includes 42 programs. Of these, 32 programs reported

budget data, with a collective annual budget of $166 million.

Air-source heat pumps for single-family residential space heating were the primary

technology focus in 90% of the building electrification programs included in this study,

primarily because space heating, as the largest fossil fuel energy use in the typical

American home, presents a huge decarbonization opportunity.

When building efficiency upgrades (such as weatherization to improve building

envelopes) are paired with electrification of space- and water-heating systems, those

systems can be designed to serve a smaller thermal load, reducing upfront cost,

improving comfort, and lowering peak electric demand.

Typical utility-run electrification programs usually involve technology-based rebates to

residential customers. Nonutility program administrators are more likely to offer more

comprehensive program models, including whole-home retrofit programs, financing

for upgrades, workforce training programs, low- and moderate-income programs,

market development, and other strategies.

Upstream incentives for heat pump manufacturers are not widely represented in this

survey of programs but present an opportunity for even more cost-effective energy

savings and greenhouse gas reductions because they are scalable and savings can be

passed on to end-use customers.

Low- and moderate-income (LMI) customers and renters face significant obstacles to

enjoying the benefits of building electrification. While some programs specifically

target the needs of these customers, this segment of the market requires increased

attention.

Where possible, electrification programs, measures, and incentives should be braided

into existing energy efficiency programs to increase their reach and engagement with

hard-to-reach customer groups such as low-income and multifamily households.

Contractors play a key role in building electrification. Expanding the workforce and

educating and motivating contractors to install and service heat pumps is a critical

strategy for scaling up capacity for electrification in buildings.

BUILDING ELECTRIFICATION © ACEEE

Electrification—the process of converting fossil fuel–based equipment used in heating,

cooking, and transportation into efficient electric equivalents—is a critical step in addressing

anthropogenic climate change. As the United States transitions away from burning fossil

fuels for electricity generation, we must also carry out this same transition in our buildings

and our daily lives to reduce emissions of greenhouse gases (GHGs). By creating incentives

and programs to promote accelerated, widespread, and equitable electrification of fossil

fuels, we can take steps to address the existential threat of global warming without

compromising our safety, comfort, and quality of life.

This research examines the status and progress of electrification in buildings in the United

States through the lens of local electrification programs and incentives. These programs,

developed and administered by states, cities, utilities, and nongovernment organizations,

aim to accelerate building electrification through incentives, education, job training and

certification, and increased supply chain capacity. We collected a range of data from these

electrification programs, including the end uses and measures that were incentivized, the

sectors that were targeted, the level of spending and program budgets, and the anticipated

or achieved impacts (measured by total participation and GHG reductions). In addition, we

conducted interviews with program managers and technical experts to identify emerging

trends, barriers, and best practices in program design and implementation. The objective of

this report is to provide a high-level snapshot of electrification progress to date and to

identify obstacles and opportunities to accelerate building electrification across the United

States and beyond.

ACEEE published prior research on this subject in a 2020 paper surveying 22 local and

regional programs to electrify space heating.

Our updated survey includes data from 42

programs providing strategies and incentives for increasing the amount of new electric

heating, water heating, and cooking devices to replace fossil fuel systems in single-family

residential, multifamily residential, and small to medium-size commercial building

applications.

This report describes many of the largest and most comprehensive building

electrification efforts as of 2021, including programs that are ongoing and those that have

concluded. These programs, although not an exhaustive list, cover 17 states and 35 program

administrators (24 utilities and 11 nonutility administrators) in the United States, as shown in

figure ES1.

Nadel 2020. Programs to Electrify Space Heating in Homes and Buildings. aceee.org/topic-

brief/2020/06/programs-electrify-space-heating-homes-and-buildings.

To keep the scope of this report manageable, we do not include industrial programs. While industrial process

end uses are a significant opportunity for electrification, these applications are often specific to the industry in

question. ACEEE has published a body of research specific to electrification in the industrial sector, such as

Rightor, Whitlock, and Elliott 2020. Beneficial Electrification in Industry. aceee.org/research-report/ie2002

BUILDING ELECTRIFICATION © ACEEE

vii

Figure ES1. Number of building electrification programs in this report, by state

Space heating is the most targeted end use, with 90% of programs in this study offering

incentives for air-source and/or ground-source heat pumps. Certain programs, particularly

those in cold-weather states such as New York and Minnesota, offer specific incentives for

cold-climate air-source heat pumps, which are designed to provide ample space heating

even at low ambient temperatures. Heat pump water heaters are another major end use for

electrification, incentivized in 71% of programs. Electrification of cooking equipment

(typically via induction stoves, which are more efficient than their conventional electric

resistance cousins) is incentivized in 31% of programs. Other electric end uses, such as

clothes dryers, lawn mowers, and industrial forklifts, also receive incentives in specific cases,

but less frequently than the other applications mentioned above. Beyond direct incentives,

certain programs include market development efforts to boost the capacity and technical

skills of contractors and the knowledge base of both contractors and consumers.

The most common type of incentive is a direct rebate to utility customers for purchasing

qualifying equipment. Some programs offer tiered rebates based on factors like the

efficiency of equipment, its performance in cold climates, the type of fuel being displaced,

customer income level, and other factors. A smaller percentage of programs deliver

incentives in other ways. For example, six new-building programs offer incentives to help

home builders lower the cost of all-electric new construction. Two programs provide

incentives and specialized training to contractors who install equipment in customers’

homes. Eight programs use multiple channels to provide incentives.

BUILDING ELECTRIFICATION © ACEEE

viii

In this updated review, annual budgets total more than $166 million among the 32 programs

reporting data, a 53% increase relative to the 2020 study. The average program spends

approximately $5.2 million per year. Programs vary from small-scale pilots in fewer than 10

homes to statewide incentives and market transformation efforts with thousands of

participants. Most utility-led programs are funded by ratepayers. Programs run by state-

based organizations or other nonprofits rely on various funding methods, such as cap-and-

trade funds, capacity market revenues, grants, and donations. The programs with the largest

spending are most often found in states that prioritize electrification in policy and

regulation, such as California, New York, and Colorado.

Equity is an objective in several programs. Seven programs have an explicit requirement that

some or all participants in the programs be low-income customers. Several additional

programs offer higher financial incentives to income-qualified customers. Our research

shows, however, that multiple barriers remain for these customers, including an inability to

afford high upfront costs of fuel switching (even with incentives), a lack of understanding or

awareness of incentive opportunities and the multiple benefits of electrification, and a lack

of control over their home energy systems in a rental unit.

The “Discussion” section in this

report identifies additional barriers as well as strategies that some program administrators

have adopted to address these issues.

Our interviews with program managers and experts revealed that contractors play a vital role

in expanding building electrification efforts. Because heat pumps still represent a small

(although growing) segment of the HVAC market, many contractors have limited experience

with and understanding of heat pump technologies, particularly heat pump water heaters,

which require both electrical and plumbing expertise. This unfamiliarity, along with lack of

established methods to sell heat pumps to end customers, makes many contractors hesitant

to incorporate heat pumps into their existing businesses. Contractor education and

incentives targeting installers are key components of the largest market transformation

efforts to date, such as in Maine and New York.

In addition, while new building electrification is a path to create long-term cost savings and

emissions reduction, retrofits for existing homes and businesses present a variety of

challenges. Efficiency, weatherization and building shell improvements, wiring and panel

upgrades, and providing customer service all create additional complexity and can increase

costs in building electrification efforts. By offering “comprehensive” incentives that combine

electrification with building energy assessments, weatherization, panel upgrades, demand

response and distributed energy generation, whole-building programs can offer solutions

that are tailored to fit the unique needs of the building in question. Combining multiple

More in-depth research on decarbonization for affordable housing will be published in a forthcoming ACEEE

report (York et al. 2022).

BUILDING ELECTRIFICATION © ACEEE

energy solutions can enable program managers to lock in long-term energy savings and

benefits that go beyond a simple technology replacement.

Our recommendations for expanding and scaling up electrification based on the findings of

this study are detailed by actor in table ES1.

Table ES1. Recommendations by actor

Actor

Key recommendations

State legislatures

•

Include explicit building electrification targets within larger climate plans, and

prioritize access to resources and support for marginalized communities when

setting goals

• Provide consistent funding streams for building electrification programs,

particularly whole-building retrofits for underserved communities

• Capture electrification opportunities in new buildings through building codes and

standards, such as requiring new buildings to be all-electric or “ready to electrify”

• Enact a price on carbon via a tax or by joining a regional carbon cap-and-trade

market. Utilize carbon market revenues to create sustainable funding streams for

building decarbonization programs

Regulators

•

Enable a rapid and smooth transition to a carbon-free power supply

• Ensure that the grid has adequate transmission/distribution capacity to reliably

accommodate additional electricity load from buildings

• Allow program managers to offer fuel-switching measures and incentives

• Set targets for utilities to provide building electrification incentives to their

customers, including performance-based incentives where appropriate, and

establish fuel-neutral impact tracking and reporting methods

• Consider nonenergy benefits (e.g., environmental impacts) in cost-effectiveness

testing and evaluations for building electrification programs

• Encourage utilities to explore the integration of building electrification

technologies with the grid in order to increase variable renewable energy

resource utilization and reduce systemwide costs

• Develop a transition plan for gas utilities, including gas distribution system

downsizing and zero net carbon alternatives to natural gas

• Consider impacts on electric rates, particularly for energy-burdened customers,

and require utilities to offer programs specifically targeting hard-to-reach sectors

BUILDING ELECTRIFICATION © ACEEE

Utilities

•

Incorporate building electrification into the integrated resource planning process

• Develop pilots and expand existing building electrification program offerings

• Incorporate demand response, distributed generation, energy storage, and other

demand-side resources to mitigate grid impacts of electrification

• Combine electrification incentives with existing in-home energy efficiency

programs to streamline the delivery progress

• Offer incentives for electric panel and service upgrades to support electrification

• Phase out incentive programs for fossil fuel equipment

Manufacturers/

distributors

•

Expand production and distribution of building electrification technologies,

particularly for whole-home systems designed for use in cold climates and for

homes with hot-water distribution systems.

• Provide contractor education programs and work with installers to broaden

understanding and expertise in heat pump technologies for buildings

• Ensure that heat pump equipment is widely available and stocked in distribution

centers to allow replacement of fossil fuel equipment on an emergency basis

Contractors, home

builders, architects,

and engineers

• Participate in education, job training, and certification programs to incorporate

building electrification technologies in building design and installations

• Develop specialized product and service offerings to integrate heat pump

technologies into existing business models and sales processes

• Join local/regional business groups to share knowledge and receive support for

building electrification

• Combine electrification with energy efficiency to reduce total system cost and

ongoing energy costs for customers

• Educate customers on heat pump technologies, incentives, and benefits

Homeowners and

property managers

•

Learn about building electrification technologies and share this information with

neighbors and peers

• Understand the local utility incentives for building electrification measures

• Plan to replace existing fossil fuel equipment as it nears the end of its useful life

span to avoid an emergency replacement when existing equipment fails

• Implement energy efficiency measures, such as improving building envelopes,

along with building electrification to reduce lifetime energy cost and improve comfort

BUILDING ELECTRIFICATION © ACEEE

Introduction

In the past year, many states and utilities have ramped up their commitments to reducing

greenhouse gas (GHG) emissions. To address global climate change, we must reduce these

emissions from every part of our energy system. The energy used in residential and

commercial buildings accounts for 40% of total energy use in this country (EPA 2021). The

burning of fossil fuels in buildings alone accounts for 13% of total U.S. emissions. Reducing

these numbers through efficiency and electrification is a critical step toward reaching total

decarbonization.

Electrification in the context of building decarbonization refers to the replacement of fossil-

fueled equipment (such as for space heating, water heating, and cooking) with electric

equivalents. When building electrification reduces overall emissions and energy costs, it is

often termed beneficial or strategic electrification (Farnsworth et al. 2018). Today, replacing a

natural gas furnace with an electric heat pump will reduce carbon emissions in 46 out of the

48 contiguous United States—that is, in 99% of all U.S. households—while switching from a

propane or fuel oil furnace to a heat pump will reduce carbon emissions essentially

anywhere in the Lower 48 (McKenna, Shah, and Silberg 2020). As the power sector generates

more and more electricity from carbon-free sources, electrifying fossil-fueled end uses will

increasingly reduce carbon emissions.

Several studies have found that building electrification is more cost effective than fossil fuels

for most new home construction, especially when considering the avoided cost of gas mains,

services, and meters in all-electric homes and neighborhoods (McKenna, Shah, and Louis-

Prescott 2020). For existing home retrofits, electrification is most cost effective at the time

when existing equipment reaches the end of its useful life and needs to be replaced. Space-

heating electrification also tends to be more economically favorable when replacing

equipment that runs on delivered fuels (i.e., oil and propane) with heat pumps, since

electricity rates are regulated and are therefore more stable than unregulated fuel prices

(Nadel 2018). Heat pumps are also significantly more efficient than fossil-fueled and electric

resistance heating systems; moreover, they provide air-conditioning as well as space heating,

making them attractive from a cost savings as well as a comfort perspective (Nadel 2016).

The economics of electrification may be more challenging when replacing existing gas

heating systems, due in particular to the historically low price of natural gas.

However, heat pumps can still be favorable relative to natural gas in mild climates where

heating needs are moderate and where electricity cost is often lower than the national

average (Nadel 2020; Kaufman et al. 2019). In a previous study, ACEEE concluded that 27%

These economics may change, as the price of natural gas is expected to fluctuate and increase beginning in the

winter of 2022.

BUILDING ELECTRIFICATION © ACEEE

of existing commercial floor space heated with fossil fuel systems can be electrified today

with a simple payback of less than 10 years on average and without any rebates or carbon

pricing; with additional incentives, the share increases to 60% (Nadel and Perry 2020).

Some end uses in buildings may be partially electrified or electrified in stages due to the

limitations of today’s technology or cost constraints in some regions. For example, while

cold-climate air-source heat pumps work for space heating to temperatures well below 10

°F, efficiency may be reduced. Therefore, in some cases, heat pump space heating in cold

climates may need a source of backup heating depending on the condition of the building

envelope and selection of heating equipment. Another example is electrifying water heating

in multifamily buildings. A central heat pump water heating system can be designed to

displace a portion of the hot-water load in a multiunit dwelling and still remain cost effective

(Ceci 2021). In any event, heat pump technologies continue advancing; this will be discussed

in the “Improved Heat Pump Performance” section of this report.

Policies and incentives often play a critical role in catalyzing new technology uptake.

Electrifying buildings is an essential part of many local, state, and national climate strategies,

and utilities and program administrators across the nation are working to accelerate

adoption of electric replacements for fossil fuel equipment. Their efforts often come in the

form of financial incentives and other programs that aim to address the cost and knowledge

barriers and other obstacles to conversion to efficient electric end uses, generally in tandem

with efforts to “green the grid” by replacing fossil fuel generation with zero-carbon

renewables. The benefits of electrification will only increase as the carbon intensity of the

grid is reduced.

This study is intended to identify emerging trends and best practices in building

electrification programs. It updates and expands on past ACEEE research on building

electrification. In June 2020, ACEEE published a topic brief on programs to electrify space

heating in homes and buildings (Nadel 2020). The 2020 study reviewed 22 utility programs

and identified a trend of rapid growth in electrification programs, which primarily use high-

efficiency heat pumps to displace fossil fuels and electric-resistance space heating. The total

program budget in 2020 was nearly $109 million, up 70% from the prior year.

The

continuing rising interest and rapid growth in electrification programs and policies since

then warrant a new report on electrification programs nationwide. For example, the

Minnesota Energy Conservation and Optimization (ECO) Act, passed in May 2021, provides

For comparison, U.S. customer-funded energy efficiency expenditures in 2018 totaled $7.2 billion (Cooper,

Shuster, and Watkins 2020).

BUILDING ELECTRIFICATION © ACEEE

an incentive pathway for fuel switching

(Minnesota Legislature 2021). Colorado SB21-246,

signed into law in June 2021, requires investor-owned electric utilities to incentivize building

electrification (Colorado General Assembly 2021b). Colorado SB21-264, passed in the same

session, requires investor-owned gas utilities to reduce greenhouse gas emissions through a

variety of “clean heat” strategies, of which electrification is one (Colorado General Assembly,

2021a). Illinois’s Climate and Equitable Jobs Act (CEJA) allows utilities to meet some of their

annual energy efficiency goals through efficient electrification measures.

This report provides an overview of the building electrification programs offered nationwide

to date, including program budgets, types, and savings. We requested updated information

from all of the programs included in the 2020 ACEEE study, reached out to administrators of

new electrification programs, and collected more detailed program information (such as

participation and savings) from program administrators. We added 20 programs from a total

of 36 utilities and administrators to our research. We also conducted interviews to compile

success stories and gain insight into lessons learned. Our study includes both commercial

programs and residential programs (for both single-family and multifamily buildings, but not

including manufactured homes). Similar to ACEEE’s previous findings reported by Nadel

(2020), the existing electrification programs are by and large aimed at residential and small

commercial buildings. Figure 1 shows which sectors have been targeted by programs in this

study. We elaborate on program details, including end uses, measures, budgets, and more,

in the “Electrification Programs Landscape” section below.

Figure 1. Number of electrification programs in target sectors

Fuel switching is the practice of replacing an end-use customer-facing technology (such as space heating or

water heating) with one that uses a different fuel. In the context of decarbonization, fuel switching encourages

moving away from fossil fuel technologies, such as those using oil, propane, or natural gas, through the

installation of an electric air-source heat pump.

Single-family

residential, 21

Single and

multifamily, 8

Multifamily, 2

All sectors (single

and multifamily,

commercial), 8

Commercial, 2

Single-family and commercial, 1

BUILDING ELECTRIFICATION © ACEEE

Since our focus is on electrification, heat pump programs that do not include fuel switching,

such as programs to replace electric resistance heating with heat pumps, are excluded from

this study. These other heat pump programs offer multiple benefits such as cost savings and

carbon reductions; however, we exclude them in order to concentrate specifically on the

unique needs and attributes of electrification programs.

Whole-building energy efficiency provides a strong foundation for electrification because it

reduces a building’s thermal load and peak demand. A smaller overall heating load makes

electrification more cost effective by reducing HVAC size, and a building’s demand flexibility

and resilience improve when a constant indoor temperature can be maintained for a longer

period of time. As electrification increases electric load during peak times, it may raise

carbon emissions for some periods when carbon-intensive units, such as coal, are used for

marginal generation. A lower peak demand reduces these marginal emissions. With an

emphasis on efficiency, our study also looked into the integration of electrification program

and weatherization measures, which reduce building energy loads and costs, especially for

low-income families. More in-depth research on how to align energy efficiency with climate

goals and how electrification will affect low-income families in residing in affordable housing

is available in two other ACEEE reports (Specian and Gold 2021; York et al., forthcoming).

OVERVIEW OF THIS REPORT

This report begins by providing its readers with necessary background information, key

terms, and context in terms of electrification policies, technologies, and drivers of change.

We also summarize findings from the existing literature to illustrate the sphere of knowledge

and information on this topic to date.

Following this introductory section, we describe our methods and key findings in the

“Electrification Programs Landscape” section. We present our analysis of the 42

electrification programs in terms of general program information; targeted end uses; target

customer sectors; measures and incentives; delivery pathways; integration with

weatherization, demand response, and other clean energy technologies; program budgets

including administrative and incentive costs; and program impacts including participation,

energy savings, and greenhouse gas reductions.

After the analysis of electrification programs across the nation, we present four case studies

in California, New York, and Washington, DC, based on our in-depth interviews with program

managers. We then discuss our research findings and the emerging barriers and

opportunities for electrification across four levels of decision making: homeowners,

contractors, manufacturers, and policymakers. We conclude with our recommendations for

strategies that various actors can employ to accelerate electrification of buildings in the

United States.

The full set of data for each program can be found in Appendix A. Appendix B presents the

survey we used to collect data for this study.

BUILDING ELECTRIFICATION © ACEEE

DRIVERS OF CHANGE

Uptake of electrification programs needs multiple drivers, including a supporting policy

environment to enable program development and implementation; a cleaner utility grid to

achieve the intended carbon reduction goals; and reliable, efficient technologies to meet

customer needs and deliver consumer benefits. Consumer interest and motivation certainly

play a critical role. For example, one big driver of heat pump installation in some regions

(such as Northern California and the Pacific Northwest) is encouraging homeowners to

consider heat pumps when they are thinking of installing central air-conditioning, since heat

pumps can provide cooling as well as space heating.

STATE POLICIES

A growing number of states are updating their policies to enable electrification through

customer-funded efficiency and other demand-side management programs. ACEEE

presented a landscape of the state policies and rules for beneficial electrification in a policy

brief published in May 2020 (Berg, Cooper, and Cortez 2020) and updated in January 2022.

The 2020 policy brief showed that six states (California, Hawaii, New York, Vermont,

Tennessee, and Massachusetts) were encouraging fuel switching

through guidelines or fuel-

neutral goals. Three states (Minnesota, Colorado, and Illinois) have since passed similar

legislation. For example, Minnesota recently lifted its prohibition on fuel switching in its ECO

legislation, creating opportunities for utilities such as Xcel Energy and Otter Tail Power to

expand their existing heat pump offerings and begin providing additional incentives for

conversion (Minnesota Legislature 2021). Three more states (New Jersey, Maine, and Rhode

Island) have supportive policy in place with pending guidelines or rules. The rest of the

states have no policy or specifically prohibit fuel switching.

Some policy changes in the last year have paved the way for more aggressive electrification

in certain regions. As of July 2021, 49 municipalities in California had passed measures to

require all-electric new construction (commercial and/or residential) or pre-wiring for future

electric appliance installation (CEC 2021b; Gough 2021). The California Energy Commission

released the new Title 24 Building Energy Efficiency Standards in August 2021 with rules that

will give builders strong incentives to choose electric over natural gas–fired heating for

residential and small commercial buildings starting in 2023 (CEC 2021a). At the national

level, the U.S. Environmental Protection Agency (EPA) announced in September 2021 that

gas appliances would not be included in its “most efficient” designation list starting in 2022

(EPA 2021).

Energy efficiency resource standards (EERS)—policies requiring utilities to meet long-term

(three or more years) energy savings targets—have also been revised in some states (such as

The EPA notice did leave the door open for potentially including gas heat pumps in the future.

BUILDING ELECTRIFICATION © ACEEE

Massachusetts, Vermont, Minnesota, New York, and California), with more states following

suit (such as Maryland and Connecticut), to better align with state climate goals (Berg et al.

2020; Specian and Gold 2021). The two primary approaches, which are often used in

combination, are multiple goals, directing energy efficiency programs to meet a number of

policy objectives, and fuel-neutral goals, enabling program administrators to prioritize the

highest-potential GHG mitigation measures across fuels and sectors) (Gold, Gilleo, and Berg

2019). In Colorado, SB21-246, signed into law in June 2021, establishes electrification goals

for investor-owned utilities, requiring them to develop plans for building electrification and

submit them to the Colorado Public Utilities Commission for approval (Colorado General

Assembly 2021b). This policy, the first of its kind in the United States, will promote the use of

energy-efficient electric equipment in place of less efficient fossil fuel–based systems.

CHANGING GRID MIX

Reducing the carbon intensity of the power grid (in terms of carbon emissions per

megawatt-hour of electricity) is crucial to maximizing the environmental benefits of end-use

electrification. While electric appliances are generally more efficient than fossil-fueled

versions, the overall environmental and GHG benefits of electrification depend on the grid

mix that provides power to these systems. Over the last 20 years, the percentage of total

electricity generated from renewable sources (including wind, solar, hydroelectric, biomass,

and geothermal) has increased from 9% of the grid in 2000 to 20% in 2020, as shown in

figure 2.

Figure 2. U.S. electricity generation by major energy source, 2000–2040. Values past 2020 are based on

forecast data (EIA 2021a).

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Coal Natural gas Nuclear Petroleum and other Renewables

BUILDING ELECTRIFICATION © ACEEE

Electricity generated from renewable energy sources exceeded that generated from coal-

fired power plants in 2020, for the first time since the U.S. Energy Information Administration

(EIA) started tracking nationwide energy generation data, in 1950 (EIA 2021c). The fuel mix

nationwide for electricity generation in 2020 was 40% natural gas, 21% renewables, 20%

nuclear, and 19% coal. According to EIA, the growth of renewables came primarily from

gains in wind (up 14%) and solar (up 26%). EIA predicts renewable generation to continue to

steadily grow in 2022 (10% increase relative to 2021) and in future years (EIA 2021d). Over

the long term, to 2050, EIA projects a robust competition between renewable energy and

natural gas, with renewables supported by incentives and falling technology costs and

potentially benefiting from rising costs of natural gas. The agency also predicts that coal and

nuclear power will continue decreasing in the electricity mix (EIA 2021a). A Lazard analysis

shows that selected renewable generation technologies are cost competitive with

conventional generation technologies under certain circumstances (Lazard 2020).

Electrification can lead to lower emissions today—in all but the most coal-heavy systems—

and will achieve greater reductions as the electric grid becomes cleaner (McKenna, Shah, and

Silberg 2020). A study of co-op electrification programs estimates that electrification can

reduce co-op members’ fossil fuel consumption by more than 30% (Yañez-Barnuevo et al.

2019). Nationally, the fuel mix of co-ops is 68% fossil fuel (a slightly higher percentage than

the national average), 15% nuclear, and 17% renewable (Yañez-Barnuevo et al. 2019).

As electrification increases electric load, it may also increase peak demand on the power

grid. This may lead to greater carbon emissions during specific times and in certain regions

where carbon-intensive power generation units, such as coal peaker plants, are used to

maintain reliability during peak demand times. Also, increasing peak demand can spur

utilities to invest in supply-side generation and electric transmission and distribution

upgrades, leading to increased costs throughout the power system. Therefore, demand

reduction and flexibility are critical to realize the projected emission reductions of

electrification and to keep costs manageable.

Demand flexibility can come in the form of grid-connected device controls, “smart”

thermostats, preheating and precooling, battery storage, and more. With demand flexibility,

electrification can become a valuable grid resource as opposed to a potential liability.

Connected heat pump equipment with smart controls and variable-speed motors can

respond to grid signals and reduce its energy use during these peak times. Flexible demand

can also support renewable energy growth by better utilizing intermittent resources like

solar and wind. It can help balance the grid by shifting load away from peak demand hours,

thereby reducing the need for peaker plants and helping to maximize GHG reductions. As of

2020, the ENERGY STAR® version 3.3 standard includes “connectedness” criteria for

residential water heaters that will allow them to participate in utility demand response

programs (ASAP 2021).

In addition to “active” demand flexibility measures, “passive” measures such as home

envelope upgrades can also contribute to demand-side management and provide

meaningful benefits in tandem with electrification. Comprehensive energy efficiency

BUILDING ELECTRIFICATION © ACEEE

measures, particularly weatherization that includes air sealing and insulation, can reduce the

overall energy required to heat and cool a building. This allows installers to downsize HVAC

equipment, leading to reduced equipment costs and more energy savings and mitigating

the impact on peak electric demand. This is particularly important in cold-climate regions

where rising winter peaks are a concern, such as the Northeast (Specian, York, and Cohn

2021).

IMPROVED HEAT PUMP PERFORMANCE

Heat pumps are among the foundational technologies to enable building electrification.

Figure 3 illustrates the basic structure of a heat pump system, which relies on a closed loop

of evaporation and condensation using a refrigerant liquid that has a very low boiling point.

By exchanging heat with an outdoor source (air, ground, or water), a heat pump can provide

both heating and cooling, based on the needs of the indoor space at the time.

Figure 3. Basic characteristics of a heat pump system with a vapor condensation-evaporation cycle

The applications of heat pumps have been expanding with technology advancement. The

following section details various heat pump technologies and uses.

Air-source heat pumps are the most common type of heat pump for residential

applications. There are two types of air-source heat pumps, ducted and ductless

systems. Ducted systems fill the role of a central furnace and air conditioner

simultaneously, delivering heating and cooling for a building with centralized HVAC

BUILDING ELECTRIFICATION © ACEEE

ducts. A ductless system, also called a mini-split system, is a version of an air-source heat

pump for homes without HVAC ducts. Mini-splits can provide heating or cooling within a

zone such as a room, floor, or attached unit. Air-source heat pumps can also heat or cool

water rather than air (these are called air-to-water heat pumps) and may be used with

radiant floor heating systems for more efficient space heating.

Cold-climate air-source heat pumps (ccASHPs) are a specialized model of air-source

heat pump that can operate in colder temperatures. Both ducted and ductless systems

offer cold-climate models. Modern ccASHPs are capable of delivering 100% rated

heating capacity at 5°F and up to 76% capacity at –13°F (Mitsubishi 2020). Below those

temperatures, the heat pump may switch to an electric resistance or fossil fuel backup

heating system. Heat pump efficacy in cold climates has improved in recent years due to

advancements in inverter-driven compressors and refrigerants (Shoenbauer et al. 2017).

Geothermal heat pumps, also called ground-source heat pumps (GSHPs), rely on

relatively stable temperatures underground or underwater to provide heating and

cooling. Because geothermal systems do not depend on the temperature of the outside

air, these heat pumps have more efficient and stable energy performance than air-source

systems. However, the installation cost is generally several times higher than air-source

heat pumps due to the cost of drilling underground wells. Some pilot studies have

examined the possibility of retrofitting stranded natural gas distribution infrastructure to

distribute geothermal heat on a neighborhood level (HEET 2019). However, this

application is not currently included in any of the programs featured in this study.

Water-source heat pumps (WSHPs) operate by rejecting heat to a water-pipe system

during the summer or by absorbing heat from the same water loop during the winter.

WHSPs are more efficient than air-source heat pumps because water has a higher

capacity to carry heat than air does. They are also more applicable to large commercial

buildings. Other advantages include quiet operation, a small system footprint, and the

ability to meet simultaneous heating and cooling demand in multiuse buildings

(Halbhavi 2016). Due to the highly specific siting and infrastructure required, this type of

heat pump system is not widely represented in our study.

Hybrid (dual-fuel) heat pump systems combine a heat pump with a backup gas or

propane furnace that operates when the heat pump cannot provide adequate heat.

These systems may be used in new construction or building retrofits as full load

replacements for the existing heating system. An alternative dual-fuel approach involves

installation of a new heat pump system while the previous legacy fossil fuel system is left

behind as a backup until it reaches the end of its useful life. Some programs are pursuing

this option where customers are uncertain about a heat pump’s ability to provide reliable

full-load heating, while others, like New York, are developing strategies to mitigate the

need for backup heat even in the coldest climates to fully achieve their decarbonization

goals. Some market actors have suggested dual-fuel systems are a good solution to have

a backup system in the event of a power outage, but the fossil fuel furnace still requires

BUILDING ELECTRIFICATION © ACEEE

electricity to operate some form of onsite generation would be needed to fulfill that

need.

Improved performance of heat pumps for water heating and space heating, especially cold-

climate air-source heat pumps, is an essential driver for heat pump adoption.

Regulations

and technology advancements have been key forces driving heat pump efficiency

improvement. The average seasonal performance factor of heat pumps sold in the United

States rose by 13% in 2006 and 8% in 2015 following two increases in minimum energy

performance standards (IEA 2020). The technological upgrades in recent years include

advances in refrigerant composition and volume, improved compressors (two-speed

compressors, scroll compressors), dual-speed/variable-speed motors, and waste heat

recovery for integrated space-heating/water-heating systems using a desuperheater

further increase efficiency (DOE 2021).

Most heat pumps use electric resistance heaters as a backup in very cold weather. Some

heat pumps are equipped with backup burners that use fossil fuels to provide

supplementary heat and reduce the use of electricity during the winter peak season. These

dual-fuel heat pumps may be cheaper to operate in some regions while still reducing fossil

fuel consumption (relative to a 100% fossil fuel heater). In climates where temperatures fall

below 0 °F, a dual-fuel heat pump system can still significantly cut onsite fossil fuel use by

50% or more (Yañez-Barnuevo et al. 2019). However, with advancements in refrigerant

technology, heat pumps with minimal electric backup heating can meet users’ needs in most

applications. A study in Minnesota found that current ccASHP technology performs well and

can deliver 55% savings (compared with electric resistance heating) in Minnesota’s climate

(McPherson, Smith, and Nelson 2020).

Elsewhere, a study in Vermont that examined a total

of 77 ccASHPs (all electric) installed at 65 residential locations showed an average seasonal

efficiency of 314% and annual fuel savings of approximately $200 after upgrading to heat

pumps (Walczyk 2017). These savings could have been even higher if paired with consumer

education about efficient operation of ccASHPs. None of the surveyed homeowners

expressed dissatisfaction with their system.

We use heat pump here to refer to general heat pump technologies. When we discuss heat pump applications

and case studies, it refers primarily to air-source heat pumps, which are the most popular application, unless we

specify ground-source heat pumps (GSHP).

A desuperheater is a secondary heat exchange device that uses excess heat generated from the refrigeration

cycle on a heat pump to heat water in a connected water-heating system.

In this Minnesota study, air-source heat pumps were installed in six occupied homes where natural gas was

unavailable. Propane furnaces were used for backup at four sites, and the existing electric resistance baseboards

were used for backup in two homes.

BUILDING ELECTRIFICATION © ACEEE

FINDINGS FROM EXISTING STUDIES

This study builds on existing research and analysis of the potential impacts of electrification

in buildings. Findings from prior studies—summarized below—can also provide useful

insights for policymakers and program administrators striving to design and operate

electrification programs more effectively. The following list describes key findings from prior

studies of electrification programs and practices.

Program maturity: Many electrification programs are still in their infancy. Program

administrators continue refining their approaches and adjusting incentives (Nadel 2020).

Heavily rebated heat pump water heater programs (not specific to electrification) are

prevalent across the nation. (Yañez-Barnuevo et al. 2019).

Benefits: Additional load from added electrical end-use equipment increased revenue

for utilities, especially co-ops, which have been experiencing flat sales or low sales

growth for the past decade. Beneficial electrification is seen as a new investment

opportunity for some utilities (Yañez-Barnuevo et al. 2019).

Locations: Electrification programs are most extensive on the West Coast and in the

Northeast (Nadel 2020).

Full versus partial electrification: The bulk of program participants (i.e., utility

customers) use heat pumps alongside existing fossil fuel systems (Nadel 2020).

Weatherization: Most programs encourage—but do not require—weatherization to

reduce loads in conjunction with the purchase of a new heat pump (Nadel 2020).

Target customers: Many programs emphasize the residential sector and target

customers who use fuel oil and propane because the economics of electrification in

these situations are often better than when displacing natural gas at current retail energy

prices (Nadel 2020).

Participation: Midstream incentives to contractors, distributors, and/or retailers have

been found to increase participation, but come with additional challenges, including

difficulty tracking sales and ensuring high-quality installations.

Higher incentives have

also led to higher participation. A study on Northeast electrification with a focus on

ductless mini-splits showed that among 10 programs, Efficiency Vermont’s offering using

a midstream incentive model had the highest installation rate (1.26% of homes).

Throughout this report, “midstream” incentives are incentives that are delivered in the middle of the supply

chain to vendors or contractors. Upstream refers to program incentives delivered early in the supply chain, such

as incentives to manufacturers and distributors. Downstream incentives mostly target end-use customers.

BUILDING ELECTRIFICATION © ACEEE

Efficiency Maine, which had the second-highest rate (0.82%), offered substantial

incentives of at least $500 per unit (Levin 2018).

Cost and financing: The economics of electrification are challenging in many cases,

especially in cold climates and regions with relatively low gas prices, such as the upper

Midwest. However, the economics may change if the price of natural gas rises. The EIA

estimates that midwestern natural gas customers could pay on average 49% more for

natural gas in the winter of 2021–22 (EIA 2021d). ACEEE conducted a study to evaluate

the feasibility of electrifying water heaters in multifamily buildings (Perry, Khanolkar, and

Bastian 2021). The results of this study showed that, while water-heating system retrofits

for multifamily are an effective way to reduce greenhouse gas emissions, the average

payback period for water heater electrification in a multifamily building was 20 years for

an in-unit water heater or 30 years for a central water heater. These findings were

specific to a retrofit context; the economics for all-electric new buildings are much more

favorable in many areas.

In general, while many electric heat pump

programs are offered across the nation, they are

not often specifically designed to align with the goals of beneficial electrification. First, fuel-

switching requirements are not clearly stated in most heat pump incentive programs. For

example, in a 2021 study, the Pacific Northwest National Laboratory compiled information

from 244 utility programs that provide incentives for heat pump water heaters. Nearly 88%

(214 in total) do not specify the fuel used by the water heater being replaced. Only seven

programs (less than 3%) target fuel switching from natural gas to electricity. The remaining

9% prohibit fuel switching, in effect offering rebates only for replacing electric water heaters.

Second, heat pump programs generally do not provide additional incentives for fuel

switching. An analysis by the Environmental and Energy Study Institute (EESI) of the

programs offered by Midwest co-ops found that no existing programs can be characterized

as full beneficial electrification programs per EESI’s definition (Yañez-Barnuevo et al. 2019).

The co-op members do not receive a rebate for fuel switching (from propane to electric), nor

do the co-ops track whether fuel switching has occurred. EESI has since helped co-ops

launch full beneficial electrification programs nationwide. For example, the Orcas Power and

Light Cooperative (OPALCO) and Mountain Park Electric are successfully operating on-bill

The EESI report defines beneficial electrification as “switching fossil-fuel end-use equipment to electric

equipment in a way that reduces overall carbon emissions, while providing benefits to the environment and to

members.” It defines a fully beneficial electrification program as one that includes the following elements: 1)

incentives and/or financing to cost effectively convert fossil fuel–powered equipment to electric equipment, 2) a

central program goal of reducing net carbon emissions, 3) a verification process to check that the replacement

has indeed occurred, and 4) energy audits to calculate estimated energy and monetary savings resulting from the

switch-out.

BUILDING ELECTRIFICATION © ACEEE

tariff programs for beneficial electrification to help their members switch to electric

equipment for residential and commercial space and water heating.

In summary, electrification program design and implementation is still in its infancy,

particularly when compared with traditional efficiency programs that focus primarily on

energy use reductions and cost savings. Learning the achievements and pain points of

existing electrification programs will help states and utilities design more effective incentive

programs.

Building Electrification Programs Landscape

Our data collection covered both electrification program characteristics and performance.

We gathered data on which end uses (space heating, water heating, cooking, etc.) are being

targeted in these programs, whether the programs are designed to replace a specific source

fuel (natural gas, oil, propane, etc.), what measures are included in the programs, and what

incentives are being provided. We also investigated whether these electrification programs

were integrated with other demand-side programs, such as those for conventional energy

efficiency upgrades, weatherization, demand response, or solar and battery storage.

To evaluate program performance, we used metrics including participation, budget, and

energy and greenhouse gas savings. We also sought to determine the extent to which

programs are reaching customers in low-income areas.

In addition to aggregating data on program characteristics and performance, this report

identifies the strategies program administrators are using to overcome market barriers to

electrification. On the basis of interviews we conducted with a select group of program

administrators, we developed a set of emerging best practices.

METHODOLOGY

The data collection process for this research began with updating and expanding the data

gathered for a previous ACEEE review of 22 electrification programs (Nadel 2020). We

reached out to program managers for updated data as of 2021 and expanded the data set

to include measures beyond space heating, such as hot-water heating, induction cooking,

and other electrification end uses. Furthermore, we contacted research institutes, advocacy

organizations, and state and utility program implementers to identify additional

electrification programs and efforts in their respective regions. We also examined program

offerings in states where electrification policies have been enacted.

Beyond adding more programs to our study and collecting quantitative data on cost

effectiveness, energy savings, and GHG savings, we also collected qualitative data around

barriers to accelerating electric technology adoption, the strategies program administrators

use to address these barriers, and practices to integrate electrification with weatherization,

demand response, distributed solar, and EV charging. Our data collection and qualitative

survey form can be found in Appendix B.

BUILDING ELECTRIFICATION © ACEEE

These data requests were supplemented by interviews with program managers and other

experts in the field. We sought to interview program managers from a diverse range of

implementers—including large investor-owned utilities, smaller co-op utilities, and nonutility

administrators—representing a range of geography, climate, and market conditions. The

purpose of these interviews was to learn more about program goals and to gain a deeper

understanding of barriers and lessons learned in the process of administering the programs.

Our findings from these interviews are discussed in the “Program Examples and Experience”

and “Discussion” sections below.

UPDATED REVIEW OF PROGRAMS IN THE UNITED STATES

Electrification efforts across the United States vary in their targets, scales, strategies, and

outcomes. The common aspects across many programs include an emphasis on air-source

heat pumps and a focus on rebates to end users as a delivery strategy. Beyond these

aspects, program enrollment, budgets, delivery strategies, target sectors, source fuels,

energy savings, and GHG impacts vary substantially.

We limited our survey to programs that specifically offer incentives for converting fossil-

fueled end uses to electric equivalents. Although hundreds of utility incentives for heat

pumps exist, and some customers may have used them for fuel switching, we considered

these to be conventional energy efficiency measures, as opposed to electrification measures,

because these programs are not specifically designed to replace fossil fuel end uses. We

focused specifically on electrification programs with a fuel-switching component, or

incentives for all-electric new buildings. Some electrification programs in our study also

include components that incentivize electric-to-electric conversions (e.g., replacing electric

resistance equipment with heat pumps). Those components are included in our data

collection and analysis.

Figure 4 shows the geographical distribution of the programs in our study. The state with

the most programs represented in this report is California, with 13 programs offered by 6

different administrators. Other states with robust electrification program offerings include

Colorado, New York, Massachusetts, and Vermont.

BUILDING ELECTRIFICATION © ACEEE

Figure 4. Map of electrification programs included in this study

We identified 42 different building electrification programs. Twenty-three of them are still

ongoing, while 19 concluded prior to this study. These were generally pilots and

demonstration projects with an intentionally limited run, or programs that transitioned to a

new administrator (such as the New York State Energy Research and Development

Authority’s heat pump rebate program, which transferred to the New York State Investor-

Owned Utilities in 2020). Table 1 lists the basic characteristics of each program, including its

name, the name of the utility or administrative organization, the primary state in which the

program operates, and years of operation. Each program is assigned an abbreviated name

that is used throughout this report. All programs are or were in operation; planned and

forthcoming initiatives, such as California’s BUILD program, were excluded from our study.

Throughout this report, “n/d” indicates where no data could be found.

Table 1. List of electrification programs – basic characteristics

Short

program name Full program name

Program

administrator/implementer State Years

1 AEA LIWP

Low Income Weatherization

Program Multifamily

Association for Energy

Affordability

CA 2016–2021

2 AK Heat $mart

Alaska Heat Smart and

Thermalize Juneau

Alaska Heat Smart AK 2020–2021

APS Reserve

Rewards

Reserve Rewards Arizona Public Service AZ n/d

BUILDING ELECTRIFICATION © ACEEE

Short

program name Full program name

Program

administrator/implementer State Years

Avangrid

Energize CT

Energize CT Eversource CT CT n/d

5 BayREN Home+ Home+

Bay Area Regional Energy

Network

CA 2020–2021

BED Net Zero

City

Net Zero Energy City Burlington Electric Department VT n/d

7 City of Ashland

Conservation Division

Incentive Programs

City of Ashland, Oregon OR n/d

ComEd Electric

New Homes

Electric Homes New

Construction

Commonwealth Edison IL n/d

Comfort365

City of Boulder, CO

2018–2021

10 DCSEU LIDP

Low Income

Decarbonization Pilot

DC Sustainable Energy Utility DC 2020–2020

11 Efficiency VT

Efficiency Vermont

Electrification Incentives

Efficiency Vermont VT n/d

EFG Hudson

Valley HP*

Hudson Valley Heat Pump

Program

Energy Futures Group NY 2017–2019

EFG MA Solar

Access

Massachusetts Solar Access

Program

Energy Futures Group MA 2017–2019

EFG Zero Energy

Now

Zero Energy Now Energy Futures Group VT 2016–2018

15 EMT HP Rebate

Efficiency Maine Trust Heat

Pump Rebates

Efficiency Maine Trust ME n/d

EWEB Smart

Electrification

Smart Electrification Eugene Water and Energy Board OR n/d

Holy Cross BE

Rebates

Beneficial Electrification Holy Cross Energy CO n/d

MA CEC ASHP

Pilot

Whole-Home Air-Source

Heat Pump Pilot

Massachusetts Clean Energy

Center

MA n/d

MA DOER Home

MVP

Home MVP

Massachusetts Department of

Energy Resources

MA n/d

Mass Save Fuel

Optimization

Mass Save Fuel Optimization

for Residential, Small

Business, and Income

Eligible

Mass Save (National Grid, Cape

Light Compact, Unitil, Eversource)

MA 2019–2021

21 MN ASHP

Minnesota ASHP

Collaborative

Minnesota ASHP Collaborative MN 2020–2021

BUILDING ELECTRIFICATION © ACEEE

Short

program name Full program name

Program

administrator/implementer State Years

MPE Electrify

Everything*

Electrify Everything Mountain Parks Electric, Inc. CO 2018–2021

23 NG RI HVAC HVAC Program National Grid Rhode Island RI n/d

24 NYS Clean Heat

NYS Clean Heat: Statewide

Heat Pump Program

NYS Electric Utilities NY 2020–2021

NYSERDA HP

Rebate

NYSERDA Heat Pump

Rebates and Clean Heat

Challenge

New York State Energy Research

and Development Authority

NY 2017–2019

OPALCO Switch

It Up!

Switch It Up! On-Bill

Program

Orcas Power & Light Co-op WA n/d

27 Palo Alto HPWH

Heat Pump Water Heater

Rebate

City of Palo Alto Utilities CA 2019–2021

28 PG&E/SCP AER Advanced Energy Rebuild

Pacific Gas & Electric, Sonoma

Clean Power, Bay Area Air Quality

Management District

CA 2017–2019

Renewable

Juneau

Juneau Carbon Offset Fund Renewable Juneau AK 2019–2021

SCAQMD

CLEANair

CLEANair Furnace Rebate

Program

South Coast Air Quality

Management District

CA 2020–2021

31 SCE CLEAR

Clean Energy and Resiliency

(CLEAR)

Southern California Edison CA n/d

SCE Residential

Upstream

Plug Load and Appliance

(Residential Upstream

Incentives for Space and

Water Heat Pumps)

Southern California Edison CA n/d

SMUD Advanced

Homes

Advanced Homes

Electrification

Sacramento Municipal Utility

Department

CA 2018–2021

SMUD

Commercial

Sacramento Municipal Utility

Department

CA 2019–2021

SMUD Home

Appliance

Home Appliance

Sacramento Municipal Utility

Department

CA 2018–2021

SMUD Low

Income

Low Income Electrification

Sacramento Municipal Utility

Department

CA 2019–2021

SMUD

Multifamily

Existing Multifamily

Sacramento Municipal Utility

Department

CA 2018–2021

SMUD New

Homes

New Homes Electrification

Single and Multifamily

Sacramento Municipal Utility

Department

CA 2018–2021

BUILDING ELECTRIFICATION © ACEEE

Short

program name Full program name

Program

administrator/implementer State Years

Tri-State Heat

Pump

Heat Pumps

Tri-State Generation and

Transmission

CO 2014–2021

40 Tri-State HPWH Heat Pump Water Heaters

Tri-State Generation and

Transmission

CO 2018–2021

41 TVA C&I

Electrification Rebates for

Commercial and Industrial

Tennessee Valley Authority TN 2017–2020

WVPA Power

Moves

Power Moves

Wabash Valley Power Alliance

(WVPA)

IN 2010–2021

* Two programs were funded all or in part by other programs on this list, namely, EFG Hudson Valley is

funded through competitive grants from NYSERDA and MPE Electrify Everything is partially funded

through rebates provided by Tri-State Generation and Transmission.

SUMMARY OF PROGRAMS AND FINDINGS

The programs identified in table 1 provide a range of incentives among several distinct end

uses, including space heating, water heating, cooking, and others. Below we include several

figures that summarize these programs in terms of commonly targeted end uses (figure 5),

source fuels for conversion (figure 6), target sectors (figure 7), and method of incentive

delivery (figure 8). A detailed breakdown of these characteristics for each individual program

can be found in Appendix A.

TARGETED END USES

Figure 5. Targeted end uses across 42 electrification programs. Note: For space heating, many programs

included more than one equipment type or did not specify the type of equipment included.

BUILDING ELECTRIFICATION © ACEEE

Most programs in this study targeted space-heating electrification. Out of 42 programs, 38

(90%) provided incentives for space heating via heat pumps of various types, and some of

these 38 programs offered specific incentives for certain heat pump technologies and/or

applications. The most common type of heat pump incentive was for ductless/mini-split

systems, with 21 programs offering this type. Nine programs offered incentives for ground-

GSHP systems. Ducted systems received specific incentives in five programs.

Some programs offered scaling incentives based on factors such as equipment efficiency,

ability to perform in cold climates, or customer income level. In these cases, more efficient

equipment and/or cold-climate equipment was typically eligible for a higher incentive. Four

programs specifically incentivized ccASHP through this method. A more detailed breakdown

of measures and rebates can be found in the “Measures and Incentives Breakdown” section,

below.

Water heating was the second-most targeted end use, included in a total of 30 programs

(71%). Many programs provided incentives for both space and water heating with heat

pumps. These two end uses consume the largest share of energy in buildings. On a total Btu

basis, space heating represents 43% of all residential site energy consumption, and water

heating 19% (EIA 2018). This makes these uses the highest priorities for electrification from

both carbon and energy standpoints.

Thirteen programs offered incentives for efficient electric cooking equipment in the form of

induction stovetops. While induction stoves offer multiple advantages over both gas and

electric resistance stoves, program managers noted challenges with overcoming some

customers’ preference for gas stoves and ovens and their unfamiliarity with induction

cooking equipment.

To address this barrier, some program administrators, such as Sonoma

Clean Power, offered equipment loan programs that allowed customers who had never used

induction stoves before to familiarize themselves with the technology.

Only one program, run by the City of Ashland Conservation Division, targeted clothes drying

as an end use for electrification. Dryer conversions were not included in most programs

likely because electric dryers (using electric resistance heating elements) already represent

almost 80% of the existing market for clothes dryers (Statista 2011) and are often less

Induction stoves require specialized cookware (pots and pans) that many customers do not have in their

kitchens. Customers may assume induction cooktops are like electric resistance stoves, which can take a long

time to heat up, and that they provide less precise control of the heating element (Bartholomy et al. 2020).

Induction cookware is more precise and is quicker to heat than electric and cools off rapidly after use, providing a

much safer cooking environment.

BUILDING ELECTRIFICATION © ACEEE

expensive than gas dryers without incentives.

Heat pump clothes dryers are still new to the

market.

Certain programs combined electrification of space and water heating with other clean

energy technologies. These were often “whole-home” programs whose aim was to reduce

overall building energy consumption and GHG emissions. The most common technology

incorporated in these programs was solar power, with eight programs providing incentives

for rooftop installations or off-site community solar subscriptions. Combining solar with

electrification can help make up for the higher electric consumption that results from fuel

switching, reducing customer energy bills in the long run. However, it also contributes to a

higher upfront cost. Some of these programs combined incentives for solar and battery

storage, such as the PG&E/SCP Advanced Energy Rebuild (AER) program, which offered

customers an additional $5,000 (on top of $7,500–12,500 for electric space and water

heating) to install solar and battery storage on newly rebuilt homes that had been damaged

by wildfire. More details on the AER program can be found in the “Program Examples and

Experience” section.

Although transportation electrification is another vital avenue for energy and GHG savings,

electric vehicle service equipment (EVSE) was beyond the scope of this study, except where

both building electrification and EVSE were offered in the same program. Many programs

that offered EV incentives, such as Burlington Electric Department Net Zero City and

Mountain Parks Electric’s Electrify Everything, worked with customers to get their homes as

close to net zero as possible through incentives for EV charging and electric lawn mowers in

addition to air-source heat pumps and HPWH incentives.

Likewise, forklifts are another electrification opportunity that was beyond the initial scope of

this study but were included in two cases where incentives were offered in addition to other

building electrification measures. Two program administrators (Burlington Electric and the

Tennessee Valley Authority) offered incentives for electrification of forklifts used in large

commercial and industrial applications. This equipment offers numerous benefits over

conventional, propane-powered forklifts, including reduced noise and air emissions, both of

which create a safer and healthier environment for forklift operators and other workers.

Electrification of heavy equipment is beyond the scope of building electrification. We include

this information in this report because it presents a novel perspective on utility’s role in

promoting a broad range of end use electrifications. In this example, electric forklifts have a

Heat pump clothes dryers are not widely available in the market and currently have disadvantages compared

with electric resistance, including longer run times and needing more space. However, they can also reduce

energy use by at least 28% compared with standard dryers. www.energystar.gov/products/heat_pump_dryer

BUILDING ELECTRIFICATION © ACEEE

higher upfront cost but a lower overall cost of ownership compared with propane lifts, so

utility rebates may be effective in this sector.

SOURCE FUELS

Electrification requires conversion from fossil fuels to electricity. Some programs had specific

fuel requirements or limitations on which fuels were eligible to receive incentives for their

replacement. Figure 6 shows the targeted source fuels across the 42 programs. Many

programs aim at more than one source fuel. In cases where the source fuel did not matter or

apply, such as in new construction programs, we describe them here as having “no specific

source fuel.”

Figure 6. Source fuels for replacement in electrification programs

Electrification programs covered a variety of source fuels, depending on which ones were

common in the service area, feasible for conversion, and permitted by regulation. Natural

gas, oil, and propane were all frequent targets for replacement. Some programs offered

incentives for replacing multiple source fuels or for electric-to-electric conversions.

Every

program that offered oil conversions covered propane as well. Thirteen programs had no

specific requirements for eligible source fuels. These programs were focused either on new

While programs that offer incentives for conversion of fossil fuels are the focus of this study, six programs

offered electric conversions in addition to fossil fuel replacement incentives. Note that we include the electric-to-

electric programs only when they are offered as part of the fossil fuel replacement programs. The stand-alone

electric-to-electric programs are not included in our study because they are often considered as efficiency

programs.

Natural gas Propane Oil Electric resistance No specific source

fuel

Number of programs

Fuels eligible for fuel switching/conversion to electric

BUILDING ELECTRIFICATION © ACEEE

builds or purely on technology (such as promoting heat pumps via a midstream incentive to

the merchant).

A small number of programs provided incentives for partial load displacements or dual-fuel

systems, particularly in cold climates. For example, promoting partial load mini-split heat

pumps has helped drive adoption of heat pump technologies in regions like Maine, where

the high price of electricity compared with natural gas makes the economics of an all-electric

conversion challenging. Although there are still concerns with continuing to invest in fossil

fuel infrastructure to support dual-fuel systems, dual-fuel heat pumps generally offer

reduced operating costs in regions where the price of electricity is higher than the price of

natural gas, and lower emissions than a purely fossil-based system. Dual-fuel heat pumps

can offer a compromise for customers who are hesitant to adopt an all-electric heat pump

system in colder climates, although cold-climate air-source heat pumps are proven to be

effective in temperatures as low as –13°F (Mitsubishi 2020).

The availability of a fossil fuel backup system during extremely cold weather may

additionally help relieve pressure on the grid during a winter peak (Hopkins, Takahashi, and

Nadel 2020). However, as more jurisdictions face gas capacity constraints and gas peak

demand days become an increasing concern in some regions (e.g., Massachusetts), the

potential value add from offsetting electricity demand is increasingly diminished. It is also

important to note that while dual-fuel systems may help reduce greenhouse gas emissions,

they do not eliminate them. States that are committed to full decarbonization (such as New

York) are first mitigating peak demand via envelope improvements, thus minimizing the size

of the backup heating equipment needed to maintain comfort, rather than investing in full-

load dual-fuel equipment.

TARGET SECTORS

Programs in this study reached a variety of distinct customer sectors. Figure 7 shows the

specific sectors targeted.

BUILDING ELECTRIFICATION © ACEEE

Figure 7. Target sectors for electrification programs in the study. Some programs

target more than one of the listed sectors.

Single-family residences were the most targeted sector, with 32 programs offering

electrification incentives. This is likely because it is relatively easy to work with owner-

occupied units, where the residents have full control over their home energy environments.

Multifamily residences were targeted in 15 programs, the majority of which provided

incentives for both single- and multifamily electrification. Only two programs aimed at

multifamily units exclusively: AEA LIWP and SMUD Multifamily. Ten programs were for the

commercial sector, with six programs specifically targeting large commercial users (those

with more than 100 kW demand).

Multifamily building electrification has unique challenges and barriers that often require

specialized program designs. Because multiunit dwellings are often complex systems and

may involve hundreds of residents, programs serving them, such as the Low Income

Weatherization Program offered by the Association for Energy Affordability, must and work

with property managers to deliver a combination of measures including energy efficiency,

electrification, and distributed energy solutions in order to maximize carbon reductions and

energy savings. We provide further details of opportunities and barriers for multifamily

households in the “Discussion” section below.

Electrification in the industrial sector, while beyond the scope of this study, can achieve

significant GHG reductions and cost savings in many applications (Rightor, Whitlock, and

Elliott 2020). These solutions are often highly specific to the industry in question and require

custom-tailored technologies.

INCENTIVE DELIVERY PATHWAYS

Incentives for electrification were delivered at numerous points in the supply chain, as shown

in figure 8.

>100 KW, 6

Single-family residential Multifamily residential Commercial

Number of programs

BUILDING ELECTRIFICATION © ACEEE

Figure 8. Recipients of electrification incentives in 42 programs

Twenty-six programs offered incentives directly to end users, the most frequent recipients.

Six programs delivered incentives to home builders who construct all-electric new builds or

major renovations. New construction is sometimes considered the low-hanging fruit of

electrification since builders do not have to work around an existing home’s structure and

energy system and can design the house specifically to work with a heat pump–based space

and water heating system (Bartholomy et al. 2020). Some programs offered incentives to

multiple targets; for instance, the DCSEU Low Income Decarbonization Pilot provided

simultaneous incentives to low-income end users and direct-install contractors.

While the largest target sector was end users and the most frequently used delivery

mechanism was rebates, program managers employed numerous strategies and approaches

to electrification. These included providing rebates at the point of sale; bundling measures

for ease of delivery; combining electrification with home energy audits, weatherization, and

solar installation; and providing incentives and education for contractors and upstream

distributors. A wide variety of alternative and complementary implementation mechanisms

went beyond those approaches. We provide a more thorough look at program incentives in

the section below.

MEASURES AND INCENTIVES BREAKDOWN

The specific measures and incentives that program administrators offered customers for

electrification varied from program to program in terms of both value and type. Table 2 lists

the financial incentives provided by the programs included in this study. Some incentives

were not fixed but rather varied according to factors such as the equipment’s efficiency, the

customer’s income level, whether the unit was for full or partial heating load, and other

factors. For incentives with a fixed value rather than a range, we list the “minimum incentive”

metric as n/a (not applicable). For programs that did not provide information on a given

metric, we use n/d (no data).

End users, 27

Contractors, 2

Home builders, 5

Multiple/other, 8

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Table 2. List of measures and incentives by program

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

AEA LIWP

Whole-home audit,

weatherization,

retrofits,

on- or offsite solar

$3,000

$5,000

per MTCO

81 (properties)

AK Heat $mart

Air-source heat

pumps (ductless)

n/a

n/d

per home

n/d

APS Reserve Rewards

Heat pump water

heaters

n/a

$6,000

per unit

200

Avangrid Energize CT

Air-source heat

pumps (ductless)

$300

$500

per ton

n/d

Heat pump water

heaters

n/a

$750

per unit

n/d

Air-source heat

pumps

n/a

$1,000

per ton

n/d

BayREN Home+

Air-source heat

pumps

n/a

$1,000

per system

Heat pump water

heaters

n/a

$1,000

per unit

171

Residential induction

ranges

n/a

$300

per unit

171

Heat pump clothes

dryers

n/a

$300

per unit

BED Net Zero City

Electric lawn mowers

n/a

$100

per unit

n/d

Instant rebate of up to 100% of cost, including installation costs. Part of a pilot study of grid-connected water

heaters.

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

Electric vehicles

$800

$1,200

per unit

n/d

Cold-climate air-

source heat pumps

$2,100

$2,500

per system

n/d

Electric forklifts

$4,000

$6,500

per unit

n/d

Heat pump water

heaters

$300

$600

per unit

n/d

City of Ashland

Air-source heat

pumps (ductless)

$500

$1,200

per system

n/d

Windows

n/a

$8,000

per home

n/d

Solar

n/a

n/d

per home

n/d

Heat pump water

heaters

n/a

$600

per unit

n/d

ComEd Electric New

Homes

Whole home

n/a

$2,000

per home

(new builds)

n/d

Comfort365

Air-source heat

pumps (ductless)

$250

$400

per unit

Ground-source heat

pumps

n/a

$650

per ton

Cold-climate air-

source heat pumps

$250

$400

per home

Heat pump water

heaters

n/a

$250

per unit

n/d

Non-cold-climate

measures (air-source

heat pumps mini-

split, ducted, HPWH,

insulation, and air

sealing)

n/a

$250

various

164

DCSEU LIDP

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

Air-source heat

pumps

$6,750

$22,350

per system

(low income)

Heat pump water

heaters

$1,850

$4,900

per system

(low income)

Weatherization

$1,100

$5,825

per home

(low income)

Residential induction

ranges

n/a

$1,050

per unit (low

income)

Solar

$4,961

$8,750

per system

(low income)

Efficiency VT

Air-source heat

pumps (ductless)

$350

$450

per unit

9,825

Air-source heat

pumps (ducted)

$1,000

$2,000

per system

233

Heat pump water

heaters

$300

$600

per unit

233

Other space heating

n/a

$1,000

per ton

Ground-source heat

pumps

$1,000

$2,100

per ton

n/d

Air-to-water heat

pumps

n/a

$1,000

per ton

n/d

EFG Hudson Valley HP

Air-source heat

pumps (ductless)

n/a

$350

per ton

n/d

EFG MA Solar Access

Air-source heat

pumps (ductless)

n/a

n/d

per home

Solar

n/a

n/d

per home

Covered 100% of the cost of equipment replacement for low-income customers in a multiunit dwelling.

Ductless air-source heat pump systems frequently consist of multiple units, one for each separate heating zone

in the home or indoor space. Because of this, some customers may claim more than one rebate for a multiunit

system if the incentive structure allows it.

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

EFG Zero Energy Now

Air-source heat

pumps (ductless)

n/a

n/d

per home

Heat pump water

heaters

n/a

n/d

per home

Ground-source heat

pumps

n/a

n/d

per home

Solar

n/a

n/d

per home

EMT HP Rebate

Air-source heat

pumps (ductless)

$400

$800

per unit

n/d

Heat pump water

heaters

n/a

$850

per unit

n/d

EWEB Smart

Electrification

Air-source heat

pumps (ductless)

n/a

$1,000

per home

n/d

Air-source hat

pumps (ducted)

n/a

$800

per home

n/d

Heat pump water

heaters

n/a

$800

per home

n/d

Air-source heat

pumps (ductless)

$1,000

$3,800

per home

(low income)

n/d

Holy Cross BE Rebates

Air-source heat

pumps

n/a

$850

per ton

n/d

Heat pump water

heaters

n/a

$1,450

per unit

n/d

Induction cooktops

n/a

$80

per unit

n/d

MA CEC ASHP Pilot

Air-source heat

pumps (ducted)

n/a

$2,500

per home

169

MA DOER Home MVP

Air-source heat

pumps

$2,000

$12,000

per system

n/d

Weatherization

$1,000

$9,000

per home

n/d

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

Ground-source heat

pumps

$6,000

$20,000

per system

n/d

Mass Save Fuel

Optimization

Air-source heat

pumps (ductless)

n/a

$1,250

per ton

n/d

Air-source heat

pumps (ductless)

$1,250

per ton

n/d

Ground-source heat

pumps

n/a

$2,000

per ton

n/d

Heat pump water

heaters

n/a

$600

per unit

n/d

MN ASHP

Air-source heat

pumps

$50

$2,200

per system

n/d

MPE Electrify Everything

Air-source heat

pumps

n/a

$1,000

per ton

n/d

EV charging

n/a

n/d

Insulation

n/a

n/d

Solar

n/a

n/d

Air-source heat

pumps (ductless)

n/a

$7,200

per system

3 (pilot)

NG RI HVAC

Air-source heat

pumps (ductless)

n/a

$1,000

per ton

n/d

Air-source heat

pumps (ducted)

n/a

$1,000

per ton

n/d

NYS Clean Heat

The Minnesota ASHP collaborative does not offer incentives to customers directly. Instead it provides

information and connections to local utility incentives for heat pumps, which range from $50 to $2,200

depending on customer location and equipment type.

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

ccASHP (partial-load

heating)

$500

$800

per ton

n/d

ccASHP (full-load

heating)

$1,000

$2,000

per ton

n/d

Ground-source heat

pumps

$1,500

$2,850

per ton

n/d

NYSERDA HP Rebate

Air-source heat

pumps

$500

$1,000

per unit

n/d

Ground-source heat

pumps

n/a

$1,500

per ton

n/d

OPALCO Switch It Up!

Air-source heat

pumps

n/a

$15,000

per home

(financing)

n/d

Heat pump water

heaters

n/a

$3,500

per home

(financing)

n/d

EV charging

n/a

$2,500

per home

(financing)

n/d

Palo Alto HPWH

Heat pump water

heaters

$1,200

$1,500

per system

PG&E/SCP AER

Whole home

$7,500

$12,500

per home

(new build)

Solar + battery

storage

n/a

$5,000

per home

(new build)

Renewable Juneau

Air-source heat

pumps (ductless)

n/a

$5,000

per system

SCAQMD CLEANair

Costs of electrification upgrades are financed via on-bill payment program over a period of 10 years.

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

Air-source heat

pumps

n/a

$1,500

per system

2,000

SCE CLEAR

Whole home

$7,500

$12,500

per home

(new build)

n/d

Solar + battery

storage

n/a

$5,000

per home

(new build)

n/d

SCE Residential

Upstream

Air-source heat

pumps (ducted)

n/a

$300

per ton

n/d

Air-source heat

pumps (ductless)

$300

$600

per ton

n/d

Heat pump water

heaters

n/a

$1,000

per unit

n/d

SMUD Advanced Homes

Heat pump water

heaters

n/a

$2,500

per system

2,674

Air-source heat

pumps

n/a

$3,000

per system

3,286

SMUD Home Appliance

Residential induction

ranges

n/a

$750

per unit

432

SMUD Low Income

Air-source heat

pumps (ductless)

n/a

$13,000

per system

(low income)

2,600

Heat pump water

heaters

n/a

$3,800

per system

(low income)

500

Residential induction

ranges

n/a

$3,000

per unit

(low income)

500

Tri State Heat Pump

Air-source heat

pumps

$350

$450

per ton

n/d

Ground-source heat

pumps

$250

$500

per ton

1,799

Tri State HPWH

BUILDING ELECTRIFICATION © ACEEE

Administrator and

measures

State

Minimum

incentive

Maximum

incentive

Unit

Number of incentives

issued

Heat pump water

heaters

n/a

$350

per unit

133

TVA C&I

Air-source heat

pumps (ductless)

n/a

$230

per ton

750

Commercial electric

cooking equipment

n/a

varies

n/d

Electric forklifts

n/a

$2,000

per unit

n/d

WVPA Power Moves

Ground-source heat

pumps

n/a

$1,500

per unit

Air-source heat

pumps

$750

$1,500

per system

Heat pump water

heaters

n/a

$400

per unit

The average incentives for measures described above are presented in table 3 below.

Table 3. Range of incentives for electrification measures

Measure Minimum incentive Maximum incentive Median

Total

no.

Air-source heat pumps (all)

per home

$250 $400–2,500 $700

per home (low income)

$1,000 $3,800 $2,400

per system

$50–2,100

$1,000–12,000

$1,500

per system (low income) $6,750 $13,000–22,350 $13,000 2

per ton $300–1,250 $230–2,000 $800 17

per unit $250–500 $400–1,000 $425 4

Air-source heat pumps (ductless)

per home $- $1,000 $1,000 4

per home (low income) $1,000 $3,800 $2,400 1

per system $500 $1,200–7,200 $1,200 3

per ton $300 $230–1,250 $500 9

per unit $250–400 $400–800 $400 3

BUILDING ELECTRIFICATION © ACEEE

Air-source heat pumps (ducted)

per home

$- $2,500 $2,500

per system

$1,000

$800–2,000

$1,000

per ton $- $650 $650 2

Air-source heat pumps (cold

climate—ducted

and ductless)

per home $250 $400 $325 1

per system $2,100 $2,500 $2,300 1

per ton $500–1,000 $800–2,000 $900 2

Ground-source heat pumps

per system

$6,000 $20,000 $13,000 1

per ton

$250–1,500

$500–2,850

$1,500

per unit $- $1,500 $1,500 1

Heat pump water heaters

per home

$800

per system $1,200 $1,500–2,500 $1,500 2

per system (low income) $1,850 $3,800–4,900 $3,800 2

per unit $300 $250–6,000 $600 13

Induction cooktops

per unit $- $300–750 $525 2

per unit (low income) $- $1,050–3,000 $2,025 2

Whole home

per home $7,500 $2,000–12,500 $7,500 3

per MTCO

e $3,000 $5,000 $4,000 1

As the data in table 3 demonstrate, certain technologies tended to be associated with

specific incentive types. Air-source and ground-source heat pumps frequently received

Programs that provided incentives on a whole-home basis, including heat pump water heaters, induction

cooktops, and other measures, are listed under “whole home.”

BUILDING ELECTRIFICATION © ACEEE

incentives per ton of heating/cooling capacity, whereas heat pump water heaters and

induction stoves were most often incentivized on a per-unit basis.

Programs that subsidized the replacement of an entire system had the highest incentives.

For example, MA DOER Home MVP provided income-qualified participants up to $20,000 for

installation of a GSHP system in a one- to four-unit residential building. Some whole-home

programs offered different types of incentives depending on various home types and

existing HVAC systems. One program, the AEA LIWP, provided whole-home incentives based

on the total GHG impacts of electrification measures, weatherization and efficiency

upgrades, and solar installation. Because this state-run program was funded through

California’s cap-and-trade market, program administrators could ensure that investments

were correlated directly with climate impacts (Hill, Dirr, and Harrison 2020).

INTEGRATION WITH OTHER CLEAN ENERGY TECHNOLOGIES

Certain programs combined electrification with other demand-side management and clean

energy resources. We sought to identify the programs that integrated weatherization,

demand response, distributed solar, battery storage, and EV charging in addition to building

electrification.

ENVELOPE EFFICIENCY AND WEATHERIZATION

Figure 9 shows the extent to which electrification programs encouraged or required

weatherization in conjunction with other incentives.

Figure 9. Program approaches to integrating weatherization with electrification (N = 34)

Many program administrators encouraged or required customers to implement

weatherization measures, such as insulation and air sealing, as a component of building

electrification efforts. A tighter thermal envelope means less energy is needed to maintain

the desired indoor temperature, resulting in lower customer energy bills. A reduced heating

Weatherization

required

24%

Weatherization

encouraged

50%

weatherization

component

26%

BUILDING ELECTRIFICATION © ACEEE

load also means property owners can down-size the necessary HVAC equipment to meet a

full heating load, leading to lower purchase and installation costs as well as reduced grid

system demand. Managing peak demand is especially critical during the winter where space

heating is a large contributor to both gas and electric demand.

A quarter of the programs required participants to undergo some form of weatherization or

efficiency upgrade to receive the incentive. In many cases, these were whole-home programs

that combined electrification incentives with energy audits and more conventional efficiency

measures such as air sealing.

Half of the programs did not directly require customers to weatherize their homes but

strongly encouraged it to maximize savings. They often did this by connecting customers to

resources such as funding for upgrades or referrals to home energy professionals, or by

collaborating with a preexisting program. For example, NYSERDA developed the Comfort

Home program to complement the NYS Clean Heat program by providing incentives to

make homes "heat pump ready" via envelope improvement packages. Some programs

targeted customers with high energy use or load factors. These included the Burlington

Electric Department program, which offered weatherization incentives to customers using

more than 50 kBtu per square foot of heated space.

The remaining quarter of the programs had no weatherization component. Some program

managers noted that they would have liked to include weatherization if schedules and

budgets had permitted, but they had to focus on meeting their targeted number of

installations. A more detailed breakdown of how each program integrated weatherization

measures in its offerings can be found in table A4 in Appendix A.

DEMAND FLEXIBILITY

Five programs included a demand response component among their measures. This

incentivized in-home electric devices such as connected water heaters and smart

thermostats to adjust equipment power consumption at peak hours of the day or months of

the year to mitigate stress on the grid. By shifting demand away from peak times, grid

operators can reduce both the cost of electricity generation and marginal carbon emissions

because peaking plants are mostly fossil fuel based and expensive to operate. As discussed

in the “Barriers and Opportunities” section later in this report, large-scale electrification may

lead to an increase in base load and peak electricity demand. Although this impact has not

yet been seen due to the relatively small scale of electrification efforts to date, certain

program administrators are combining grid interactivity measures with electrification

strategies to prepare for future grid impacts.

Water heaters, particularly those with large tanks, can preheat water during times when

demand for electricity is low. This makes them uniquely well suited for demand response

(Delforge and Vukovich 2018). When paired with a special electricity rate or other financial

incentive, this can produce cost savings for the customer. However, many of the programs

that included demand response did so on an opt-in basis. As electrification becomes more

BUILDING ELECTRIFICATION © ACEEE

widespread and its impacts on the power system more pronounced, we expect to see more

programs integrating demand response as an optional or mandatory component.

SOLAR, BATTERY STORAGE, EVS

Distributed generation and storage resources such as rooftop and community solar provide

additional benefits, carbon reductions, and resilience when paired with electrification efforts.

Solar was the most common clean energy solution that was combined with electrification,

with eight programs providing incentives for solar installations. These were largely whole-

home or new-build programs such as the AEA Low Income Weatherization Program, DCSEU

Low Income Decarbonization Pilot, and PG&E/SCP Advanced Energy Rebuild. For the

income-based programs, solar was included as a part of a holistic building conversion

package designed to minimize participant energy costs. In the case of Advanced Energy

Rebuild and others, participants could receive a higher incentive if they installed solar and/or

battery storage along with electrification measures.

Battery storage and electric vehicle charging were less commonly incentivized as part of a

package with building electrification measures. Many utilities consider transportation

electrification separately from building electrification. The two programs that did include EV

measures were whole-home programs that aimed to reduce GHG emissions on a household

basis. Two programs, both located in California, provided incentives for battery storage. One

of these, PG&E/SCP Advanced Energy Rebuild, combined building electrification, battery

storage, and solar to maximize reliability while mitigating grid impacts. Additional programs

and incentives for these other measures can be found in some regions but were not fully

captured in this survey because they do not include a building electrification or fuel-

switching component.

BUDGETS, PARTICIPATION, AND GHG IMPACTS

Electrification programs varied widely in terms of sources of funding, budget, number of

participants, and impacts on greenhouse gas emissions and customer energy use. We

collected data on program budgets, including incentives and administrative costs. Table 4

lists programs by total budget in descending order. These include budgets for ongoing

programs as well as programs that are concluded. Budget data were not available for 10

programs, including some that had only recently started at the time of our data collection. A

full list of annual and total spending by program, including incentive and administrative

costs, may be found in table A4 in Appendix A.

Table 4. Program budgets

Program

Total budget to date

(incentive + administration)

Annual budget

(incentive + administration, most recent

year)

AEA LIWP $63,900,000 $17,900,000

NYS Clean Heat $36,600,000 $36,600,000

BUILDING ELECTRIFICATION © ACEEE

Program

Total budget to date

(incentive + administration)

Annual budget

(incentive + administration, most recent

year)

NYSERDA HP Rebate $22,800,000 $22,800,000

SMUD Advanced Homes $20,400,000 $7,700,000

SCE Residential Upstream $17,000,000 $17,000,000

Avangrid Energize CT $16,523,241 $10,676,893

Mass Save Fuel

Optimization

$14,580,000 $9,705,000

BayREN Home+ $12,500,000 $8,700,000

EMT HP Rebate $12,118,849 $12,118,849

SMUD Low Income $10,400,000 $3,400,000

Efficiency VT

$7,700,000

$4,100,000

SMUD New Homes $6,200,000 $3,300,000

SMUD Commercial $3,300,000 $2,700,000

MA DOER Home MVP

$2,666,667

$1,333,333

SMUD Multifamily $2,600,000 $1,200,000

Tri State Heat Pump $2,452,417 $790,000

SCE CLEAR $2,025,000 $1,600,000

EFG MA Solar Access $1,492,067 $1,492,067

EWEB Smart Electrification $1,000,000 $500,000

BED Net Zero City $905,374 $277,469

EFG Zero Energy Now $830,516 $164,641

SMUD Home Appliance $800,000 $400,000

Palo Alto HPWH $553,500 $300,000

MA CEC ASHP Pilot

$500,000

EFG Hudson Valley HP⁺ $396,900⁺ $396,900⁺

DCSEU LIDP $346,000 $346,000

AK Heat $mart $300,000 $140,000

WVPA Power Moves $205,838 $205,838

NG RI HVAC $190,000 $190,000

Comfort365 $175,000 $50,000

Renewable Juneau

$167,500

$85,500

Tri State HPWH $46,520 $15,400

BUILDING ELECTRIFICATION © ACEEE

Program

Total budget to date

(incentive + administration)

Annual budget

(incentive + administration, most recent

year)

APS Reserve Rewards n/d n/d

City of Ashland n/d n/d

ComEd Electric New

Homes

n/d n/d

Holy Cross BE Rebates n/d n/d

MN ASHP n/d n/d

MPE Electrify Everything n/d n/d

OPALCO Switch It Up! n/d n/d

PG&E/SCP AER n/d n/d

SCAQMD CLEANair

n/d

TVA C&I n/d n/d

Total*

$261,278,489

$166,290,990

Average*

$8,177,356

$5,208,997

* Among 32 programs reporting budget data.

⁺EFG Hudson Valley HP budget is excluded from the total due to being funded through grants provided

via the NYSERDA HP Rebate program.

The 32 programs with budget data available varied widely from small-scale pilots to far-

reaching initiatives; hence, total and annual spending varied widely as well. The program

with the highest overall budget to date was also the largest low-income program: the Low

Income Weatherization Program, a statewide initiative in California run by the Association

for Energy Affordability. The AEA LIWP has spent nearly $64 million on comprehensive

building retrofit and decarbonization projects since its beginning in fiscal year 2014–15 and

has provided services to 81 large multifamily properties encompassing more than 8,200

households. The average annual budget for the 32 programs was $5.2 million, and the

average total expenditure to date was just shy of $8.2 million.

The program with the largest annual budget was the NYS Clean Heat program, which serves

all of New York State with an annual budget of more than $36 million through 2025. In

addition to the rebate program, NYSERDA is investing $230 million through 2025 to support

a comprehensive market engagement portfolio to accelerate adoption of heat pumps and

clean heat technologies. The NYS Clean Heat program is the continuation of the NYSERDA

Heat Pump Rebate Program, which ended in 2020. The new program provides rebates for

heat pumps and for contractor education and certification. Another significant program

administrator is the Sacramento Municipal Utility District, which runs multiple programs with

a combined annual budget of more than $18 million. These various programs serve different

BUILDING ELECTRIFICATION © ACEEE

sectors in the greater Sacramento metropolitan area, including residential, low-income, new

construction, and multifamily. More details on the programs run by these administrators can

be found in the “Program Descriptions and Experience” section below.

Smaller-scale programs include pilots and demonstration projects, such as the Low Income

Decarbonization Pilot from DCSEU in Washington, D.C., and market development efforts like

AK Heat $mart and Renewable Juneau in Alaska.

Total annual spending from the 32 programs that provided these data topped $166 million,

or approximately $5 million per program. This average is consistent with the amount

reported in Nadel (2020), which included 23 programs totaling $108 million annually with an

average of $4.7 million per program. We anticipate total spending on building electrification

will rise in the future due to policy mandates and GHG reduction targets. Multiple large-scale

building electrification initiatives are currently in the planning stages, such as California’s

TECH and BUILD programs and Xcel Colorado’s forthcoming building electrification strategy.

Spending on building electrification is considerably smaller than the average spending for

utility energy efficiency programs in general, which in 2019 was $64 million per year per

state (Berg et al. 2020). Spending on energy efficiency was slightly higher for investor-owned

utilities, with an average of $77.5 million per year for the 52 largest U.S. utilities in 2019 (Relf

et al. 2020). On the basis of these data, we can see that electrification program annual

budgets are relatively small compared to overall state and utility spending on demand-side

management.

SOURCES OF FUNDING

We collected data on how programs were funded and looked at the breakdown of budgets

based on major sources of support. Figure 10 summarizes the most common methods of

funding building electrification programs in this study.

Figure 10. Sources of funding for electrification programs. Carbon mitigation fees include cap-and-trade

funds and air emissions compliance fees by manufacturers. “Other” funding sources include local taxes,

donations, and partner utility programs. Some programs utilized multiple funding sources.

BUILDING ELECTRIFICATION © ACEEE

The most common source of funds was utility ratepayers, who provided primary funding for

33 of the 42 programs (78%). Federal and state grants provided funding for six programs

(14%), largely those focused on demonstration projects, R&D, or market development.

Seven programs were funded all or in part by energy market–based mechanisms, such as

capacity market revenues or cap-and-trade allocations from regional carbon markets. These

mechanisms are in some ways ideal for electrification programs because displacing fossil

fuels correlates directly with a reduction in carbon emissions. Regional cap-and-trade funds

are currently limited in their distribution, and some states have placed restrictions on their

ability to generate revenue. If more regions were to join carbon markets such as the

Regional Greenhouse Gas Initiative (RGGI), it could lead to greater opportunities for funding

electrification in the future. However, these market-based funding sources can be

inconsistent where policymakers make allocation decisions, and program administrators that

rely on these funds could be forced to seek additional funding, such as grants, to cover any

budget gaps (S. Hill, director of low-income programs, Association for Energy Affordability,

pers. comm., July 16, 2021).

Figure 11 displays the breakdown of budgets by funding source. Nearly all large-scale

programs we could obtain budget data for were funded all or in part by utility ratepayers.

Figure 11. Program budgets by sources of funding, sorted by primary funding source(s) indicated by survey

respondents. (Data labels indicate the number of programs followed by the total amount of funds.)

In general, programs administered by utilities were funded entirely through standard cost-

recovery mechanisms. Programs run by a non-investor-owned program administrator such

as an energy efficiency utility (e.g., Efficiency Vermont, DCSEU) or a municipal government or

utility (e.g., City of Boulder, CO) were more likely to utilize additional funding sources like

taxes, grants, and carbon mitigation fees. Some programs used multiple funding sources; for

these, we did not have data on the relative contribution of each.

2, $63,900,000

2, $696,900

2, $175,000

30,

$137,994,557

2, $19,818,849

3, $38,922,583

1, $167,500

$- $50 $100 $150

Carbon mitigation fees

Grants

Taxes

Utility ratepayers

Utility ratepayers & carbon mitigation fees

Utility ratepayers & grants

Carbon mitigation fees & grants

Spending to date (Millions)

Primary sources of funding

BUILDING ELECTRIFICATION © ACEEE

INCENTIVE AND ADMINISTRATIVE COSTS

Where it was available, we collected data on program administration costs (operations,

staffing, customer support, etc.) and incentive costs (money paid to participants). Figure 12

shows the proportion of total program budgets that went toward administrative costs on

both an annual and total basis.

Figure 12. Administrative costs as a percentage of total program budget; among the 32 programs that

reported budget data, only programs reporting separate administrative/incentive cost data are included

Although we were missing data for administrative costs, incentive costs, or both for more

than half of the programs in this data set, those that did report both costs indicated a wide

variation depending on program model and delivery strategy. In general, average annual

administrative costs relative to total program budgets were higher in the first year of

program administration and lower once programs were established, averaging 49% in the

first year as opposed to 34% overall. This may be due to having a high number of pilots and

early-stage programs in this data set, where new programs have higher upfront

administrative costs (staffing, etc.) and lower annual operating costs once under way.

Some program models have higher operating expenses than others. Whole-home, income-

qualified, and multifamily programs tended to have higher administrative costs, on average,

than one-time rebate programs. These programs generally required additional technical and

administrative support and staff to provide ongoing customer service. Additional support

from staff and contractors was also important to manage experiences of customers

participating in a more comprehensive retrofit program (P. Boyd, senior technology

strategist, DCSEU, pers. comm., July 9, 2021).

4 4

No data <25% 25–50% 51–75% >75%

Number of Programs

Administrative Costs as a Percentage of Program Budget

Annual Total

BUILDING ELECTRIFICATION © ACEEE

PARTICIPATION, ENERGY SAVINGS, GHG IMPACTS

As with program budgets, we found that participation, energy savings, and greenhouse gas

impacts varied widely among the 42 programs. Many of the programs did not have energy

and climate impact data available. Some were still awaiting evaluation results; others had

been launched too recently to gauge impacts. We were able to obtain participation data for

19 of the 42 programs. Data we collected on total and annual customers and annual

spending per customer are listed in table 5 in descending order of total participants. Only

programs that had participation data are included; for a list of which programs reported this

data and which did not, see table A5 in Appendix A.

Table 5. Participation and average spending per customer

Program

Participation to

date (customer

households)

Annual participation

(most recent 12

months)

Annual

spending/customer

NYSERDA HP Rebate

21,500

6,520

$3,497

AEA LIWP 8,268 n/d $-

SCAQMD CLEANair 2,000 2,000 $-

Tri State Heat Pump 1,799 649 $1,217

AK Heat $mart 600 200 $700

BED Net Zero City 390 390 $711

NG RI HVAC 378 378 $503

BayREN Home+

329

187

$46,524

EWEB Smart Electrification 268 268 $1,866

MA DOER Home MVP 250 250 $5,333

PG&E/SCP AER 207 105 $-

Comfort365 180 39 $1,282

Tri State HPWH 133 44 $350

Palo Alto HPWH 69 24 $12,500

EFG MA Solar Access

n/d

EFG Zero Energy Now 45 8 $20,580

Renewable Juneau 21 6 $14,250

EFG Hudson Valley HP

n/d

DCSEU LIDP 10 10 $34,600

Total participation and

average spending per

customer

36,516

11,078

$6,198

(avg.)

BUILDING ELECTRIFICATION © ACEEE

Of the programs that reported participation, the level of spending per participant varied

dramatically, from only the cost of the rebate itself (with very little overhead) to expansive

programs and demonstration projects that provided comprehensive home assessments,

weatherization, and retrofits, such as the EFG Zero Energy Now and DCSEU LIDP whole-

home retrofit programs. Some programs have higher administrative costs and/or are testing

innovative technologies, such as BayREN Home+, which included weatherization alongside

electrification and focused on reaching difficult to serve homeowners and renters who were

left out of other program delivery methods and creating a scalable program targeting

residents, homeowners, contractors, and other market barriers. Low-income programs also

may have higher costs due to the multiple barriers that exist for this customer class, which

we explore further in the “Discussion” section. Spending per customer is here to provide

context only and should not be used as an indicator of which programs and technologies

were cost effective.

Table 6 lists total and annual energy savings and estimated greenhouse gas impacts for the

programs that provided energy saving information. We normalized all energy savings to

MMBtu (million British thermal units) to compare savings across different fuel types.

Greenhouse gas impacts are measured in TCO

e (metric tons of carbon dioxide equivalent).

Most GHG emission reduction, except NYS Clean Heat and EFG MA Solar Access, was

calculated by the authors using an average GHG emissions equivalence factor of 0.0053

TCO

e/therm (0.053 TCO

e/MMBtu) published by the EPA (EPA 2022). Just 9 of the 42

programs reported energy savings, an indication that energy savings are not yet universally

recorded across programs of this type, or that many programs are still in an early stage and

have yet to evaluate or publicize this data.

Table 6. Energy savings and GHG impacts from electrification programs

Program

Total energy

savings (MMBtu)

Annual energy

savings (MMBtu)

Total GHG emissions

reduction (TCO

Annual GHG emissions

reduction (TCO

NYS Clean Heat 1,400,000 66,300 72,300* 2,600*

AEA LIWP 58,914 6,520 3,122 346

Tri State Heat Pump 16,161 n/d 857 n/d

Comfort365 2,852 2,000 151 106

BayREN Home+ 2,432 649 129 34

EFG Zero Energy Now 1,210 200 64 11

Palo Alto HPWH

973

390

Renewable Juneau 727 378 39 20

Tri State HPWH 469 187 25 10

PG&E/SCP AER n/d 268 n/d 14

EFG MA Solar Access n/d n/d 1,192 498

BUILDING ELECTRIFICATION © ACEEE

Total savings

1,483,738

76,892

77,931

3,660

* Source: www.nyserda.ny.gov/Researchers-and-Policymakers/Clean-Energy-Dashboard/View-the-Dashboard

Even with only a fraction of programs reporting data on energy savings and GHG impacts,

electrification programs are resulting in significant savings in terms of both energy and air

emissions. Every 1,000 TCO

e is equivalent to the emissions produced by 217 passenger

vehicles or 120 homes’ energy use for one year. These values are bound to increase over

time as efficient decarbonization locks in savings for many years, and the estimated values

are likely far lower than the total impact of electrification from the programs in this study

that did not report these data. The lack of information highlights the infancy of programs

and supports the need for continuous program evaluations with consistent methodologies.

These improvements will enable program administrators to utilize evaluation results and

publicize impacts that can then be used to advocate for more adoption of efficient building

electrification programs.

Program Examples and Experience

In this section, we offer detailed descriptions of four electrification programs that use

different strategies to reach various customer sectors in markets across the country. We

chose these programs in particular because of their unique delivery models, strategies for

overcoming barriers for hard-to-reach populations or use of specific technologies to achieve

desired outcomes. The information in this section comes from the data we collected on the

programs as well as detailed interviews we conducted with program administrators. For each

program, we describe key measures, implementation strategies, obstacles to

implementation, and lessons learned in the process. The four programs we selected are

based in Washington, D.C.; New York; Tennessee; and California. They include a low-income

retrofit program from the DC Sustainable Energy Utility, a midstream contractor education

and incentive program from NYSERDA, and a new-build electrification program from Pacific

Gas & Electric and Sonoma Clean Power. Our fourth program administrator example actually

comprises six electrification programs from the Sacramento Municipal Electric Department

for the residential, commercial, and low-income sectors.

DC SUSTAINABLE ENERGY UTILITY: LOW-INCOME DECARBONIZATION PILOT

This pilot program, which ACEEE highlighted in its beginning stages in a 2020 space-heating

brief (Nadel 2020), concluded its initial run with 10 total units receiving partial or full

conversion to all-electric heating, hot water, and cooking, with distributed solar on the

single-family units and a community solar subscription for the four-unit multifamily complex.

These whole-home conversions were provided at no cost to income-qualified participants.

The projects were managed by the DCSEU, and while owners were consulted on decisions,

the DCSEU handled most of the work with contractors. Program managers noted high

satisfaction rates among participants, with 9 out of 10 reporting entirely positive outcomes

in surveys after the pilot concluded. Beyond energy savings, customers responding to these

surveys indicated that they experienced improved air quality and greater comfort in their

BUILDING ELECTRIFICATION © ACEEE

homes because of the electrification and weatherization measures. The program managers

cited clear communication from the contractor as key to ensuring that participants were well

informed and satisfied with the process.

Program administrators encountered some complexities during program administration. The

COVID-19 pandemic created multiple unexpected challenges and required the planned

participant group of 20+ households to be reduced by more than half. Other issues included

the expense and complexity of wiring and panel upgrades. The cost to upgrade to a 200-

amp panel is approximately $2,750 in D.C., and wiring can increase the price even higher if

no dedicated circuit exists for a new all-electric appliance. Additionally, the relatively short

time frame for the project placed stress on the contractors, permitting process, unit delivery,

and other factors. Most projects were completed in less than 45 days, whereas a typical full-

unit conversion will often take between four and six months (P. Boyd, senior technology

strategist, DCSEU, pers. comm., July 9, 2021). Last, administrators learned the importance of

clearly communicating program goals and outcomes upfront so that clients know what to

expect. At the start, it was unclear to certain participants that this was an energy-oriented

program rather than a whole-home renovation. Once program administrators explained,

customers were able to proceed smoothly with the process.

With the success of the pilot, the DCSEU is moving forward with more building

decarbonization incentives in 2022. One of these is an HVAC Replacement Program that

provides for the installation of high-efficiency electric heat pumps, high-efficiency electric

water heaters, and advanced thermostats in single-family homes owned or rented by low-

and moderate-income District residents. The other is an Affordable Housing Retrofit

Accelerator, a comprehensive energy retrofit program that provides technical and financial

assistance to affordable multifamily building owners who are required to comply with the

District’s Building Energy Performance Standards.

NYSERDA HEAT PUMP INCENTIVE: AIR-SOURCE HEAT PUMP AND GSHP

PROGRAMS

In service of meeting the state’s ambitious carbon reduction policy goals, NYSERDA from

2017 until December of 2019 ran two separate but parallel programs to provide incentives

for cold-climate air-source heat pumps and ground-source heat pumps. In both programs,

the incentives were paid to qualified participating contractors. Air-source heat pump

contractors had the option to keep the entire incentive amount or pass a portion on to the

customer/end user. GSHP contractors were required to pass the entire incentive on to the

customer/end user. The air-source heat pump program served only the residential and

multifamily sectors, while the ground-source heat pump program was open to any

residential, commercial, or industrial application.

Program administrators selected a contractor-based delivery mechanism because it allowed

them greater control over and insight into the installation process. Participating contractors

were required to undergo training and agree to certain terms and conditions, including

periodic inspections of completed installations to guarantee quality. This training and

BUILDING ELECTRIFICATION © ACEEE

inspection process allowed administrators to promote understanding of heat pump

technologies among the contractor workforce in the area. Over the course of the program’s

run, NYSERDA reported increasing participation and a doubling of installations every year.

The incentive program run by NYSERDA sunsetted in March 2020, transitioning over to a

similar delivery mechanism run by the New York State Utilities under the umbrella “NYS

Clean Heat.” Increasing contractor capacity, educating and driving consumer interest, setting

state policy targets, and identifying supply chain opportunities, in particular supporting

development of new technologies, improving distribution and stocking for heat pumps, are

all aspects of the market development groundwork for growing adoption of heat pump

technologies and retrofits.

Some contractors and customers are installing heat pump technologies while leaving in

place the existing fossil fuel system to use as a backup. While this approach is eligible for

incentives, the NYS Clean Heat program encourages sizing heat pumps to meet

a building’s full heating load. To this end, program administrators at NYS Clean Heat

offer specific, higher incentives for installing integrated controls aimed at prioritizing and

optimizing use of the heat pump system, or for decommissioning the existing fossil fuel

heating system.

Over time, by increasing adoption and growing contractor capacity and sale of heat

pump equipment relative to fossil fuel heating systems, program administrators expect

upfront costs to come down, particularly as the price of natural gas increases relative to

electricity in the region. Ensuring that air-source heat pumps will function cost effectively,

especially in cold climate zones will help to fully decommission legacy fossil fuel systems at

the end of their useful life.

PACIFIC GAS & ELECTRIC, SONOMA CLEAN POWER: ADVANCED ENERGY

REBUILD

Following the wildfires that destroyed thousands of homes in Sonoma County, California, in

2017, Sonoma Clean Power (SCP), Pacific Gas & Electric (PG&E), and the Bay Area Air Quality

Management District (BAAQMD) collaborated to create the Advanced Energy Rebuild

program (Opinion Dynamics 2019). Its purpose was to incentivize homeowners to adopt

energy-efficient, low-carbon technologies and building practices in accordance with above-

code standards when reconstructing homes that were damaged or destroyed by fire. The

program provided incentives of up to $7,500 for partial electrification with a dual-fuel

backup and up to $12,500 for all-electric homes. An additional $5,000 incentive was available

for adding solar panels or battery storage to either type of project. Due to regulatory

restrictions, PG&E was unable to directly fund electrification measures, so Sonoma Clean

Power and BAAQMD provided the funding for homes to convert to all-electric. Out of the 66

customers who participated, 22 rebuilt homes to be all-electric and the remainder chose

dual-fuel backup.

BUILDING ELECTRIFICATION © ACEEE

Using the results from this program as a case study in promoting zero net energy and

decarbonization efforts, managers identified a variety of best practices to be used in future

programs of this type. A crucial element of this program’s success was its use of existing

program infrastructure and established relationships with customers via social media and

other messaging pathways. This helped establish legitimacy early on and led to streamlined

marketing strategies. Another aspect of success was the program’s use of multiple funding

streams from the three different program implementers, which enabled funding of various

specific measures while presenting a single, unified customer-facing program. Additionally,

the program enlisted local advocates (termed “block captains”) in specific neighborhoods to

act as champions for energy efficiency and decarbonization among their peers, expanding

communication, understanding, and enrollment in the program.

An obstacle that program managers encountered was consumers’ and contractors’ lack of

knowledge and comfort around all-electric technologies, particularly induction stoves

(Opinion Dynamics 2019). To overcome this, SCP established an induction cooktop lending

program that offered customers a 30-day free trial of the equipment to build familiarity and

garner feedback at the end of the trial period. Additionally, because this was a program

focused primarily on rebuilding homes affected by wildfire, managers noted customer

priorities were more often focused on their immediate needs of comfort and safety, and less

on carbon impacts or long-term energy costs.

SACRAMENTO MUNICIPAL UTILITY DEPARTMENT: ELECTRIFICATION PROGRAMS

SMUD, a municipally owned, not-for-profit utility in Sacramento, California, has one of the

most aggressive carbon reduction targets in the country, aiming to reach net-zero emissions

by 2040, five years ahead of California’s statewide goal (SMUD 2021). Building

decarbonization is a critical aspect of meeting this goal, with the utility aiming for 80% of

buildings in its service area to be all-electric by 2040 (Wang and Menonna 2020). SMUD

aims to achieve this cost effectively and equitably by employing smart technologies and

focusing on including under-resourced communities and hard-to-reach sectors. The utility

currently offers six pathways for building electrification incentives. We describe each of these

programs below.

Advanced Homes—SMUD offers rebates for electrification and energy efficiency upgrades

in residential single- and multifamily homes. Using a whole-house approach, a certified

contractor will inspect the home and recommend improvements, rebate packages, and

financing options. In addition to providing incentives for efficient HVAC and HPWH, the

utility offers incentive packages for air sealing and insulation as well as funding for prewiring

homes to be “electrification-ready.”

Commercial—SMUD offers incentives for small and large commercial building

electrification. These include rebates for energy-reduction upgrades on HVAC systems, and a

custom retrofit Go Electric package to incentivize gas-to-electric conversions at a rate of

$0.30/kWh-equivalent site energy reduction, with payments of up to 50% of project costs,

capped at $100,000.

BUILDING ELECTRIFICATION © ACEEE

Home Appliance—SMUD offers end-user rebates for induction cooktops, providing up to

$750 for gas-to-electric replacements. Applicants are required to submit “before” and “after”

photos demonstrating that the conversion has taken place in order to qualify for the rebate.

Low-Income Electrification—To ensure that low- and moderate-income customers are not

left behind in the energy transition, SMUD embedded electrification incentives in its existing

direct-install energy efficiency program. All customers enrolled in SMUD’s energy assistance

program are qualified for in-home energy audits and weatherization services. Electrification

measures are combined with this service at no cost to the customer. Since adding this

component, SMUD has conducted fuel switching in more than 80% of the homes receiving

incentives and services through this program (Gerdes 2019). These conversions may

additionally require upgrading 100-amp electrical service panels to a 200-amp unit. Full

electrification project costs for low-income customers can range from $10,000 to $15,000,

depending on the extent of upgrades required.

Existing Multifamily—SMUD’s Go Electric incentives for existing multifamily properties with

five or more units are designed to promote switching to electric space-heating, water-

heating, and cooking appliances. This program also offers incentives for wiring and electrical

panel upgrades, EV charging, and energy efficiency measures. Property owners can receive a

per-appliance incentive and an additional 25% incentive for apartment complexes where a

majority of tenants are income-qualified. Project managers work with property owners to

deliver incentives but also engage directly with building tenants to provide education and

guidance through the upgrade process.

New Homes Electrification—This program targets home builders with incentives to

construct all-electric and energy-efficient single-family and multifamily residential houses.

SMUD provides a per-home incentive of $4,000 per single-family home and $1,250 per

multifamily home, with an additional bonus for including induction cooking appliances. To

qualify for incentives, builders must construct homes with all-electric appliances and

mechanical systems, with no gas service or infrastructure. The program also includes a

demand response component in the form of an optional add-on incentive for connected

heat pump water heaters.

BUILDING ELECTRIFICATION © ACEEE

Discussion

BARRIERS AND OPPORTUNITIES FOR BUILDING

ELECTRIFICATION

In this section, we discuss the barriers that exist for multiple actors in the building

electrification supply chain, including homeowners, contractors, manufacturers, low-income

residents, and policymakers. For each actor, we identify key barriers based on our survey,

interviews with program administrators and subject matter experts, and a review of existing

literature. We then discuss various strategies that program implementers in this study have

successfully employed to address these barriers. Table 7 gives a summary of key issues by

actor, along with strategies to address these barriers and accelerate electrification. Each of

these issues and opportunities are discussed in greater detail below.

Table 7. Barriers and opportunities for electrification

Key barriers by actor

Pathways to expand electrification

Homeowners and building managers

• Higher upfront costs relative to fossil fuel

equipment

• High operating costs in areas with steep

electricity rates

• Lack of knowledge about heat pump

technologies

• No motivation to replace equipment

before the end of its useful life

• Program administrators can offer point-

of-sale incentives to contractors and

homeowners to address the cost

differential

• Lenders, utilities, and states can provide

access to financing for home energy

upgrades

• Federal, state, and local governments

and utilities can create customer

education campaigns

• Contractors and dealers can encourage

replacement of equipment that is

nearing the end of its useful life and

likely to fail

Low- to moderate-income (LMI) customers and

communities

• Low-income homeowners may not pay

income tax, which prevents them from

accessing tax credits.

• Low-income homeowners may lack the

upfront capital needed to purchase new

equipment and therefore will not benefit

from rebates.

• Where state and federal programs offer

tax credits for electrification, they should

provide alternate methods for

customers who lack the tax equity to

access these incentives

• Program administrators can incorporate

electrification incentives into existing

LMI programs to streamline delivery

BUILDING ELECTRIFICATION © ACEEE

Key barriers by actor

Pathways to expand electrification

•

Many LMI customers are renters, who

typically do not control the infrastructure

serving their homes (gas versus electric).

• Energy burdens must be monitored and

managed given that operational costs for

heat pumps are higher than gas prices in

many regions.

•

Program implementers must develop

electrification strategies specific to the

multifamily housing sector

Contractors

• Making a like-for-like fossil fuel

replacement is easier than introducing

and installing a new type of system,

especially for contractors unfamiliar with

heat pump technology.

• Limited capacity and availability of

qualified installers

• Narrow dissemination of specialized

knowledge, such as how to set up

dedicated controls

• Lack of a standard set of proficiencies for

heat pump installers and technicians

• State and federal governments and

industry organizations can establish

certification pathways to create

standardized knowledge and skills for

heat pumps and other electrification

technology installation and

maintenance

• Using established certification pathways,

educate and train heat pump installers

so that all have a standard set of

proficiencies.

• Develop peer networks for information

sharing among contractors

• Offer contractor incentives and

partnerships with utility programs to

encourage heat pump sales and

deployment

Manufacturers and distributors

• Shortage of heat pumps in distribution

networks and supply depots

• Higher cost to manufacture heat pumps

than unitary A/C units

• Federal programs can offer incentives

to manufacturers to address price

differential between heat pumps and

A/C units

• State and utility programs can offer

midstream incentives to distributors to

encourage consistent stocking of heat

pumps and parts.

• Consider phasing out preexisting utility

incentives for air conditioners and gas

furnaces in favor of heat pumps that

function as both, improving economies

of scale

BUILDING ELECTRIFICATION © ACEEE

Key barriers by actor

Pathways to expand electrification

Policymakers—legislators, regulators, utility

administrators

• Limits on fuel switching in certain

jurisdictions

• Traditional cost-effectiveness tests do not

fully value the benefits of electrification

(such as reduced emissions and improved

indoor air quality)

• Conflict of interest with natural gas

utilities

• States should Incorporate building

electrification into climate plans

• Jurisdictions can update building codes

to require new and renovated structures

to be all-electric or “electrification-

ready”

• States and local jurisdictions can

establish moratoriums on gas

infrastructure in new construction

• Regulators can update cost-

effectiveness testing methods to value

environmental impacts and nonenergy

benefits of electrification

• Federal and state governments can

create mechanisms to price carbon and

allocate CO

mitigation funds for

weatherization and electrification

HOMEOWNERS AND BUILDING MANAGERS

Every day, approximately 16,000 HVAC systems are installed in the United States (Pantano et

al. 2021). Currently most of these systems utilize conventional one-way air conditioners

coupled with fossil-based heating systems instead of efficient bidirectional electric heat

pumps. The decision to install a particular type of system is often made by the homeowner

and the contractor, which means that understanding and meeting the needs of homeowners

and engaging with both owners and contractors are vital to scaling up electrification in

homes and buildings.

COST OF ELECTRIFICATION UPGRADES

The higher upfront cost of heat pumps relative to oil, propone, and natural gas–based

heating systems is a major barrier to adoption of heat pump technologies in buildings. Table

8 shows cost comparisons of different space-heating and water-heating systems derived

from a study by Rocky Mountain Institute on the economics of electrifying buildings. Note

that the table presents the most challenging scenario—upgrading the existing heating

systems only. (When a new air conditioner needs to be added, a heat pump system has the

lowest upfront cost compared with the combined cost of an air-conditioning and fossil fuel

heating system.) The lower upfront cost of natural gas–based heating systems, plus the

current low price of natural gas itself, makes these systems more attractive from a cost

BUILDING ELECTRIFICATION © ACEEE

standpoint for homeowners who have access to the fuel.

Many programs in this study seek

to address this upfront cost barrier with incentives.

Table 8. Heating system retrofit costs comparison

Equipment type

Upfront equipment

cost (before incentive)

Annual operating/

fuel cost ($) Net present cost

Space heating

Natural gas space

heating (w/existing AC)

$3,156–3,581 $130–782 $12,933–17,310

Fuel oil or propane space

heating (w/existing AC)

$3,004–3,323 $1,582–2,703 $21,844–28,019

Air-source heat pump

$7,522–8,816

$136–1,240

$15,350–20,886

Water heating

Natural gas water heating

$1,228–1,426

$90–251

$2,141–3,710

Fuel oil or propane water

heating

$1,359–2,175 $353–641 $5,387–7,199

Heat pump water heater

$2,062–2,416

$48–342

$3,072–5,916

Data source: Billimoria et al. 2018. Estimates are based on a model of a typical 2,401-square-foot single-

family home in four cities: Oakland, Chicago, Houston, and Providence. Values represent a range from lowest

to highest cost of various installations in the four locations.

In our review of incentives, the average incentive for air-source heat pumps was between

approximately $429 and $897 per ton of heating/cooling capacity and between $1,434 and

$4,330 for a whole-home system. This is not always sufficient to make up the difference in

cost between electric and natural gas systems (the difference depending on equipment choice

and other factors). Additionally, there can be other project costs associated with electrification

of existing buildings which are excluded in the cost estimates in table 8, such as wiring and

panel upgrades (typically not included in utility rebate programs). While these costs vary by

project and region, the typical cost to upgrade an electric panel from 100 amp to is $1,300

to $1,600 (HomeGuide 2021). The cost of installing new wiring and circuits can increase

expenses further. These additional potential expenses may further widen the cost gap

between fossil fueled equipment and electric equivalents for homeowners.

At the time of writing, the average price of natural gas in the United States was $20.96 per thousand cubic feet

(EIA 2021b). These cost comparisons are for building retrofits with preexisting gas infrastructure. For new builds,

the added cost of installing gas service may equal or exceed the cost of a heat pump, making electrification the

most economical option for new builds in most parts of the country (Billimoria et al. 2018).

BUILDING ELECTRIFICATION © ACEEE

Some program administrators are addressing the cost barrier by packaging retrofit upgrades

with other incentives. For instance, SMUD’s Advanced Homes program offers customers a

package of rebates for electric space- and water-heating measures, combined with a Go

Electric bonus package of up to $2,500 to cover wiring and panel upgrades. However, more

generous utility incentive programs may have trouble passing some cost-effectiveness

screens, depending on the testing protocols employed by that state’s regulatory commission.

Just one in four states considers environmental benefits in the cost-effectiveness evaluation

of demand-side programs (York, Cohn, and Kushler 2020). If the benefits from electrification

and carbon reduction are not quantified in cost-effectiveness assessments, aggressive utility

incentives for electrification may not receive approval by regulators.

FINANCING FOR ELECTRIFICATION UPGRADES

An effective way to address cost barriers may be to provide access to financing for home

energy upgrades. Although many programs deliver benefits through equipment rebates,

these may not cover the entire extra cost of an electric system, leaving the customer to make

up the difference. Loans and financing can help address the cost barrier that remains. Access

to affordable financing may also lower the barrier to entry for customers who wish to see

environmental and financial benefits of converting to an efficient all-electric system but do

not have the capital to cover the upfront costs. Entities such as green banks that offer low-

cost loans to assist with home energy upgrades may spur development in this area, as well

as create local jobs and lasting economic growth. Examples of program administrators in this

study that include financing options for heat pumps are the Minnesota ASHP Collaborative,

the Eugene Water and Electric Board, and AK Heat $mart.

One method of financing upgrades that is more accessible for customers who lack savings or

a strong credit history, or who are unable or unsure of how to access traditional financing, is

on-bill financing. This strategy has existed for more than 30 years and is beginning to see

greater implementation today (Yañez-Barnuevo 2021). With on-bill financing, the cost of

upgrades is repaid through a charge on the customer’s monthly energy bill. It is best suited

for projects that are cash flow positive from the outset, so that savings can be realized on

customer bills immediately. If the home is sold, any remaining debt can be easily transferred

to the new owner. Because of the complexities involved with taking on customers’ debt,

these programs often require enabling statutory or regulatory action, and many investor-

owned utilities are hesitant to run such programs at scale. One program administrator in this

study, Orcas Power and Light (a customer-owned cooperative utility in Washington State),

provides on-bill financing for fuel conversion upgrades, heat pump water heaters, and EV

charging with its Switch It Up! program.

FACTORS BEYOND COST: KNOWLEDGE, TRUST, AND MOTIVATION

Beyond cost, there are other reasons why heat pumps might not be the first choice for many

customers. One is a lack of general knowledge and awareness about heat pump

technologies among the public. To address this information barrier, some utilities and

program administrators are running education and marketing campaigns to increase public

awareness about efficient electric technologies. The Bay Area Regional Energy Network

BUILDING ELECTRIFICATION © ACEEE

(BayREN) reached customers through digital advertising and by partnering with local

municipal utilities to offer webinars and send mailers to eligible customers. Other programs,

such as the PG&E/Sonoma Clean Power Advanced Energy Rebuild program, used peer

networks to disseminate knowledge among customers. This program engaged with

customers at public events and appointed customer representatives to serve as “block

captains” in each neighborhood (Opinion Dynamics 2019). Using these existing social

networks, particularly through social media, allowed Sonoma Clean Power and PG&E to

effectively message residents.

A major misconception among contractors and property owners is the idea that air-source

heat pumps are unable to deliver heat reliably and efficiently in cold temperatures.

It is

crucial to address this misconception because, according to program managers, comfort is a

key factor in the customer experience and a critical part of what motivates people to

upgrade or replace their HVAC or water heating system. If customers lack confidence in a

heat pump’s ability to provide consistent and reliable thermal control, they will favor the

familiar and ask their contractor to install a like-for-like replacement or a dual-fuel system

where fossil-based heating is left in as a backup. For total building electrification to be

achieved, program administrators and contractors need to demonstrate that heat pumps are

just as reliable, comfortable, and affordable as fossil fuel–based systems.

Finally, for electrification retrofits to be a viable option, equipment must be available,

affordable, and attractive so that property owners will be sufficiently motivated to adopt

heat pump technology. Many system replacements occur only when existing equipment

breaks or reaches the end of its useful life. This requires heat pump equipment to be in stock

at supply centers for emergency replacement scenarios. Homeowners also need to be

informed (by contractors and/or marketing and education efforts) so that they can plan for

replacement well in advance of a system’s failure. Otherwise, in an emergency, a like-for-like

replacement will often result, locking in fossil fuel use and carbon emissions for an additional

20 years or more. These replacements should target equipment that is very old and nearing

the end of its useful life, since replacing prior to that is often not economically feasible.

LOW- AND MODERATE-INCOME (LMI) CUSTOMERS

The challenges discussed in the section above mainly concern market-rate customers,

homeowners whose annual income is at least 80% of area median income. However, a

substantial percentage of the population does not fit within this category. The needs of low-

Due to recent innovations in refrigerants that can work in very low temperatures, as well as defrosters that can

prevent ice from accumulating on the heat pump system, cold-climate air-source heat pumps can provide full-

load heating in temperatures as low as 5°F and partial-load heating for temperatures as low as –13°F (Mitsubishi

2021). Studies in cold regions such as Minnesota have found that this technology can provide an effective space

heating option on its own or when paired with a backup heating system (McPherson, Smith, and Nelson 2020).

BUILDING ELECTRIFICATION © ACEEE

and moderate-income homeowners and renters cannot be ignored in the process of

decarbonizing the buildings sector. In fact, these groups often stand to benefit the most

from home retrofits, since they are more likely to live in older buildings with poor heating,

ventilation, and indoor air quality and are likely to struggle with higher energy burdens.

Beneficial electrification can address some of these issues by reducing energy costs and

improving comfort and health. However, there are additional equity concerns, such as

housing affordability and higher electricity rates, that can arise if the needs of these

customers are not considered holistically within building decarbonization plans. This section

details key barriers to electrification for low- and moderate-income customers and describes

how program administrators in this study addressed these issues.

SYSTEMWIDE COSTS OF ELECTRIFICATION

A major issue that affects LMI customers is the impact of electrification on electricity rates,

and by extension energy burdens. LMI homeowners are also at higher risk of bearing the

brunt of damage caused by climate change–induced extreme weather events. If building

decarbonization is not implemented equitably and with due consideration of systemwide

cost impacts, it could exacerbate the burdens on an already under-resourced group of

people. Seventy-nine percent of the programs in this study were funded partially or entirely

by utility ratepayers. If the benefits from these programs are not allocated equitably among

the population, then there is a risk that utilities will raise costs for everybody to create

benefits for a smaller, wealthier subset of customers.

To ensure that low-income customers

are not left behind in the building energy transition, several programs in this study offered

higher incentives to income-qualified customers, carved out a portion of program funding

for income-qualified customers, or offered entire programs designed specifically to address

the barriers that LMI customers face.

Another key issue relates to keeping housing affordable for LMI renters and homeowners.

Due to the higher costs of heat pump equipment discussed above, home builders and

landlords may seek to recover those costs by charging higher prices for homes and rentals.

Providing electrification specifically for the affordable housing sector is critical to ensure that

building upgrades do not price residents out of their neighborhoods. One approach is to

offer incentives to home builders to reduce the costs of equipment in all-electric new builds.

Commonwealth Edison provides specific incentives to home builders who construct all-

Energy burden is the percentage of annual income a given household pays for energy (electricity and fuel). On

average, low-income households spend 8.1% of their annual income on energy, while non-low-income

households average 2.3% (Drehobl, Ross, and Ayala 2020).

The effect of electrification on electricity rates is complex due to creating both upward and downward pressure

on rates simultaneously. A Ratepayer Impact Measure (RIM) test can evaluate the specific rate impacts of a given

program; however, RIM should not be used as a substitute for a true cost-effectiveness test.

BUILDING ELECTRIFICATION © ACEEE

electric homes that integrate a holistic package of energy efficiency upgrades, including

distributed solar. The utility also offers rebates for affordable housing new construction.

A recent pilot study by Commonwealth Edison compared two multifamily units constructed

under the affordable housing program. One was built to ENERGY STAR certification with a

natural gas heating system, and the other had all-electric systems and was constructed to

more stringent passive house (PHIUS+) certification standards. The efficient, all-electric

home was more expensive to construct ($214 per square foot

compared with $178 per

square foot) but reduced the delivered energy requirement for space heating by 76% and

lowered resident annual energy costs by 19% relative to the other home (Slipstream 2021).

The authors of the study suggest that as market capacity increases over time, with more

qualified contractors who are able to install efficient HVAC and meet passive house

standards, the costs to implement these efficient building decarbonization measures will

decline.

MULTIFAMILY ELECTRIFICATION: RENTERS, LANDLORDS, AND THE SPLIT INCENTIVE

For customers who live in rental units, the first barrier of access is that they do not own or

control their home’s energy system. Renters and landlords face a split incentive when it

comes to paying for home energy upgrades. In the case where renters pay their own energy

bills, energy savings provide little to no motivation to landlords to invest in energy efficiency

or heating system upgrades, given they will see little to no financial return on their

investment. For this reason, they are less likely to take advantage of rebates or participate in

many building electrification or energy efficiency programs based on energy saving benefits

alone.

Because of this split incentive, several programs in our study—notably the AEA’s Low Income

Weatherization Program (AEA LIWP) and the SMUD Multifamily program—targeted the low-

income multifamily sector. Each of these programs combined electrification equipment

retrofits with other measures, such as wiring and panel upgrades, weatherization, and

distributed generation (in the case of AEA LIWP). Both programs provided incentives to the

property owners for upgrades, while simultaneously engaging with tenants and providing

educational materials. In SMUD’s program, all multifamily properties were eligible for

incentives, and an additional 25% incentive was provided for properties with more than 50%

of tenants who are enrolled in the utility’s low-income rate. AEA LIWP had slightly higher

requirements, providing incentives to properties with more than 66% of tenants at or below

80% of area median income. AEA LIWP program managers recommend aligning program

eligibility criteria with other common funding mechanisms for income-based programs, such

as the Low Income Housing Tax Credit (LIHTC), to streamline the enrollment process for

similar programs (Hill, Dirr, and Harrison 2020).

Of the two multifamily-specific programs, the AEA LIWP made a dedicated effort to address

the split incentive issue by offering significantly higher incentives (an extra $1,000–1,500 per

MTCO

e reduced) for buildings where the tenants paid for their own electricity. This was

designed to offset the out-of-pocket investment for property owners making building

BUILDING ELECTRIFICATION © ACEEE

decarbonization upgrades. The lower incentives that were offered to master-metered

properties also proved effective in encouraging comprehensive work scopes, allowing

property managers to tackle deferred maintenance and upgrade aging systems with new,

efficient, carbon-free versions (Hill, Dirr, and Harrison 2020).

ELECTRIFICATION AND WEATHERIZATION

Another issue is that some LMI customers occupy homes requiring major repairs or

weatherization before electrification upgrades can be installed. To overcome this barrier and

deliver equitable electrification solutions, approximately half of the programs in this study

encouraged weatherization on top of electrification by connecting customers to incentives

or parallel programs providing insulation, air sealing, and other building envelope measures.

A quarter of programs required customers to weatherize in order to receive incentives or

offered more generous incentive packages to customers who weatherized. For example,

Energize CT required customers to weatherize if they were receiving incentives for displacing

delivered fuels (oil or propane) or if they were participating in the income-based Home

Energy Savers (HES) parallel program. Other program administrators, such as BayREN

Home+, created a “one-stop shop” for program delivery so that customers could access a

holistic package of efficiency and electrification upgrades. Delivering incentives in this way

lowers barriers to entry and allows time-limited customers to easily access information about

incentives and home improvements.

NATURAL GAS INFRASTRUCTURE STRANDED COSTS

Finally, there remains a key equity issue concerning LMI customers on the natural gas

delivery system. As with electricity, the costs of gas heating are allocated among all

customers on the delivery system, including both variable and fixed costs. When customers

leave the gas system by electrifying buildings, the remaining fixed costs to maintain the

system are allocated across a smaller number of customers. While there is little to no

evidence at the time of writing that this has led to substantially higher costs for customers,

these costs may rise sharply at high levels of building electrification; one study projects the

yearly increase to be $31 per customer at 15% electrification; $116 per customer at 40%

electrification; and $1,565 per customer at 90% electrification (Davis and Hausman 2021).

This should not be used as a reason to avoid pursuing electrification, but it does represent

an equity issue, since not every homeowner or resident is able or willing to pay the price of

conversion or move to another unit. Future program planners should be mindful of the cost

of stranded gas assets and pay special attention to providing incentives for LMI and energy-

burdened customers on the natural gas

system to access building electrification upgrades.

HVAC CONTRACTORS

In interviews with program administrators and experts, many of them emphasized the

scarcity of qualified contractors as an important barrier to overcome in the effort to advance

heat pumps and other electrification measures. A contractor’s relative level of experience

and comfort with heat pump heating and hot-water systems is critical when it comes to

communicating the value of electrification technologies to customers and homeowners. If a

contractor lacks the skills, knowledge, and confidence to install a heat pump for space and

BUILDING ELECTRIFICATION © ACEEE

water heating, it will not be presented as a viable option to customers who are looking for

HVAC solutions. Underinformed contractors may even try to discourage potential buyers

from installing an electric home heating system (Pontecorvo 2021).

Market development efforts can address this obstacle by training contractors to install heat

pumps and educating them on the value of these technologies and how to communicate

that to customers in terms of comfort, health and safety, and cost savings. In markets where

a lack of contractor availability and willingness to install heat pumps and other electric

technologies is a major barrier, some program implementers are promoting and supporting

education and job training for installers through investments in workforce development. This

is particularly crucial for technologies like heat pump water heaters, which require

contractors who have both plumbing and electrical experience. Organizations such as

Efficiency Maine, NYSERDA in New York, the Minnesota ASHP Collaborative, the Beneficial

Electrification League of Colorado, and the Massachusetts Clean Energy Center are investing

millions of dollars in education and training for heat pump contractors.

Certification programs and procedures can create a common language of competencies that

job training programs can use for teaching and evaluation. While the North American

Technician Excellence (NATE) organization does include certification pathways for specialty

in installation and service of air-source heat pumps (NATE 2021), these certifications are not

universally required for contractors in all jurisdictions, so the reliability and consistency of

heat pump contractors varies from region to region. A standard definition of and curriculum

for green HVAC contractors would help guide job training programs around the country.

Additionally, the training and certification programs must extend beyond standard heat

pump installation and maintenance to grow contractor expertise in specific technologies and

issues, such as selecting and installing cold-climate heat pumps, hot-water heat pumps, and

ductless mini-split systems. Market transformation groups like the Minnesota ASHP

Collaborative are publishing guides for installers that include key information on product

choice, sizing of systems, integrated controls, and installation best practices for achieving

optimal energy savings and homeowner satisfaction.

If utilities target contractors with incentives for specific technologies such as cold-climate

heat pumps, contractors will then be able to offer those products and services to their

customers at a competitive rate. These incentives need to be combined with accountability

measures, such as site inspections, to ensure that equipment is installed correctly and to

gather feedback and results that can be communicated back to utilities, installers, and

product manufacturers (McPherson, Smith, and Nelson 2020).

ONLINE RESOURCES FOR HEAT PUMP INFORMATION AND EDUCATION

Our research identified several online resources that can be used freely for informing and

educating contractors, customers, and other key decision makers on the demand side of

building electrification. The Northeast Energy Efficiency Partnerships (NEEP) Cold Climate

Air-Source Heat Pump List is a searchable database of more than 28,000 heat pump

products (as of November 2021) that includes details such as maximum throughput rating in

BUILDING ELECTRIFICATION © ACEEE

Btus per hour, coefficient of performance in cold climates, ducting configurations, and other

valuable information to help guide buyers of these technologies.

Another virtual resource

is the HVAC 2.0 consulting process for contractors, which provides guidance and training in

a specialized sales process for installers of heat pumps and information for potential buyers

of these technologies.

MANUFACTURERS AND DISTRIBUTORS

As mentioned earlier, for contractors to sell heat pumps to customers, it is vital that the

necessary equipment be stocked and available at distribution centers. This is particularly true

for emergency replacement retrofits. Otherwise, even when contractors and customers are

interested in heat pump technologies, a shortage of supplies in the manufacturer-distributor

pipeline will probably result in a like-for-like replacement. In late 2021, many markets for

heat pumps reported having supply chain issues with air-source heat pumps and water

heaters (Anderson 2021). These shortages may have been exacerbated by additional factors,

such as the COVID-19 pandemic and high demand in certain markets.

Four programs in this study engaged with manufacturers of heat pumps in order to reduce

costs and/or address supply chain issues. The Energy Futures Group ran two direct-install

demonstration projects, one in New York (leveraging grant funding by NYSERDA) and

Massachusetts (leveraging grants from the MA Clean Energy Center and Dept. of

Environmental Resources). These projects provided incentives at multiple levels, including to

end users, to contractors, and to distributors of heat pumps to streamline the delivery

process to retrofit 20 homes in Hudson Valley, New York, and 49 homes in western

Massachusetts. Administrators of the Mass Save Fuel Optimization program also engaged

with manufacturers in developing a set of rebates, although financial incentives were

ultimately offered to end users. The Southern California Edison residential upstream

incentive program, also known as Plug Load and Appliances, built on relationships with

retailers to incorporate incentives for efficient electronics (including HVAC) and appliance

recycling programs.

These four programs represent a small fraction of incentives and spending across all

programs in this study. However, a nationwide study from CLASP suggests that providing

incentives at the manufacturer and distributor level may be one of the most cost-effective

methods to accelerate heat pump deployment in many markets (Pantano et al. 2021). This

research proposes a manufacturer-based solution to addressing supply chain, cost, and

The list can be found at

ashp.neep.org/.

For information, visit www.hvac20.com/.

BUILDING ELECTRIFICATION © ACEEE

availability concerns for heat pumps in buildings.

The authors of the study recommend

offering incentives to manufacturers to produce air-source heat pumps (which are $200–500

more expensive to manufacture) rather than air conditioners.

By targeting manufacturers,

state and federal program administrators could streamline distribution networks and bring

prices down at the distributor, installer, and consumer levels. By simply replacing all central

A/C installations with heat pumps, program administrators could substantially accelerate

partial or full electrification of centrally ducted homes throughout the United States. The

study authors find that this type of incentive would have cascading effects down the supply

chain, delivering the equivalent of $1,000 in per-unit cost reduction for the customer for

every $373 spent on manufacturer incentives; it would also alleviate supply shortages and

simplify a complex sales process from the point of view of a contractor.

A federal funding mechanism would likely be the most effective approach to achieve this

outcome, both because the scale of funds required would be massive and because

manufacturers and distributors operate primarily on a multistate level. The DOE has

announced a partnership with industry allies to improve the efficiency and affordability of

cold-climate heat pumps (DOE 2021). This partnership appears to consist primarily of peer-

to-peer information sharing and education; at the time of writing, it was not clear whether it

would include per-unit incentives for manufacturers to prioritize air-source heat pumps over

air-conditioning units. This may be an area where federal leadership can lead to significant

impact and a reduction in price for heat pump units across the entire market.

REGULATORS AND POLICYMAKERS

State policy and utility regulation play a significant and essential role in advancing building

electrification in the United States. The states that have made the most substantial

electrification efforts to date are the ones with explicit policy goals for decarbonization,

including California, New York, Colorado, and Maine. By removing barriers to building

electrification, providing incentives and mandates for utilities to deliver services to their

customers, and creating sustainable funding streams for electrification programs, state

leadership can catalyze rapid change in this nascent market. This section outlines key policy

barriers and opportunities for decision makers to advance policies that favor rapid scaling

and decarbonization of buildings.

FUEL SWITCHING

State policies that enable or discourage fuel switching can be a critical driver or barrier for

building electrification. In 2020 ACEEE identified 11 states that prohibited or strongly

Details can be found at www.clasp.ngo/research/all/3h-hybrid-heat-homes-an-incentive-program-to-electrify-

space-heating-and-reduce-energy-bills-in-american-homes/.

Except in cases of specialized applications, such as cold-climate equipment.

BUILDING ELECTRIFICATION © ACEEE

discouraged fuel switching in state policy or regulation (Berg and Cooper 2020). This number

has changed recently, with more states, such as Minnesota, amending their rules to allow

policies that directly subsidize conversions of fossil fuels to electricity. However, in states

where prohibitions remain (e.g., Pennsylvania, Georgia, Texas, and Washington), utility-

funded electrification programs will be unable to gain much traction. Working to have these

prohibition policies repealed should be a priority for electrification proponents in those

states. Conversely, states where policies encourage fuel switching through guidelines or fuel-

neutral goals include California, Alaska, Vermont, Tennessee, New York, Massachusetts, and

Vermont. To date, these tend to be states with high reliance on delivered fuels and/or

constraints on gas distribution systems (such as in the Northeast), making electrification an

especially effective tool for emissions and cost reductions.

BUILDING CODES

New and renovated buildings represent one of the most straightforward opportunities to

deliver electrification measures at a cost that is equal to or lower than the cost of installing

fossil fuel equipment. Building codes, which are adopted at either the local or state level,

depending on jurisdiction, set mandatory baselines for new construction and can include

stretch codes or other compliance pathways for above-code additions, such as passive

house and net-zero certification. Stretch codes are an opportunity to grow a nascent market

in green buildings and are currently present in multiple jurisdictions such as Vermont,

Massachusetts, New York, Maryland, and Washington, D.C. (NEEP 2021). While most building

energy codes concern energy efficiency (envelope, lighting, hot water, and HVAC systems),

the 2021 IECC is the first model code to include zero-energy appendixes for residential and

commercial new construction. States and jurisdictions can adopt these codes as they are or

pass amendments to require higher standards of efficiency or strategic electrification.

An “electrification-ready” proposal to require electrical outlets near fossil fuel–powered

appliances was rejected in the latest IECC code development cycle. This would have reduced

conversion costs for existing units by avoiding the need to install new wiring and circuits for

all-electric appliances. It was removed after pushback from home builders and other industry

lobbyists, who cited higher costs. However, states and local jurisdictions may still include

such a provision in their own building energy codes.

COST-EFFECTIVENESS TESTING: VALUING FUEL-NEUTRAL ENERGY SAVINGS

For utilities to begin offering electrification programs and incentives at scale, they will need

to undergo evaluation, measurement, and verification (EM&V) by state regulators. At

present, only 29% of states conduct EM&V of electrification or fuel-switching programs

(York, Kushler, and Cohn 2020). For these cost-effectiveness tests to fairly measure the

impacts of electrification programs, they will need to consider energy impacts from a fuel-

neutral standpoint. Cost-effectiveness tests should also seek to quantify nonenergy benefits

of electrification such as emissions reduction, improved indoor air quality, and potentially

increased property values. Metrics such as the social cost of carbon may be used to quantify

environmental benefits in the context of climate change mitigation (Cho 2021).

BUILDING ELECTRIFICATION © ACEEE

If done correctly, EM&V practices that are integrated throughout a program on a procedural

basis can lead to robust program designs and consistent outcomes. State evaluators and

program administrators should consider reporting and evaluation practices when designing

new electrification programs and/or adapting ongoing ones.

NATURAL GAS UTILITIES

Of the fossil fuels eligible for replacement in electrification programs, only one fuel—natural

gas—is generally rate-regulated at the state level. In some regulatory environments, natural

gas utility companies are separate entities from electric utilities; this makes them a natural

opponent of electrification because electrification stands to negatively affect their profits.

The interests of the natural gas lobby have led certain states, such as North Carolina, to pass

policies that prohibit local and state governments from banning new gas connections,

whether or not such bans were being considered at the time (Ouzts 2021). Balancing the

interests of regulated natural gas utilities will be a challenge for regulators and policymakers

who are seeking to rapidly scale building decarbonization as a climate solution.

One state that has enacted policies that include natural gas as well as electric utilities is

Colorado, which requires all utilities (including natural gas utilities) to develop

decarbonization plans using a fuel-neutral approach (Colorado Energy Office 2021). Gas

utilities can meet the statutory target through efficiency or electrification measures for their

customers. However, the bill also prohibits the PUC from banning new gas hookups or

requiring customers to replace gas-fueled equipment in existing buildings. This middle-of-

the-road approach is the first of its kind in the nation and may represent an example for

other politically mixed states seeking to drive beneficial electrification through proactive

policies. Another example of such a policy is the Natural Gas Innovation Act, which was

passed in Minnesota in July 2021. This law encourages gas companies to file “innovation

plans” that introduce renewable natural gas and hydrogen-based fuels and fund energy

efficiency, carbon capture, and geothermal heating (Jossi 2021). By broadening the ability of

gas companies to invest in electrification and decarbonization and recover their costs, the

authors of this policy hope to foster cooperation, rather than competition, with natural gas

utilities.

There have been some initial efforts, such as the GeoMicroDistrict pilot study in

Massachusetts, to explore the use of stranded gas infrastructure as a geothermal heat

distribution method (HEET 2019). Although this model shows promise as a way for gas

distribution companies to pivot their business model to a decarbonized solution, current

examples of real-world applications of this technology are limited, and the upfront costs are

significant, especially in a retrofit context. Substantial investment and workforce

development would be necessary for this to be a commercially viable approach, but utilities

in states like Massachusetts that currently depend on natural gas infrastructure may have

much to gain by exploring this approach.

PRICING CARBON EMISSIONS

The current low price of natural gas compared with electricity makes it challenging for

building electrification to compete with fossil fuels on a cost-of-energy basis in many

markets. There are indications that the market price of natural gas and other fuels may rise

in 2022 and future years (EIA 2021e). However, the domestic supply chain is set up to

continue extracting and distributing fossil fuels in the United States for decades to come.

This favorable market position is likely to continue as long as the public (and marginalized

communities in particular) bears the health and environmental burdens of fossil fuel

extraction and combustion. If legislators and regulators were to impose a per-ton tax on

carbon emissions, the downstream price of natural gas and other fuels would more

accurately represent the societal impact of their use. Such a policy would help equalize the

market environment between electric end uses and fossil fuels and could be the single most

impactful policy to drive building electrification forward on the federal and state levels

(High-Level Commission on Carbon Prices 2017).

Though the present political landscape makes enacting a nationwide carbon tax in the

United States challenging, if not downright infeasible, state carbon market programs like

RGGI in the Northeast and the cap-and-trade program in California have utilized a market-

based mechanism to achieve a similar effect. With enabling legislation, these programs can

be structured to generate revenue based on selling emissions allowances. States can direct

these revenues toward decarbonizing hard-to-reach sectors. A good example of this method

in practice is the AEA LIWP in California, the largest low-income decarbonization program

we identified in this research. The initial wave of funding through this program was

distributed to low-income multifamily buildings and communities on a per-MTCO

e reduced

basis. This effectively resulted in carbon emitters subsidizing decarbonization and clean

energy for communities that would otherwise be unable to afford these measures.

Conclusions and Recommendations

Decarbonization in the buildings sector is a vital step to address global climate change, with

electrification an important strategy to decarbonize. The market for electrification in the

United States is still small but growing rapidly, driven mainly by state policy directives and

technological improvements in heat pump performance. ACEEE has tracked the landscape of

programs and incentives for building electrification over the past several years. In 2020 we

identified 22 space-heating electrification programs with a total annual budget of almost

$109 million. This year, we expanded our survey to include 42 incentive and market

development programs. Thirty-two of these programs reported budget data, with an

average of $5.2 million per program and a total budget of $166 million per year.

Our nationwide scan shows that electrification programs are still in their infancy, with most

programs clustered in certain regions (e.g., California, Colorado, New York, and

Massachusetts) that have explicit policy goals and targets for building electrification. Most

programs in this study (90%) focused on space heating with air-source heat pumps. Water

heating with heat pumps was also included in 71% of programs. Because our study was

limited to programs that specifically incentivized fuel switching away from fossil fuels or all-

electric new construction, this survey excluded many utility incentives for heat pumps

replacing electric resistance, a pure energy efficiency upgrade, unless they are part of an

electrification program that focuses on fossil fuel replacements. Some programs in our study

offered tiered incentives based on the fuel being replaced, with higher incentives for fossil

fuel conversions.

We observed a wide range of incentives. Rebates for space heating were frequently provided

on the basis of unit capacity, ranging from $165 to $1,600 per ton, whereas other incentives

(for water heating, cooking) were offered on a per-unit basis, ranging from $91 to $800 per

unit. Only one program in our study (AEA LIWP) delivered incentives based on the total GHG

impacts of electrification measures. This unique incentive structure allowed program

administrators to strategically target the highest-impact measures when it comes to carbon

reduction in buildings.

Data on energy and GHG impacts from electrification programs were relatively scarce, owing

to the newness of many programs with inadequate time to go through a full evaluation,

measurement, and verification process. This scarcity of data highlights the need for more

evaluation studies of electrification programs in order to clearly quantify and publicize the

climate benefits of building electrification. Moreover, more efforts are needed to help

utilities align their programs with local carbon reduction goals and to track the actual

outcomes.

Energy efficiency and weatherization should be paired with space- and water-heating

retrofits whenever possible to reduce upfront cost and ongoing energy requirements for

electric heating and cooling systems. Most program administrators (76%) acknowledged the

importance of energy efficiency by combining electrification and energy efficiency measures,

either by offering both in the same program or by referring customers to home energy

audits and weatherization assistance. A quarter of the program implementers even required

participants to take actions to improve their home efficiency before receiving the full

incentives from the electrification program.

Low-income customers have additional barriers to accessing electrification for their homes,

such as being unable to afford the upfront costs of conversion, a lack of access to financing,

and an inability to control their built environment if they live in rental housing (market-rate

renters face the same problem). Low-income homeowners are also at higher risk of bearing

the brunt of damage caused by climate change–induced extreme weather events. Programs

that were designed to reach this sector encountered much higher costs per participant due

to upgrades often being provided at no cost, as well as the larger extent of improvements

required for older homes and buildings. However, participants in income-qualified programs

like DCSEU’s Low Income Decarbonization Pilot cited substantial improvements to their

indoor temperature, air quality, and comfort due to the conversion. More programs that

provide specialized incentives for this sector are needed in order to deliver equitable

decarbonization for marginalized groups and communities.

Integration of demand flexibility (through connected water heaters and thermostats) and

renewable sources with electrification is an emerging area of interest. A small number of

programs coupled electrification with other distributed energy resources such as rooftop

and community solar, battery storage, and electric vehicle programs. As electrification

continues to add more loads to the existing grid and changes energy use patterns (e.g.,

when peak time occurs), measures to manage peak load—particularly through using heat

pump water heaters as a flexible load resource—are essential to scaling electrification to

meet the needs of a changing grid, even if at present its impact is not being felt in many

regions due to the small scale of building electrification efforts today.

The majority (78%) of these programs were funded all or in part through utility rates. In our

examination of incentive and administrative costs, we found that total administrative costs

were 34% of program budgets to date. On an annual basis, administrative costs were 49% of

the total for the most recent year. Because so many programs were in the pilot phase, this

indicates that new programs have a higher upfront administrative cost and lower ongoing

administrative costs. In addition, certain types of programs such as whole-building retrofits

required additional support from staff and contractors to manage participant experiences

and ensure a smooth installation process. Effectively communicating with customers was

critical to ensuring satisfaction and delivering high-quality installations.

Only a small number of programs emphasized the role of contractors and provided them

with incentives and education to sell heat pumps and other electrification equipment. In

interviews with program managers and subject matter experts, contractors were identified as

key players and an underutilized resource in terms of scaling building electrification efforts.

To effectively scale building decarbonization, we recommend that policymakers, utilities, and

program implementers expand upstream and midstream incentives for manufacturers,

retailers, and installers to expand availability of equipment, reduce costs throughout the

supply chain, and educate and empower contractors to deliver electrification measures to

end users. Although these types of incentives (particularly manufacturer incentives) were

infrequent in our study compared with end-user rebates, they address several major

roadblocks in the electrification pipeline. Customers are likely to rely on contractors to

communicate the value of home energy decisions. By providing training, certification, and

incentives to contractors who prioritize heat pumps, water heating, and induction cooking

measures, the building energy contracting workforce can become a vital partner in the effort

to electrify every home and building in the United States.

State policies are a major driver of building electrification efforts. We found the most

program spending and participation in states with clearly defined climate policies that

prioritize electrification, such as California and New York. Additionally, some states still

prohibit utilities from offering incentives for fuel switching or have enacted legislation that

forbids the banning of new gas infrastructure. Planning for building electrification in climate

policy and pushing back against policies that seek to further entrench our dependence on

fossil fuels in buildings are necessary strategies to accelerate electrification and prepare for

total decarbonization in every state.

Large opportunities remain for building electrification in the United States. The technologies

that support the process are clean, efficient, and largely able to meet the needs of the

American public without having to rely on burning fossil fuels for space heating, water

heating, cooking, and other end uses. Given the urgency of addressing climate change, the

potential for energy savings, and the improved quality of life (with exponential benefits for

LMI and disadvantaged communities), building electrification should continue to be a

priority for policymakers, utilities, program implementers, contractors, and customers. This

research identifies key trends and lessons learned from past and current programs and

practices to provide those key decision makers with the necessary tools to scale up

programs and move the market away from fossil fuels. These lessons help show a pathway

to broader understanding and acceptance of efficient electric technologies across the United

States.

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Appendix A. Program Details

Table A1. End uses, source fuels, and target sectors

# Program End uses targeted Source fuels for replacement Target sector(s)

1 AEA LIWP

Space heating, water

heating, cooking equipment,

solar

No specific source fuel Multifamily residential

2 AK Heat $mart Space heating

Oil, propane, electric

resistance

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less)

3 APS Reserve Rewards Water heating No specific source fuel Single-family residential

4 Avangrid Energize CT Space heating, water heating Natural gas, oil, propane Single-family residential

5 BayREN Home+

Space heating, water

heating, cooking equipment,

solar

Natural gas, electric

resistance

Single-family residential

6 BED Net Zero City

Space heating, water

heating, EV charging

Natural gas, oil, propane Single-family residential

7 City of Ashland

Space heating, water

heating, cooking equipment

Natural gas

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less)

ComEd Electric New

Homes

Space heating, water

heating, cooking equipment,

solar

No specific source fuel Single-family residential

9 Comfort365

Space heating, water

heating,

No specific source fuel

Single-family residential,

multifamily residential

10 DCSEU LIDP

Space heating, water

heating, cooking equipment,

solar

Natural gas, oil, propane

Single-family residential,

multifamily residential

11 Efficiency VT Space heating, water heating

Natural gas, oil, propane,

wood, electric resistance

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less), large commercial

(over 100 kW demand)

12 EFG Hudson Valley HP Space heating

Electric resistance, oil,

propane, natural gas

Single-family residential

13 EFG MA Solar Access Space heating, solar

Electric resistance, oil,

propane, natural gas

Single-family residential

14 EFG Zero Energy Now

Space heating, water

heating, solar

Natural gas, oil, propane,

wood, electric resistance

Single-family residential

# Program End uses targeted Source fuels for replacement Target sector(s)

15 EMT HP Rebate

Space heating, water

heating, EV charging

Oil, propane Single-family residential

EWEB Smart

Electrification

Space heating, water heating Natural gas, oil, propane Single-family residential

17 Holy Cross BE Rebates

Space heating, water

heating, cooking equipment

Propane, natural gas, oil Single-family residential

18 MA CEC ASHP Pilot Space heating Natural gas Single-family residential

19 MA DOER Home MVP Space heating, water heating Natural gas, oil, propane Single-family residential

Mass Save Fuel

Optimization

Space heating, water heating

Electric resistance, oil,

propane

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less), large commercial

(over 100 kW demand)

21 MN ASHP Space heating No specific source fuel Single-family residential

22 MPE Electrify Everything

Space heating, EV charging,

solar

No specific source fuel

Single-family residential,

small commercial (100 kW

demand or less)

23 NG RI HVAC Space heating, water heating Oil, propane Single-family residential

24 NYS Clean Heat Space heating, water heating No specific source fuel

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less), large commercial

(over 100 kW demand)

25 NYSERDA HP Rebate Space heating No specific source fuel

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less), large commercial

(over 100 kW demand)

26 OPALCO Switch It Up!

Space heating, water

heating, EV charging

No specific source fuel

Single-family residential,

multifamily residential

27 Palo Alto HPWH Water heating Natural gas

Single-family residential,

multifamily residential

28 PG&E/SCP AER

Space heating, water

heating, cooking equipment

No specific source fuel

Single-family residential,

multifamily residential

29 Renewable Juneau Space heating Oil, propane Single-family residential

# Program End uses targeted Source fuels for replacement Target sector(s)

30 SCAQMD CLEANair Space heating Natural gas

Single-family residential,

multifamily residential

31 SCE CLEAR Space heating, water heating Natural gas, oil, propane Single-family residential

SCE Residential

Upstream

Space heating, water heating Natural gas Single-family residential

SMUD Advanced

Homes

Space heating, water heating Natural gas, oil, propane

Single-family residential,

multifamily residential

34 SMUD Commercial

Space heating, water

heating, cooking equipment

Natural gas, propane

Small commercial (100 kW

demand or less), large

commercial (over 100 kW

demand)

35 SMUD Home Appliance Cooking equipment Natural gas, propane Single-family residential

36 SMUD Low Income

Space heating, water

heating, cooking equipment

Natural gas, propane Single-family residential

37 SMUD Multifamily

Space heating, water

heating, cooking equipment

Natural gas, propane Multifamily residential

38 SMUD New Homes

Space heating, water

heating, cooking equipment

Natural gas, propane

Single-family residential,

multifamily residential

39 Tri State Heat Pump Space heating No specific source fuel

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less)

40 Tri State HPWH Water heating No specific source fuel

Single-family residential,

multifamily residential, small

commercial (100 kW demand

or less)

41 TVA C&I

Space heating, cooking

equipment, industrial forklifts

No specific source fuel

Small commercial (100 kW

demand or less), large

commercial (over 100 kW

demand), other, industrial

42 WVPA Power Moves Space heating, water heating Natural gas, oil, propane Single-family residential

Table A2. Program delivery strategies

# Program Incentive recipient Delivery strategies

Notes on incentives beyond

measures

1 AEA LIWP End users

Audits, whole-home, performance-

based

Home energy audits,

community solar subscriptions,

weatherization

2 AK Heat $mart End users n/d n/d

APS Reserve

Rewards

End users Rebates n/d

Avangrid Energize

End users Rebates n/d

5 BayREN Home+ End users Rebates n/d

6 BED Net Zero City End users Audits, rebates n/d

7 City of Ashland End users n/d n/d

ComEd Electric

New Homes

Home builders New builds n/d

9 Comfort365 End users n/d

$500 fuel-switching incentive

per appliance up to $1,000 plus

additional $500 if including

solar

10 DCSEU LIDP Multiple targets Audits, whole-home

Electrical wiring and panel

upgrades were included at

each site.

11 Efficiency VT End users n/d n/d

EFG Hudson

Valley HP

Multiple targets

Rebates, manufacturer discounts,

contractor discounts

Each customer received a free

eGauge (and installation) to

monitor their consumption and

savings.

EFG MA Solar

Access

Multiple targets

Manufacturer discounts, tax credits,

rebates

Roof structural support and

panel upgrades were provided

for approximately 3 out of 49

projects.

EFG Zero Energy

Now

End users n/d n/d

15 EMT HP Rebate End users End-user rebates n/d

EWEB Smart

Electrification

End users End-user rebates, loans n/d

Holy Cross BE

Rebates

End users n/d n/d

# Program Incentive recipient Delivery strategies

Notes on incentives beyond

measures

MA CEC ASHP

Pilot

End users Audits, whole-home n/d

MA DOER Home

MVP

End users Performance-based n/d

Mass Save Fuel

Optimization

Multiple targets

Workforce development, manufacturer

discounts, education

n/d

21 MN ASHP Multiple targets Education, workforce, financing

Financing for home energy

improvements

MPE Electrify

Everything

End users n/d Smart thermostats

23 NG RI HVAC End users End-user rebates n/d

24 NYS Clean Heat Midstream installers

Audits, contractor rebates, workforce

development, financing

Incentives for envelope

improvements aimed at load

reduction available through

Empower (low income),

Assisted Home Performance

(moderate income), and

Comfort Home (market rate)

NYSERDA HP

Rebate

Midstream installers

Audits, contractor rebates, workforce

development

n/d

OPALCO Switch It

Up!

End users Financing n/d

27 Palo Alto HPWH End users Education, workforce n/d

28 PG&E/SCP AER Multiple targets New builds, education

Prewiring of homes to be

“electrification ready,” $5,000

incentive for onsite solar +

battery or off-site community

solar

29 Renewable Juneau End users Rebates, education, wiring Installation and wiring

SCAQMD

CLEANair

End users Rebates n/d

31 SCE CLEAR Home builders n/d n/d

SCE Residential

Upstream

Multiple targets n/d n/d

SMUD Advanced

Homes

End users n/d n/d

# Program Incentive recipient Delivery strategies

Notes on incentives beyond

measures

SMUD

Commercial

Home builders n/d n/d

SMUD Home

Appliance

End users n/d n/d

SMUD Low

Income

End users n/d n/d

37 SMUD Multifamily Home builders n/d n/d

SMUD New

Homes

Home builders n/d n/d

Tri State Heat

Pump

Multiple targets End-user rebates, installer rebates n/d

40 Tri State HPWH End users n/d n/d

41 TVA C&I End users End-user rebates

Wiring and electrical

infrastructure upgrades for

commercial kitchens; covers up

to 50% of cost

WVPA Power

Moves

End users n/d n/d

Table A3. Integration with weatherization, demand response, and other distributed

energy resources

# Program

Weatherization

required? Weatherization details

Demand

response Solar

Battery

storage EVs

1 AEA LIWP Required

Program begins with a

whole-home audit and

proposes solutions

including building shell

improvements, conversions

of heating systems, and

distributed or community

solar.

Yes

AK Heat

$mart

Encouraged

As part of the “Thermalize”

program, contractor

performs air sealing and

attic and crawl space

insulation at a discounted

rate.

# Program

Weatherization

required? Weatherization details

Demand

response Solar

Battery

storage EVs

APS Reserve

Rewards

No Yes

Avangrid

Energize CT

Required

Required for displacing

delivered fuels.

Recommended for HES

participants.

BayREN

Home+

Encouraged

The Home+ program

rebates have both

weatherization and

electrification measures.

Yes

BED Net

Zero City

Encouraged

Dwellings using more than

50,000 Btus/heated square

foot are offered

Weatherization incentives of

33% for owner-occupied

and 50% for rentals where

tenants pays heating costs

directly.

Yes Yes Yes

City of

Ashland

Encouraged

ComEd

Electric New

Homes

Required

Homes must integrate a

holistic package of energy

efficiency upgrades

including ENERGY STAR

appliances, weatherization,

water conservation

measures, and solar to

exceed basic code

requirements and achieve

the DOE Zero Energy Ready

certification.

Yes

9 Comfort365 Encouraged

Incentives for insulation and

air sealing, customer

advising services

10 DCSEU LIDP Required n/d Yes

11 Efficiency VT Encouraged

Midstream programs make

weatherization qualification

very challenging.

Yes

EFG Hudson

Valley HP

Encouraged

Solar and weatherization

were encouraged, but

program focused on heat

# Program

Weatherization

required? Weatherization details

Demand

response Solar

Battery

storage EVs

pump and monitoring to

reach the target number of

heat pump installations.

EFG MA

Solar Access

Encouraged

Encouraged but not

required, due to funding

limitations and the

challenges with getting

projects completed overall.

Yes

EFG Zero

Energy Now

Required

Must be a minimum of 10%

reduction in air leakage.

Yes

EMT HP

Rebate

n/d n/d Yes Yes

EWEB Smart

Electrification

Encouraged

Financial barriers, but

customers tend to

weatherize without it being

required, either at time heat

pump installed or later.

Holy Cross

BE Rebates

No n/d

MA CEC

ASHP Pilot

Encouraged

The whole-home pilot

requires that customers

have a home energy

assessment and strongly

encourages them to follow

up on recommended

measures.

MA DOER

Home MVP

Encouraged

Performance-based

incentive encourages a

combination of heat pumps

and weatherization. There is

an increased weatherization

incentive when combined

with heat pump

electrification.

Mass Save

Fuel

Optimization

Encouraged

In Massachusetts the

program administrators do

not require weatherization,

but it is recommended.

21 MN ASHP No n/d

# Program

Weatherization

required? Weatherization details

Demand

response Solar

Battery

storage EVs

MPE Electrify

Everything

No n/d Yes Yes

23 NG RI HVAC Required

Two separate tiers of

incentives existed in 2019:

Standard Rebate, which

encouraged but did not

require weatherization, and

Enhanced Rebate

($1,000/ton), which required

weatherization

NYS Clean

Heat

Encouraged

NYS Clean Program

materials will promote

weatherization to make

homes and buildings “heat

pump ready,” which will

include publicizing

NYSERDA’s Comfort Home

Pilot. Expansion of

weatherization programs

offered in conjunction with

heat pump programs will be

explored as a potential

program element to be

added in the future.

NYSERDA HP

Rebate

Encouraged

Program manual highly

recommends that site

owners contact a home

performance professional to

assess and implement

energy efficiency

opportunities related to

building envelope and

HVAC distribution before,

or in coordination with,

installing a heat pump

system, and refers to

available incentives.

OPALCO

Switch It Up!

No n/d

Palo Alto

HPWH

n/d n/d

PG&E/SCP

AER

Required

To qualify for incentives,

homes need to be built to

Yes Yes

# Program

Weatherization

required? Weatherization details

Demand

response Solar

Battery

storage EVs

20% above 2016 title 24

energy code, with high-

performance walls and

windows, efficient

plumbing, ENERGY STAR

appliances, and other

efficiency measures.

Renewable

Juneau

Encouraged

On occasion, a lack of

adequate weatherization

can disqualify a home. The

program aims to reduce

utility costs for an applicant.

not increase them.

SCAQMD

CLEANair

No n/d

31 SCE CLEAR Encouraged n/d

SCE

Residential

Upstream

Encouraged n/d

SMUD

Advanced

Homes

Required For low income only Yes

SMUD

Commercial

n/d n/d

SMUD Home

Appliance

n/d n/d

SMUD Low

Income

n/d n/d

SMUD

Multifamily

n/d n/d

SMUD New

Homes

n/d n/d

Tri State Heat

Pump

Expanded weatherization

program in 2021. Working

with agencies to do more

heat pumps.

Tri State

HPWH

n/d n/d

# Program

Weatherization

required? Weatherization details

Demand

response Solar

Battery

storage EVs

41 TVA C&I No n/d Yes

WVPA Power

Moves

No n/d Yes

Table A4. Funding sources and program spending

# Program Funding source

Annual

incentive cost

Annual

admin. cost

Annual

budget

Total

incentive cost

Total admin.

cost

Total budget

to date

1 AEA LIWP

Cap-and-trade

program, low-

income housing

grants

n/d n/d $17,900,000 $33,252,173 $30,647,827 $63,900,000

AK Heat

$mart

City and

borough of

Juneau grants

and DOE grant

n/d $140,000 $140,000 n/d $300,000 $300,000

APS Reserve

Rewards

Utility

ratepayers

n/d n/d n/d n/d n/d n/d

Avangrid

Energize CT

Utility

ratepayers, cap-

and-trade funds

$10,676,893 n/d $10,676,893 $16,523,241 n/d $16,523,241

BayREN

Home+

Utility

ratepayers

$3,700,000 $5,000,000 $3,700,000 $5,000,000 $7,500,000 $12,500,000

BED Net

Zero City

Utility

ratepayers

$277,469 n/d $277,469 $905,374 n/d $905,374

City of

Ashland

Oregon

clean fuels

program,

Bonneville

Power

Administration

n/d n/d n/d n/d n/d n/d

ComEd

Electric New

Homes

Utility

ratepayers

n/d n/d n/d n/d n/d n/d

9 Comfort365

Local tax on

electricity usage

$45,000 $5,000 $45,000 $140,000 $35,000 $175,000

10 DCSEU LIDP

Utility

ratepayers

$277,000 $69,000 $277,000 $277,000 $69,000 $346,000

# Program Funding source

Annual

incentive cost

Annual

admin. cost

Annual

budget

Total

incentive cost

Total admin.

cost

Total budget

to date

11 Efficiency VT

Utility

ratepayers, cap-

and-trade

funds, forward

capacity market

bids from EE,

distribution

utility direct

funding

$4,100,000 n/d $4,100,000 $7,700,000 n/d $7,700,000

EFG Hudson

Valley HP

Utility

ratepayers,

competitive

R&D grant from

NYSERDA

n/d n/d n/d $10,000 $386,900 $396,900

EFG MA

Solar Access

Utility

ratepayers,

Mass Clean

Energy Center,

and DOER

competitive

grant

n/d n/d n/d $224,000 $1,268,067 $1,492,067

EFG Zero

Energy Now

Utility

ratepayers,

grants

$60,000 $104,641 $60,000 $350,000 $480,516 $830,516

EMT HP

Rebate

Utility

ratepayers, cap-

and-trade

funds, forward

capacity

revenue

n/d n/d n/d n/d n/d $12,118,849

EWEB Smart

Electrifica-

tion

Utility

ratepayers

n/d n/d $500,000 n/d n/d $1,000,000

Holy Cross

BE Rebates

n/d n/d n/d n/d n/d n/d n/d

MA CEC

ASHP Pilot

Utility

ratepayers

n/d n/d $500,000 n/d n/d $500,000

MA DOER

Home MVP

n/d n/d n/d $1,333,333 n/d n/d $2,666,667

# Program Funding source

Annual

incentive cost

Annual

admin. cost

Annual

budget

Total

incentive cost

Total admin.

cost

Total budget

to date

Mass Save

Fuel

Optimization

Utility

ratepayers

n/d n/d $9,705,000 n/d n/d $14,580,000

21 MN ASHP

Utility

ratepayers

n/d n/d n/d n/d n/d n/d

MPE Electrify

Everything

Utility

ratepayers,

other, rebates

from Tri-State

Generation and

Transmission

Association

n/d n/d n/d n/d n/d n/d

23 NG RI HVAC

Utility

ratepayers

n/d n/d n/d n/d n/d $190,000

NYS Clean

Heat

Utility

ratepayers

n/d n/d $36,600,000 n/d n/d $36,600,000

NYSERDA HP

Rebate

Utility

ratepayers

n/d n/d n/d n/d n/d $22,800,000

OPALCO

Switch It Up!

Utility

ratepayers

n/d n/d n/d n/d n/d n/d

Palo Alto

HPWH

Utility

ratepayers

$250,000 $50,000 $250,000 $353,500 $200,000 $553,500

PG&E/SCP

AER

Utility

ratepayers;

BAAQMD and

SCP cover costs

for fuel-

switching

upgrades in all-

electric homes.

n/d n/d n/d n/d n/d n/d

Renewable

Juneau

Carbon offset

purchases,

donations,

grants

$85,000 $500 $85,000 $165,000 $2,500 $167,500

SCAQMD

CLEANair

Air Quality

Investment

Fund (mitigation

fees from

manufacturers)

n/d n/d n/d n/d n/d n/d

# Program Funding source

Annual

incentive cost

Annual

admin. cost

Annual

budget

Total

incentive cost

Total admin.

cost

Total budget

to date

31 SCE CLEAR

Utility

ratepayers

n/d n/d $1,600,000 n/d n/d $2,025,000

SCE

Residential

Upstream

Utility

ratepayers

n/d n/d $17,000,000 n/d n/d $17,000,000

SMUD

Advanced

Homes

Utility

ratepayers,

utility

shareholders

$6,000,000 $1,700,000 $6,000,000 $16,600,000 $3,800,000 $20,400,000

SMUD

Commercial

Utility

ratepayers

$1,900,000 $800,000 $1,900,000 $2,100,000 $1,200,000 $3,300,000

SMUD Home

Appliance

Utility

ratepayers

$200,000 $200,000 $200,000 $300,000 $500,000 $800,000

SMUD Low

Income

Utility

ratepayers

$3,400,000 n/d $3,400,000 $10,400,000 n/d $10,400,000

SMUD

Multifamily

Utility

ratepayers

$800,000 $400,000 $800,000 $1,000,000 $1,600,000 $2,600,000

SMUD New

Homes

Utility

ratepayers

$2,900,000 $400,000 $2,900,000 $4,600,000 $1,600,000 $6,200,000

Tri State

Heat Pump

Utility

ratepayers

$790,000 n/d $790,000 $2,452,417 n/d $2,452,417

Tri State

HPWH

Utility

ratepayers

$15,400 n/d $15,400 $46,520 n/d $46,520

41 TVA C&I

Utility

ratepayers

n/d n/d n/d n/d n/d n/d

WVPA Power

Moves

Utility

ratepayers

$158,337 $47,501 $158,337 n/d n/d $158,337

Table A5. Participation, energy savings, and GHG impacts

# Program

Participation

to date

(customers)

Annual energy

savings (MMBtu)

Total energy

savings (MMBtu)

Annual GHG

savings (TCO

Total GHG savings

(TCO

1 AEA LIWP 8,268 58,914 58,914 8,823 8,823

2 AK Heat $mart 600 n/d n/d n/d n/d

5 APS Reserve Rewards n/d n/d n/d n/d n/d

6 Avangrid Energize CT n/d n/d n/d n/d n/d

9 BayREN Home+ 329 2,432 2,432 83 83

10 BED Net Zero City 390 n/d n/d n/d n/d

12 City of Ashland n/d n/d n/d n/d n/d

ComEd Electric

New Homes

n/d n/d n/d n/d n/d

14 Comfort365 180 n/d 2,852 n/d 667

16 DCSEU LIDP 10 n/d n/d n/d n/d

19 Efficiency VT n/d n/d n/d n/d n/d

23 EFG Hudson Valley HP 20 n/d n/d 34 34

24 NYS Clean Heat n/d 66,300 1,400,000 2,600 72,300

25 EFG MA Solar Access 49 n/d n/d 498 1,192

27 EFG Zero Energy Now 45 1,210 1,210 175 175

28 EMT HP Rebate n/d n/d n/d n/d n/d

EWEB Smart

Electrification

268 n/d n/d n/d n/d

30 Holy Cross BE Rebates n/d n/d n/d n/d n/d

39 MA CEC ASHP Pilot n/d n/d n/d n/d n/d

40 MA DOER Home MVP 250 n/d n/d n/d n/d

Mass Save Fuel

Optimization

n/d n/d n/d n/d n/d

42 MN ASHP n/d n/d n/d n/d n/d

Appendix B. Data Collection Sheet