How to Design Building Electrification Programs that Work

As policymakers in several states realize the importance of efficient electrification of the country’s buildings to fight climate change, the next question that needs answering is how to help Americans upgrade to healthier, more efficient appliances that are powered with increasingly clean electricity. A series of webinars recently hosted by NRDC showcased three programs that are already blazing the way forward on building electrification. Best practices from these early efforts should be incorporated into the many building electrification programs that are being designed and launched in the coming months.  

America’s electric grid continues to get cleaner as more solar and wind power is added each year. Yet, the greenhouse gas (GHG) emissions from burning fossil fuels in our buildings—like when we use a gas furnace or water heater—will continue unabated until we replace fossil fuel equipment with efficient electric appliances that can use the increasing supply of renewable electricity.

Having recognized that any successful climate strategy will target emissions from fossil fuels in buildings, several cities and states are setting building electrification priorities and directing funding to help building owners replace their equipment with efficient, electric alternatives. In the last year, funding for building electrification programs has increased by 70 percent. But how can we assure that building electrification resources are invested effectively and equitably and that they deliver the emission reduction benefits we desperately need?

To help policy makers and advocates answer this question, NRDC hosted a series of webinars to examine already successful building electrification programs, learn what factors have been key to their early accomplishments, and discuss how those best practices should be applied to new efforts in other regions. The webinars featured presentations about VEIC’s programs with equipment distributors in the Northeast, how the Association for Energy Affordability is electrifying affordable multifamily housing in California, and Efficiency Maine’s path to installing a heat pump in every home in their cold climate. Clicking on the images below will take you to a recording of each webinar.  

Three overarching themes emerged from the webinar series:

• Building electrification programs must meet customers where they are and deliver excellent customer satisfaction.
• Programs need to create a strong value proposition for the businesses that will deliver and install building electrification technologies.
• Just like with all other energy efficiency programs, straightforward offerings and streamlined programs are easier for customers and businesses to navigate.  

It was also abundantly clear throughout the webinar conversations that electrifying existing low-income housing will require tailored approaches and dedicated resources. Low-income families tend to live in older, less efficient buildings and are more likely to be renters—both of which have historically made it harder for low-income customers to access energy efficiency and other clean energy programs. Building electrification programs need to learn from past shortcomings and design solutions that specifically target these and other barriers to electrifying affordable housing.

Meeting Customers Where They Are: Customer Support and Satisfaction

Meeting customers where they are can mean many things. For low-income customers and communities of color, many of whom live in older multifamily buildings and have historically been left out of clean energy programs, it means providing the necessary technical assistance to installers and operators to ensure the electrification process is smooth, effective, and delivers sustainable cost reductions. There are many options for electrifying multifamily buildings, many of which are relatively new to the market; equipment installers and building managers are not prepared to review, select, and operate many of these new technologies. Ignoring this knowledge gap could lead to sub-optimal equipment purchases or installations that under-perform and would very likely lead to unnecessary costs to residents. In order to reach customers equitably, programs need to be aware of these needs and provide the technical assistance installers and operators need to successfully transition to clean, efficient electric equipment.

Of course, technical assistance alone will not be enough to successfully electrify the nation’s affordable housing stock. Programs will also need to provide significant incentives to ease the cost of new equipment purchases and related efficiency upgrades. Efficiency retrofits will help ensure that the residents of all-electric buildings do not face higher bills. If we do not include these necessary resources to help low-income customers transition off the gas system early, they will be left holding the bag on a system with decreasing customers and increasing costs.

For all customers, regardless of income, programs should also strive to deliver very high customer satisfaction throughout the electrification process. Building electrification programs are seeking to transform a market—to convince people to use a new and different technology instead of equipment that has served them for as long as they can remember. Any hitch along the way (such as a delay in installing a heat pump water heater after an old gas heater fails and a home is left without hot water) could have a significant ripple effect of discouraging others from adopting electrification technology.

Creating Strong Business Value Propositions

HVAC and water heating professionals will be crucial actors in the transition to cleaner, healthier electric buildings. Most Americans don’t spend much time thinking about the equipment that keeps their homes comfortable until that equipment needs to be repaired or replaced, at which point they turn to trusted experts for advice and recommendations. Often the experts that people turn to in these circumstances are the professionals who will sell and install the replacement equipment. Those trusted messengers need to become more than capable distributors and installers of efficient, healthy electric equipment—they must be excited champions for the customer benefits of all-electric technology.

The webinar series highlighted several program design elements that will be key to transforming equipment distributors and installers into the champions for all-electric change that we need them to be:

• Understanding the local market takes time and resources, but it must be done because programs can only transform what they understand. Program implementers needs to engage with equipment manufacturers and distribution channels to fully understand business and operational needs, key pain points, and the competitive landscape. Findings from that engagement should inform incentive levels and delivery mechanisms. Developing a thorough understanding of the local customer base—including how the rental and multifamily building stock is managed—will also help tailor program designs to better address barriers faced by low income customers, such as split incentives between tenants and landlords and the risk of building upgrades driving rents up.
• Programs should include strong training components to ensure equipment is installed properly and customers are well-informed about how to operate it. In order to be successful evangelists for healthy electric technology, HVAC and water heating professionals must become experts in how to install and operate the equipment so that it delivers optimal emission and bill reduction benefits. Only then will they be comfortable recommending the new technology to their valued customers.
• Program implementers should leverage their marketing and customer outreach resources to support new customer acquisition. This includes hosting sales and marketing trainings, creating flyers and other sales support materials for businesses to use when talking with prospective customers, and managing verified expert websites that can help customers find qualified installers. Longstanding programs in the Northeast have found that these verified expert portals have been key to creating a positive customer experience.

Delivering Streamlined Offerings with Limited Process Requirements

Finally, as has been recommended many times before, simplicity and ease of use should guide program design. This applies to customer-facing programs elements as well as to requirements for trade ally and other business participants. The most successful programs use instant rebates—rather than requiring customers to mail in proof of purchase—so that the customer sees a post-rebate price as they are comparing all-electric and fossil fuel appliances. This reduces the number of obstacles the customer associates with adopting the new technology. For the business-facing side of programs, it is important to optimize data collection requirements so that the most valuable information is collected without imposing undue burdens on equipment installers. Reducing these administrative requirements makes it easier for smaller business with less access to capital to participate in programs.

Streamlined program designs will also make it easier to respond to changing market conditions and technology offers. Flexibility is crucial in a market that is evolving so rapidly. Programs need the flexibility to incorporate new technical solutions as they become available and adjust their offerings in response to changing customer needs. Program requirements that are written too narrowly reduce this much needed flexibility.

Supportive Policy is Needed to Enable Effective Program Designs

Programs will only be able to adopt these best practices to the extent that policies are put in place to support nimble, market-responsive, customer-focused program designs. For example, the sustained funding and long-term outlook in some Northeast states that have allowed programs to truly engage with and transform the local heat pump distribution market.

Supportive public policy will be particularly important for electrifying buildings in black and brown economically depressed communities that have been marginalized for far too long and truly can not afford to be left behind on a declining fossil system. Low-income Americans face higher than average energy burdens and are particularly sensitive to any increases in energy costs. The electrification of affordable homes, both deed-restricted and naturally occurring, must be prioritized to avoid leaving low income families exposed to the higher costs of maintaining a shrinking gas system, and it must be done with special care to ensure a smooth transition for all.

Leaders across the country are already taking important first steps towards addressing GHG emissions from buildings—demonstrating commitment by setting ambitious goals and dedicating resources to begin the work. Now is the time to get the details right, to set program rules that support an equitable transition away from fossil fuels for every person involved.