New Study Finds Colorado Energy Policy Discourages All-Electric Buildings Despite Lower Upfront Costs

A report commissioned by Community Energy, Inc. and prepared by Group 14 Engineering, finds that the upfront cost to build new residential buildings with all-electric space and water heating is roughly 25 percent less expensive than comparable equipment powered by natural gas. Similar, but smaller percentage savings arise for new all-electric commercial buildings. This shift to all-electric has not yet occurred, however, principally because current electricity rates and rebate programs for all-electric systems in Colorado produce higher total costs.

The report further concludes that once buildings are constructed, the economics of retrofitting from natural gas to all-electric are far more difficult — bordering on cost prohibitive. As a result, Colorado is currently building tens of thousands of new residential and commercial buildings that both cost more and lock in higher CO2 emissions for the majority of a building’s +50-year life.

“Colorado spent over $16 billion on new residential and commercial construction in 2019, with the overwhelming majority of these new buildings relying on natural gas,” said Eric Blank, co-founder and director of Community Energy. “Colorado has a near-term opportunity to modify its energy rates and rebate programs to encourage building electrification and accelerate the clean energy transition.”

Through a detailed economic case study of an individual single-family residence and commercial building in Colorado, the report shows that the state can quickly modify its rates and rebates to make all-electric the most cost-effective choice. This would begin to move new construction toward all-electric, enabling
a low-carbon future.

“Simple changes today can make a large difference in realizing the low-hanging fruit of electrifying new building construction and reducing carbon emissions, all while providing comparable comfort and service,” said the report’s lead author Celeste Cizik, principal at Group14 Engineering.

Photo by Brent Keane from Pexels

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