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.