THE ECONOMICS OF ELECTRIFYING BUILDINGS

The report finds that building electrification is generally cost-effective for new construction and for customers switching from propane or heating oil, but often more expensive for existing natural gas customers at current prices. It argues that electrification reduces carbon emissions in most US regions, except those heavily dependent on coal, though this is expected to change as coal plants retire. The authors emphasize that demand flexibility—shifting energy use to low-cost or high-renewable periods—can further improve economics and grid integration. Key recommendations include prioritizing the electrification of oil and propane homes, stopping the expansion of natural gas infrastructure, and updating energy efficiency standards to account for total energy reduction across fuels.

• Electrification is generally cost-effective for customers switching from propane or heating oil, for most new home construction, and for gas customers replacing both a furnace and air conditioner simultaneously.
• For most existing homes currently using natural gas, switching to electric space and water heating is more expensive than replacing existing gas devices with new gas ones at current prices.
• Electrification reduces carbon emissions compared to fossil fuels in most US regions, except in coal-heavy areas like Chicago where it may increase emissions in the short term.
• Demand flexibility, such as preheating water or space, can reduce lifetime costs for customers, particularly under time-of-use rates with significant price differentials.
• Bundling rooftop solar with electrification can make the transition more cost-effective than either natural gas retrofits or electrification alone.
• Electrifying homes that do not currently have gas service is typically more cost-effective than extending the natural gas distribution system.
• Accounting for methane leakage increases the emissions impact of natural gas systems, making heat pumps more competitive in carbon terms even in coal-heavy regions like Chicago.
• Water heaters are more effective for load shifting than space heating because they can be superheated to high temperatures without impacting user comfort.

APA

Billimoria, S., Guccione, L., Henchen, M., & Louis-Prescott, L. (2018). THE ECONOMICS OF ELECTRIFYING BUILDINGS. RMI. https://rmi.org/app/uploads/2018/06/RMI_Economics_of_Electrifying_Buildings_2018.pdf

Chicago

Billimoria, Sherri, Leia Guccione, Mike Henchen, and Leah Louis-Prescott. THE ECONOMICS OF ELECTRIFYING BUILDINGS. RMI, 2018. https://rmi.org/app/uploads/2018/06/RMI_Economics_of_Electrifying_Buildings_2018.pdf.

Wikipedia

{{cite report |last1=Billimoria |first1=Sherri |last2=Guccione |first2=Leia |last3=Henchen |first3=Mike |last4=Louis-Prescott |first4=Leah |title=THE ECONOMICS OF ELECTRIFYING BUILDINGS |publisher=RMI |date=June 2018 |url=https://rmi.org/app/uploads/2018/06/RMI_Economics_of_Electrifying_Buildings_2018.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{billimoria2018economics, author = {Billimoria, Sherri and Guccione, Leia and Henchen, Mike and Louis-Prescott, Leah}, title = {{THE ECONOMICS OF ELECTRIFYING BUILDINGS}}, institution = {RMI}, year = {2018}, month = jun, url = {https://rmi.org/app/uploads/2018/06/RMI_Economics_of_Electrifying_Buildings_2018.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }