Real Estate Round-Up: The electrification of housing impacts affordability

Since 2006, California has adopted aggressive greenhouse gas emission reduction

targets, including returning to 1990 levels by 2020, 40 percent below 1990 levels by 2030 and 80 percent below 1990 levels by 2050.

California residents, businesses, and utility companies have embraced new forms of energy production, including wind turbines and solar, so much that California met its 2020 target early. However, there has not been any direction of how the state will address reaching the next level of goals for 2030 and 2050, until now.

This is a topic I can truly relate to. We moved to San Diego County in 1992 and

purchased our first home, a 1952 vintage farmhouse. It was an all-electric

home, which was very expensive to heat or cool, depending on the season. We

eventually installed propane to the home, changed out the HVAC unit and all

appliances to take advantage of the less expensive source of energy.

Our current home, in Fallbrook, was built in 1977. It utilizes two HVAC units, located at one end of the home, and features a kitchen at the other end of the home. We struggled with how to install propane to accommodate the entire home. Eventually, induction cooking (with highly adjustable heating levels) became an effective way to cook, so propane was only needed for the HVAC.

Simultaneously, solar was appearing on roof tops across the county. Our big decision was, stay with electricity, by adding solar, or convert part of the home to propane? We added solar panels to generate enough power and electricity remained our sole source of energy.

The thing is, we felt that both our homes were obsolete because they didn’t have natural gas or propane as an energy source. The new proposal, for electrification of homes, is turning the energy source choice upside down. It ultimately makes homes with natural gas or propane obsolete. Crazy, right?

The new approach would mandate the “decarbonation” of all buildings. Essentially

“decarbonation” of buildings is the electrification of buildings through increasing energy efficiency, replacing gas appliances with electric and retrofitting homes and buildings that are already connected to gas to run only on electricity. The goal is to have all buildings upgraded and converted by 2045.

Buildings account for approximately 25 percent of statewide end-use greenhouse gas emissions, with residential buildings accounting for 6 percent of the state’s

total. The electrification of the residential sector would decrease total GHG

emissions by about 2 percent.

Last year, laws were passed that require all new construction after 2030 to be all

electric and that, by 2045, all the electricity in the state must come exclusively from solar, wind or other emission-free sources. This means that gas-generated electricity and natural gas appliances are being phased out completely as we move forward.

Opinions are split on the consequences of this mandate. The California Energy Commission argues that the net cost of transforming the state’s energy economy to a low-carbon system is relatively small, despite potential significant upfront

capital costs for households. In real language that means it will cost you and

me to make the required changes.

The CEC believes that the goals can be met without requiring early retirement of equipment and appliances, but rather that when equipment or appliances wear out, consumers will convert their homes at that time. The greatest reductions will occur when gas furnaces and water heaters are replaced by electric. The CEC believes that by simply replacing these two items, the reduced goal for GHG will nearly be reached.

The state has already committed to doubling energy efficiency savings and anticipates that additional funding for these retrofits and upgrades will evolve rapidly and will move from consumer credit to project financing through green banks and bonds.

The California Building Industry Association has an opposing view of the mandate. CBIA states that it would cost the average household $7,200 to convert their existing gas appliances and equipment to all-electric appliances and equipment. This figure sounds low to me.

Consumers would have to decommission gas lines and add electrical outlets. They would have to upgrade their electrical panels and wiring to handle the new load. They would realistically have to install solar on their homes, since by 2045 all energy must come from solar, wind or other emission-free sources. The cost to add solar would be in addition to the $7,200 to convert and upgrade the existing homes infrastructure.

The CBIA also states that individual households would see an increase in energy costs by $388 per year. This increase is attributed to actual electricity pricing compared to natural gas. The utility infrastructure upgrade costs to the local and state grid to accommodate the additional load on the system is not factored into these numbers and it will certainly be passed on to the consumer.

Reducing greenhouse gas emissions is very important. Everyone wants clean air. However, the implementation cannot be made in a bubble. The costs cannot solely rest on home and building owners. The implementation will, without tax or building rebates, make it more expensive to build or remodel homes, and we already have an affordability dilemma.

Solving one issue cannot impact another issue without a remedy to curb that impact. The California Association of Realtors opposes any initiative that becomes a point of sale requirement. CAR will continue to watch this initiative as it moves through the California State Legislature. I hope you will too.

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.