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Jul 15, 2023

Crafting A Custom Electrification Plan For Customers

Many homeowners are choosing to replace their gas appliances with electric equipment for reasons ranging from environmental considerations to health and safety concerns to improved comfort. And don’t

Many homeowners are choosing to replace their gas appliances with electric equipment for reasons ranging from environmental considerations to health and safety concerns to improved comfort. And don’t underestimate the impact of the various government subsidies and incentives — particularly in the Inflation Reduction Act (IRA) — that are motivating homeowners to electrify their homes.

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• Electrification

• Heat Pumps

But electrifying an existing home is, in some cases, more complex and costly than just replacing a furnace with a heat pump, and homeowners may not know what this entails or even where to start. This provides a unique opportunity for HVAC contractors to help homeowners create a custom plan to electrify their homes based on their specific budgets, wants, and needs.

Electrifying a home can be a large and costly endeavor, which is why many experts recommend that it be done in phases. However, it’s important to understand that each home — and homeowner — is unique, so there is no one-size-fits-all plan that can be applied to all projects. That is why creating a personalized plan is often the best way to ensure a positive outcome for the homeowner.

“If customers want to get rid of their fossil fuel appliances all at once — they want to install a heat pump, heat pump water heater, induction stove, EV charging, solar, etc. — those are great customers,” said Josh Lake, co-founder of Elephant Energy, a Boulder, Colorado-based company that helps homeowners achieve climate-friendly homes. “But they're few and far between, because there just are not that many people who have that amount of money sitting around in their wallets. So our approach is to meet customers where they're at, and that is much more of a phased approach.”

To that end, Lake’s team has developed an internal online tool they call “Your Electrification Roadmap,” which helps people understand the current state of their home’s efficiency, as well as their goals and their future plans for electrification. Whether it's replacing a 10- to 15-year-old water heater or gradually transitioning to heat pumps, EV chargers, and induction stoves, he said this tool provides a recommended sequence of upgrades that is unique to that homeowner and is designed to meet their specific needs.

“It's a pretty handy tool for understanding where people are at and what are they looking to do,” said Lake. “Maybe it's installing a heat pump water heater now, a heat pump in five years, and an EV charger and induction stove in six years or seven years. We're trying to make it as simple and straightforward as possible so people can have a roadmap for electrifying their homes over time.”

When it comes to electrification, homeowners usually adopt either a proactive or reactive approach, said Spencer Rosen, founder of Home Energy Academy in San Diego, California. The proactive approach — which can also be phased — usually involves passionate individuals who actively research and invest in transitioning from natural gas or propane to electric appliances. These homeowners often already have solar or are going solar and are interested in powering more of their home from their solar energy systems.

The phased approach is helpful in two scenarios, said Rosen. First, when budgets are limited, it can be effective to focus the investment on the largest user of natural gas or propane. And second, if someone has a functional gas water heater and only plans to replace it only when it fails, then a phased approach makes sense.

“Homeowners can be proactive by researching the desired type of water heater, such as a heat pump water heater, even though they are not replacing it immediately,” said Rosen. “That way, when it’s ‘go time’ and their existing water heater fails, they aren’t just pulling the first appliance off the shelf at Home Depot. The customer already knows what they want, and they’ve calculated the return on investment of going with a more advanced technology.”

The reactive approach is when a furnace fails, and the challenge there is that the homeowner has done no research and doesn’t understand the value proposition, said Rosen.

“A reactive approach is one of the biggest challenges we have in the industry today in creating an electrification movement,” he said.

Brett Little, education manager at GreenHome Institute in Grand Rapids, Michigan, has mixed feelings about the phased approach to electrification. He believes there are benefits to renovating a home all at once, but he points out that the Inflation Reduction Act offers attractive incentives that encourage consumers to embrace a phased approach.

“It used to be that the tax credit for an energy efficient retrofit could only be used once in your lifetime, which just made no sense,” said Little. “The IRA fixed that, so you can take the tax credit once a year up to a certain amount. It’s really designed for a phased approach, which is how many people repair their homes. So, now, they might get a tax credit for a water heater they install in 2023 and another tax credit for the heat pump they install in 2024.”

When homeowners express an interest in electrifying their homes, it is first necessary to determine the state of their existing equipment, as well as how that equipment is performing, said Little. That information can be gathered by conducting a comprehensive GreenHome Inspection, he said, which includes energy audits, energy scores, Manual J and D calculations, heating load assessments, etc.

“Our recommendation is to get the GreenHome inspection first,” said Little. “Then we can find out a homeowner’s budget, their goals, as well as what state their house is in. If equipment is close to failure, it may be wise to replace it all at once. However, if the equipment has more life left but the home lacks energy efficiency due to poor air sealing and insulation, prioritizing those upgrades before investing in new equipment is advisable. That evaluation of the home and its energy usage will let homeowners make the most informed decisions.”

Rosen agrees that analyzing the homeowner’s utility bills is an important first step, along with assessing the condition and type of existing appliances, evaluating home comfort levels, and identifying specific challenges like if the homeowner is running out of hot water after just one shower. Once this information is gathered, he said, it becomes easier to explore suitable electrification options and determine their financial viability, taking into account the local rate structures, costs, and climate.

“I can't really give a prescriptive approach, because once you have all that information, that's when a plan emerges — that's when the solutions kind of show themselves,” said Rosen. “It’s often about cost optimization and which solution will provide the best overall return for the customer. That could be financial or carbon neutrality or health and safety or whatever else matters to the customer. Everybody's situation is different. Everybody's home is different. And understanding those nuances will help create a custom plan that makes the biggest difference for that homeowner.”

As Lake mentioned earlier, the first step for homeowners looking to electrify their homes through his company is to fill out the online tool, “Your Electrification Roadmap.” If they’re interested in pursuing electrification, they can then set up a virtual home comfort consult with an Elephant Energy expert, who uses that opportunity to understand the homeowner's objectives, pain points, and motivations. This includes identifying reasons for electrification (e.g., upgrading old appliances), addressing draft or comfort issues, improving IAQ, or wanting to move away from natural gas. That expert also digitally collects the homeowner’s energy bills to see how the home is performing and to help determine the optimal heat pump size.

“By understanding their unique goals, we can then tailor appropriate solutions that align with the homeowner’s specific needs and preferences,” he said. “Assuming they want to move forward with our custom solution and roadmap, we'll then help them navigate the entire process. We do all the system design, we procure the equipment, and we vet, onboard, and manage all the skilled trade partners, including plumbing, HVAC, electrical, drywall, painting, roofing, etc. We wrangle all of them together and produce a great outcome for the customer. We also handle all the paperwork for local, state, and federal incentives and rebates, which is just a whole bag of craziness. Most customers and trade partners don’t have the patience for that.”

HEAT PUMPS: Many homeowners are choosing to replace their gas furnaces with electric heat pumps. (Staff photo)

In addition to providing a path to electrification, contractors should take the time to educate customers about the possible outcomes. For example, customers who replace a gas-fired furnace with an electric heat pump should understand that the comfort levels may be different than what they’re used to or that their electricity bills could be higher in certain parts of the country.

“It's all about education and setting customer expectations,” said Lake. “By setting realistic expectations, like the time it takes to warm a home in extreme weather conditions, we minimize surprises. We emphasize the impressive capability of heat pumps to extract heat from extremely cold air and encourage homeowners to use conservative set points when away for short periods. Once customers adapt to these factors, they generally find the experience to be quite satisfactory.”

Joanna Turpin is a Senior Editor. She can be contacted at 248-786-1707 or [email protected]. Joanna has been with BNP Media since 1991, first heading up the company’s technical book division. She obtained her bachelor’s degree in English from the University of Washington and worked on her master’s degree in technical communication at Eastern Michigan University.