New technologies, such as air source heat pumps and smart thermostats, are changing the way we produce and use energy — making it cheaper and more efficient to electrify heat and hot water in buildings. As the power grid gets cleaner by adding more renewable energy, it will make home electricity use cleaner too. This reality presents an opportunity for buildings’ energy use to take advantage of the power grid’s flexibility. Home energy technologies can in effect turn a building into a thermal battery, precooling or preheating spaces and water supply, and can help shift electricity demand away from more expensive times to hours when prices are lower and renewable energy is most abundant.
Regulatory frameworks need to evolve to enable this transition to modern electrification. Many existing energy policies and regulatory structures, which may have served us well in the past, create unnecessary barriers now. Addressing these challenges will help realize the full potential of electrified, flexible, grid-integrated buildings. This guidebook — written with co-authors from Synapse Energy Economics, Inc. — outlines several ways in which regulation needs to be “renovated”:
- Building electrification must be equitable, focusing on the needs of all consumers, including low-income households.
- Buildings’ energy demand needs to be flexible and grid-integrated, so it can be actively managed.
- Energy efficiency resource standards should be revised to promote the most energy-efficient choices, regardless of fuel type.
- Energy efficiency programs, likewise, need to expand beyond fuel-specific silos and educate consumers about their full range of choices.
- Building codes and performance standards should be updated and complement utility programs to support electrification.
- Current approaches to gas line extension, including cost recovery and the utility’s obligation to serve, should be revisited to ensure that customers do not see a biased economic choice between gas and electricity that masks the benefits of electrification.
This guidebook details options for regulators to address all these areas and ensure that the regulatory framework can capture the full benefits of building electrification for customers, the power system and the environment.