Rebuilding - The Smart Way to Electrify Your Building

Electrification comes with many benefits, but also institutional and financial hurdles. With a systematic approach, you can successfully make the switch to all-electric and start realizing the benefits.

With buildings being one of the largest sources of carbon dioxide emissions, many jurisdictions are starting to mandate going all-electric, especially for new construction. This means using electricity for heating, cooling and cooking rather than fossil fuels, and in the perfect world, powering the building with solar, wind and other sources of zero-carbon electricity. Fortunately, these types of clean energy sources are close in price or cost less than that of natural gas and coal.

Electrification technologies

Technologies include air source heat pumps, geothermal heat pumps, induction cooktops/stoves, high-efficiency electric or heat pump water heaters, among others. Heat pumps are the typical replacement for natural gas boilers and provide both heating and cooling. While heat pump equipment is typically more expensive than a traditional boiler, its operational costs are lower over time and prices continue to come down. Systems are now available that operate at temperatures of -10°F and below.

Steps to electrification

With all these options, building owners are challenged to come up with the optimum electrification solution. To determine the best strategy, the first step is to complete a cost-benefit analysis, which will be impacted by building location, electricity cost, local policies and potential benefits (reduction in emissions, rent premium increases). Costs of equipment and net rentable area, among other variables, should be included.

For retrofits, prioritize building envelope upgrades, which enables right-sized equipment and minimizes cost and impacts on winter peak demand. Consider replacing fossil-fuel equipment at the end of their operating lives, which is more economical. Equipment selection will depend on building size, climate, temperature distribution and load profile. 

Plan for operational changes; for instance, induction cooking appliances require less ventilation than their natural gas counterparts.

For a large portfolio of properties, electrify as many buildings as possible until winter peak demand closely matches demand during summer. Choose centralized solutions, such as packaged heating units, that are easily replicable across the portfolio. However, a full electrification strategy may require more space for mechanical, electrical and plumbing, reducing rentable space. In one case, installing water heating equipment on the roof that would meet the hot water demands required a doubling of roof area.

With proper design, building electrification can increase efficiency, cut costs, improve indoor air quality and enhance safety. According to the Rocky Mountain Institute, electrification retrofits (packaged rooftop units) for mid-size office buildings (50,000 square feet) can be cost-effective when paired with other energy retrofit measures, including energy efficiency improvements, winter peak demand management and solar PV.

Financing electrification

While electrification comes with many benefits, it also can require a significant financial investment. Fortunately, a variety of financing options are available.

Some electrification upgrades may be eligible for the 179D energy efficient commercial building tax deduction. State and local incentives may also be available in your area.

• Angel funds
• Bridge financing
• Green and sustainability bonds
• Commercial property-assessed clean energy (PACE) loans

There are also many private capital funds to investigate, including clean energy equities, climate-related special purpose acquisition companies (SPACs) and exchange-traded funds. Other funding opportunities include:

LADWP’s Zero By Design encourages developers to build more sustainably by providing financial incentives for commercial new construction projects which exceed Title 24 or industry standards (also available for and multifamily high-rise 4 stories and above). Visit us online, email us at [email protected], or call (213) 367-8755, for more information on this program.

With proof that electrification efforts reduce emissions (such as certifications like LEED Zero), your organization can meet your sustainability goals and improve its brand and reputation.