Building Electrification

The U.S. Department of Energy on June 6 released the first part of a national definition of a zero-emissions building intended to provide guidance that will support decarbonization efforts in new and existing buildings and advance public- and private-sector climate goals.

Part 1 of the definition focuses on operational emissions from energy use, setting criteria to determine whether a building generates zero emissions from energy used in building operations, the DOE said. These criteria involve requiring buildings to be among the most energy efficient; free of on-site direct greenhouse gas emissions from energy use; and powered solely from clean energy, meaning all on-site and off-site energy used in the building must come from clean energy sources, according to a guidance document released by the DOE.

“With today’s announcement, DOE is helping bring clarity to our public and private sector partners to support decarbonization efforts and drive investment — paving the way for the cutting-edge clean energy technologies we need to make America’s buildings more comfortable and affordable,” U.S. Secretary of Energy Jennifer Granholm said in a statement.   

The U.S. has nearly 130 million existing buildings that cost over $400 billion a year to heat, cool, light and power, the DOE said. By 2050, an additional 60 billion square feet of commercial space are expected to be constructed, per the release. The department said defining what constitutes a zero-emissions building would help the nation achieve climate goals and cut energy costs for businesses and homes, while providing market certainty and clarity to scale zero emissions in new construction and retrofits. 

Plans to define what constitutes a “zero-emissions” building were first announced by White House National Climate Adviser Ali Zaidi last September. In developing a draft of this definition, the DOE sought input from industry stakeholders at the beginning of this year. Responses to its request for information, the department said, would serve “as a clear market signal and consistent target, backed by measurable data, to help move buildings toward zero emissions goals.” 

In April, DOE released a federal blueprint laying out actions that can be taken to slash U.S. building emissions 65% by 2035 and 90% by 2050, compared with 2005 levels. The blueprint also aims to reduce energy used on-site in buildings 35% by 2035 and 50% by 2050, compared with 2005 levels. Major technical advances in energy efficiency, heat pumps and clean energy mean that new and existing buildings can help the nation achieve zero emissions, the department said. 

Numerous factors, including embodied carbon, refrigerant use, grid interactivity, indoor air quality and electric vehicle support equipment can improve human health and minimize environmental impacts while cutting utility costs and boosting resiliency to climate change, according to the document outlining part 1 of the definition. Thus, the definition is “not a substitute for the green building and energy efficiency standards and certifications that public and private parties have developed,” the document clarifies. 

To meet the first pillar of the definition, being energy efficient, existing buildings must satisfy certain criteria. These include obtaining an Energy Star score of 75 or higher, or, if the building is not eligible for an Energy Star score, reducing site energy use intensity to at least 35% better than the median EUI for buildings of that category, the document says. Alternatively, a building can ensure its energy use intensity is less than the EUI specified in the latest version of ANSI/ASHRAE/IES Standard 100, Energy and Emissions Building Performance Standard for Existing Buildings, “for buildings of that type and location.”

Meanwhile, new buildings must satisfy one of three requirements, the document says. These include ensuring that estimated whole building energy use is at least 10% lower than the model code, being designed to obtain an Energy Star score of 90 or higher, if eligible, or being certified to the most recent effective version of the Energy Star Residential New Construction Program or Zero Energy Ready Homes program.

The second pillar, zero on-site emissions from energy use, involves ensuring that direct greenhouse gas emissions from energy use equal zero, the document says. However, emergency backup generators, which need to be used when grid power is unavailable, are exempt from this requirement, according to the document. 

The third pillar of the definition involves ensuring that all energy consumed by the building is clean energy obtained through any combination of on- and off-site sources, as long as GHG emissions from that source equal zero. If the building obtains heating or cooling from a district energy system, for example, that district energy must be generated from clean sources, the DOE says. It also recommends maximizing on-site clean energy before procuring off-site clean energy. 

ASHRAE has commended the release of the national definition’s part 1. "ASHRAE is pleased to be recognized and have our referenced standards acknowledged as guiding tools in this significant milestone to combat climate change by decarbonizing the built environment," ASHRAE President Ginger Scoggins said in a June 6 statement. 

“The Biden Administration, perhaps more than any previous administration, recognizes the enormous role that buildings play in our lives and our environment.” Peter Templeton, president and CEO of the U.S. Green Building Council, said in a June 6 statement.

“This is the future of buildings, and the definition will be an important tool for establishing a common understanding of what it really means to be a zero operating emissions building,” Templeton said. “As financial institutions, investors, and insurers grapple with climate risks, we see the baseline established by this definition as key to evolving market expectations.”  

The U.S. Department of Energy’s new Commercial Building Heat Pump Accelerator program aims to help manufacturers develop heat pumps that can replace less efficient rooftop heating and cooling systems. If deployed at scale, next-generation heat pump rooftop units could save U.S. businesses and commercial entities $5 billion on utility bills every year, the DOE said in an April 3 news release. 

Despite the effectiveness of heat pumps in boosting energy efficiency and reining in emissions, deployment has been low, Maria Vargas, senior program advisor and director of the Better Buildings Initiative at DOE, said in an interview. “We’re going to be working closely with manufacturers to make sure that the products meet what the end users need and are looking for to empower their facilities … in a way that’s reliable and works in all climate zones,” she said.

The accelerator, developed with manufacturing partners and commercial end users as part of the DOE’s Better Buildings Initiative, aims to bring higher-efficiency rooftop heat pump technologies to market as soon as 2027, the department said. These units, it said, are expected to halve greenhouse gas emissions and energy costs compared with natural gas-fueled heat pumps.

About $800 billion is spent annually to power U.S. buildings, plants and homes, with between 20% and 30% of energy wasted on average, the DOE said in its news release. Heat pump rooftop units are estimated to cut GHG emissions and energy costs by up to 50%, compared with natural gas heating rooftop units. But fewer than 15% of U.S. commercial buildings currently have heat pumps, and their adoption is even lower in cold climates, where the performance and availability of commercial building equipment lags behind residential systems, according to a DOE fact sheet on the accelerator program. 

The Better Buildings Initiative seeks to improve energy efficiency, reduce waste, conserve water and assist with emissions reduction efforts in buildings and facilities. Organizations participating in Better Buildings include nearly 30 Fortune 100 companies as well as state and local government entities. Through this initiative, the DOE is partnering with leaders in the public and private sectors to “advance next-generation solutions, promote climate leadership and support workforce development,” it said in the news release. 

The Commercial Building Heat Pump Accelerator program, one of the newest Better Buildings initiatives, was developed with commercial partners including Amazon, Target, Budderfly, Columbia Association, Ikea, the Los Angeles Unified School District and Whole Foods. It builds on “more than a decade of public-private partnerships to get cutting edge clean technologies from lab to market, helping to slash harmful carbon emissions throughout our economy,” U.S. Secretary of Energy Jennifer Granholm said in the release.    

“Part of what the accelerator hopes to do is make compelling real world business cases to adopt these technologies,” Vargas told Facilities Dive, pointing to the need for these technologies to be reliable and inspire confidence. “We can generate case studies and real world examples of these technologies being used to take away some of the risks that people might perceive with this new technology, because there always has to be a vanguard. We’re going to need to build it, prove it and then get the word out. That’s the road map to moving these new technologies into the marketplace.”

In the commercial heat pump accelerator program fact sheet, the DOE says it will challenge manufacturers to develop new equipment that meets its “advanced technology specification.” In partnership with the U.S. National Renewable Energy Laboratory and other laboratories, the DOE will also develop prototypes with manufacturers, test the performance and durability of the products and lead field validations with Better Buildings partners, according to the fact sheet. 

Manufacturers the accelerator has partnered with include AAON, Budderfly, Carrier Global Corp., Lennox International, Trane Technologies and York International Corp., a wholly-owned subsidiary of Johnson Controls. 

“Support for innovative public-private partnerships like this one is critical to driving climate solutions domestically and across the world. By working together to build, test, and install next-generation commercial heat pumps at scale in the United States, we can accelerate a key, clean energy technology essential to reducing carbon emissions,” Kara Hurst, vice president of worldwide sustainability at Amazon, said in an email. 

The technology challenge is open to commercial heat pump manufacturers, the DOE said, and the campaign is open to building and plant owners and operators, utilities and other supporting organizations that could include nonprofits, associations and trade organizations. 

Sponsored content

By Franklin Energy

Recent years have seen the enactment of landmark legislation aimed at addressing the pressing issue of climate change. The federal Inflation Reduction Act (IRA), which has allocated $8.8 billion in home energy rebates is just one example of the transformative policies designed to steer the nation towards a net-zero carbon future. These new initiatives underscore the essential role that utilities and state energy offices will play in creating a sustainable, electrified energy landscape.

While many utilities have long championed energy efficiency, the IRA-funded programs that will start rolling out in states across the country in the fall take these concepts a step further, using electrification and whole home energy initiatives to help significantly reduce greenhouse gases and abate global warming. With majority of that IRA funding going to state energy offices (SEO), one might assume that electric utilities might be tempted to put off aligning their programs with those of state energy offices. However, as the energy landscape has changed in recent years, utilities are transitioning their residential demand side management (DSM) programs away from lighting-focused direct install programs towards a more comprehensive electrification, load management and home energy-efficiency portfolio, with a special emphasis on low-income customers. This evolution of programs aligns with changing consumer needs and broad energy conservation goals.

While utilities won’t directly administer IRA rebates programs, that doesn’t mean they can’t benefit from the vast sums of money the federal government is doling out to encourage both local and national residential electrification.

A Sierra Club analysis of the IRA found that the legislation will do more than just jump-start the government’s climate goals. IRA provisions for utilities include direct-pay tax credits for clean energy projects, grants for projects that reduce greenhouse gases, low-cost loans for utilities that are repurposing or replacing fossil energy infrastructure, and low-interest or potentially forgivable loans for renewable energy procurement.

In addition, utilities and SEOs can work together to integrate their programs. For instance, utilities could tailor their electrification programs to target services that are not addressed by the IRA-funded programs, but are very complimentary, like pre-weatherization improvements to low-income homes, panel upgrades to accommodate a larger electrical load, and resiliency improvements such as solar-plus-storage solutions. And SEOs that find their program budgets inadequate can partner with utilities; they may provide assistance in tapping into additional incentive or rebate programs that bolster the overall rebate levels for customers and collaborate on utility data access to remove a significant cost from SEO program implementation.

In addition to layering IRA-funded rebates with utility rebates, other federal program funding, such as WAP and Solar for All, as well as federal and state tax credits can address a major pain point for utilities and their residential customers—the overall cost and complexity of making big electrification equipment upgrades versus simple DIY-type fixes that no longer result in much savings without lighting.

By designing their programs for close alignment with SEO programs, utilities can establish next-generation residential programs that include major electrification upgrades like whole-home weatherization, swapping out an HVAC unit for a heat pump, and replacing gas appliances and water heaters with electric. Homeowners can take advantage of both IRA and utility-funded rebates, then claim energy tax credits, which gives them a sizeable discount on their project with minimal out-of-pocket expenses. Low-income customers have even more options available given the vast number of complimentary programs in many states.

The bottom line is that the IRA is an opportunity for both utilities and SEOs to take electrification initiatives to a higher level. And the resulting market transformation can last long after the IRA rebate periods end.

For instance, IRA funding can spawn creative ways to reach traditionally underserved or disadvantaged residential utility customers, including people with low incomes, multifamily-unit dwellers, homes that rely on propane or oil heat, manufactured housing owners, rural households, and tribal communities.

While the funding may vary for SEO and utility electrification programs, the implementation is similar. Both SEOs and utilities need clear standards and policies for attributing energy savings and rebates for their programs. And while each entity can create its own electrification programs, to be most effective, federal and utility funding streams should complement each other. As SEOs consider how best to use the billions of dollars in IRA money, they can also make program participation easier for homeowners by collaborating with local utilities and building upon the energy-efficiency and electrification programs many utilities already offer.

An initiative as ambitious as whole-home electrification won’t be easy to design or implement. Franklin Energy can provide expert guidance to help both SEOs and utilities following the best practices in residential energy program evolution—and reap the cost and climate savings benefits for generations to come.

 

The U.S. Department of Energy finalized a rule April 24 to phase out fossil fuel use in newly constructed federal buildings and those that have undergone extensive renovations.

Under the Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings Rule, federal agencies must reduce their on-site fossil fuel use by 90%, compared with 2003 levels, in construction and renovation projects started between 2025 and 2029 and entirely eliminate on-site fossil fuel use in new projects beginning in 2030.

The DOE estimates that over the next 30 years, the new rule will cut carbon emissions from federal buildings by 2 million metric tons and methane emissions by 16,000 tons. The rule is intended to help the federal government achieve the Biden administration’s federal sustainability goals, Brenda Mallory, chair of the White House Council on Environmental Quality, said in an April 24 news release. 

The rule implements the Energy Independence and Security Act of 2007, DOE said in the release. The EISA’s goals for federal agencies include improved energy performance, increased building efficiency and more widespread use of clean fuels. 

The EISA lays out certain thresholds and criteria that determine which federal buildings are subject to its energy efficiency regulations. Buildings are accordingly classified under two categories.

The first category includes new federal or majorly renovated public buildings. A public building requires the submission of a prospectus to Congress if the total cost of constructing, altering or acquiring the facility exceeds $1.5 million, with the U.S. General Services Administration authorized to adjust this value annually to factor in construction cost increases. For fiscal year 2024, for example, the GSA’s annual prospectus threshold is about $3.6 million, the rule notes. The threshold for altering leased public buildings is half of the cost threshold for renovation of federally-owned buildings, or approximately $1.8 million in 2024.

The second category includes non-public federal buildings that are new or have been renovated, with construction or renovation costs of at least $2.5 million, adjusted for inflation. As of the most recent update last October, that is an equivalent of approximately $3.8 million, the rule says. 

The DOE rule also highlighted the possibility of federal agencies breaking up major renovations into smaller pieces to circumvent the applicable cost thresholds and said it aims to discourage this practice.

Federal buildings complying with the rule are expected to reduce pollution, improve air quality, create well-paying jobs and garner cost savings through the use of more energy-efficient equipment. These measures, the department said, would “lead the way” to achieving President Biden’s goal of net-zero emissions from all federal buildings by 2045. 

“President Biden has charged the Federal Government to lead by example by transforming its footprint of over 300,000 buildings to be more energy efficient and climate resilient,” Mallory said.

"With federal facilities contributing over 80% of government climate pollution, taking fossil fuels out of the equation for new construction and major renovations is paramount,” David Smedick, federal and international policy manager with the carbon-free buildings team at clean energy nonprofit RMI, said in an email, noting that the rule fulfills a “long-standing Congressional directive.” Combined with energy efficiency initiatives like the Federal Building Performance Standard, these actions will not only reduce costs and air pollution but also drive innovation in the efficient appliance market and clean energy economy, Smedick said.

The rule will not only reduce air pollution in cities with major federal offices, but also “unleash the buying power of the federal government for electric space and water heating appliances,” Sierra Club said in a statement. This market influence, the environmental organization noted, will drive down costs of energy-efficient electric appliances.

In an April 25 blog post, RMI recommended that state and local governments follow suit. The organization cited an internal analysis that points to the potential for decarbonization measures in state and local government buildings to cut 6% of building greenhouse gas emissions — approximately 38.6 million metric tons a year. This is an equivalent of emissions from all private and public U.S. office buildings, RMI said. 

The DOE said it will issue supplemental guidance on the rule through its Federal Energy Management Program, providing federal agencies with pathways for compliance, and that it will support agencies as they work to meet these targets by “providing resources, opportunities for grant funding, training and technical assistance.”

Owners and operators can slash building emissions more quickly through measures that transcend energy efficiency improvements, according to a U.S. Green Building Council paper on building decarbonization released last month.

The plan points to other emissions-reduction pathways, like electrification, clean power, building grid integration and embodied carbon reduction.

“There are two big steps: First, electrify your building — stop burning fossil fuel on-site,” USGBC Principal Climate Advisor Laurie Kerr said in the report. “Second, buildings must reduce their peak heating and cooling loads, because that’s going to drive the size of the power grid.” These areas of emphasis align with the USGBC’s fifth iteration of its Leadership in Energy and Environmental Design, or LEED v5, rating system, for which it opened the first public comment period April 3. 

LEED v5 prompts projects to curtail operational emissions from energy used to operate buildings, embodied carbon emissions from materials used for construction and renovation, waste generated while operating or renovating buildings and emissions related to transportation to and from a building, the USGBC says. Strategies to do so, it says in the building decarbonization paper, include “more obvious and less obvious methods, from going all-electric for heating and cooling systems to disposing of refrigerants in old HVAC systems safely.”

LEED v5’s credits and prerequisites revolve around efforts that improve decarbonization, quality of life and ecological conservation and restoration, the USGBC said in an April 4 press release. Fifty percent of points in the rating system would go toward decarbonization across building design and construction as well as operations and maintenance, Corey Enck, vice president of LEED technical development at the USGBC, said in an interview. 

Additional prerequisites for existing buildings include reviewing water consumption data, monitoring water quality and performance, and identifying methods to reduce water consumption, alongside an assessment of major impacts on occupant health related to the indoor environment, according to a building operations and maintenance guide to LEED v5 released last week for the first public comment period.

The LEED team has also added credits for electrification, peak thermal load reduction, renewable energy and refrigerant emissions reduction efforts, Enck said. The USGBC “moved most of the points from energy efficiency credits and distributed those points to these other pathways for decarbonization” in the latest iteration, he added.

 A draft of the LEED v5 building design and construction guide released for the first public comment period requires that project developers assess the building’s climate resilience and social equity and develop a projected 25-year carbon assessment. Projects like data centers and warehouses can earn up to six points for accreditation by ensuring proximity to transportation resources like airports and highways and selecting a site where at least 25% of the project borders on previously developed parcels

Budget-constrained facilities managers who are tasked with reducing emissions from buildings and equipment must plan ahead and consider corporate climate commitments, tenant expectations and building performance standards, said USGBC’s Senior Policy Counsel Liz Beardsley. With decarbonization pressures mounting from tenants and other stakeholders, facilities managers would be best placed to “get a handle on where they are right now,” develop a plan “for how they would work toward decarbonization over a number of years, and then start to chip away at it and communicate what they’re doing to their stakeholders,” she said.

For Maria Vargas, director of the Better Buildings initiative at the U.S. Department of Energy, a people-centric approach to designing, renovating and managing buildings would help existing buildings meet LEED v5’s operations and maintenance prerequisites. “A building is not just a building. It’s really to sell a product or house sick people or teach children, so buildings have end users,” she said Thus, a focus on occupants’ needs and well-being is crucial for creating effective and sustainable spaces, she said.  

For CBRE’s global chief economist and head of global research, Richard Barkham, however, energy efficiency is a step many buildings can start with. It includes simple practices like “being very rigorous about putting the lights out at the end of the day,” Barkham said, “but many buildings don’t even do that.” 

The first public comment period for LEED v5 is open through May 20. Final versions of LEED v5 are slated for release in early 2025.

Interest is growing in electrification as the lowest cost and lowest risk option for decarbonizing much of the building sector. In addition to the incentives and tax credits for building electrification included in the federal Inflation Reduction Act, several states have begun enacting policies to promote the adoption of electric heat pumps and slow the growth of natural gas distribution systems.

In California, policymakers are piecing together a plan to achieve high levels of building electrification, including efforts to develop new upfront incentives, modernize electric rate designs, update the state's building code and consider emissions standards for new appliances. However, as these initiatives begin to take root, an important question looms ever larger: what to do about our extensive natural gas infrastructure?

California has a massive gas system with over 200,000 miles of gas "distribution” pipelines – small-diameter pipes that move gas through neighborhoods and deliver it to buildings. Collectively, California’s gas distribution pipelines cost over $20 billion to install, are financed by gas ratepayers over roughly 60 years, and we have paid off less than one third of their costs. These costs will pose an increasing challenge as building electrification advances, as gas system costs will be spread across fewer customers and a lower volume of gas sales. As a result, remaining customers could face large increases in their gas rates. Low-income homeowners, who cannot afford electric alternatives, and renters, who cannot elect these alternatives, will be most vulnerable to these gas rate increases.

The long-term gas system cost challenge is a thorny issue for the energy transition. New research completed for the California Energy Commission shows how “targeted electrification and gas decommissioning” could help manage costs on the gas system. In this approach, building electrification would be targeted to specific locations to avoid a gas pipeline replacement project. If implemented at scale across the state, we estimate that targeted electrification and gas decommissioning projects could reduce the gas revenue requirement — the total funds collected from gas customers to pay for the gas system — by $100 million per year in early years and by over $2 billion per year by 2045.

This strategy will not be a “silver bullet” to solve the state’s long-term gas cost challenge. Even where targeted electrification projects are cost-effective, the timing and scale for these projects will be limited by the pipeline replacement schedule and by hydraulic feasibility for decommissioning.

At the California Public Utilities Commission, the Long-term Gas Planning proceeding is beginning to focus on planning for a transition of California’s natural gas system. In February, the CPUC proposed new scope for Phase 3 of the proceeding, including the identification and collection of key gas system data and the consideration of geographically targeted approaches to building electrification. The CPUC also issued a joint agency staff paper on gas transition planning that draws on our work on targeted electrification. This proceeding will be an important opportunity to consider the role of targeted electrification as part of a portfolio of strategies to decarbonize gas customers and manage gas system costs.

The gas infrastructure cost challenge

While California’s long-term goal is to transition gas customers to electricity or clean fuels, continued investment in the gas system is needed to support safe and reliable operations. California’s gas utilities replace hundreds of miles of distribution pipeline per year, focusing on pipelines with the highest risk of leakage or failure. These projects typically cost between $2 million and $6 million per mile of distribution main.

Our research for the California Energy Commission explored the cost-effectiveness of targeted electrification and gas decommissioning to avoid specific gas pipeline replacement projects at eleven sites in the San Francisco Bay Area. Our cost-effectiveness analysis considered participant, gas ratepayer, electric ratepayer and total cost perspectives using site-specific estimates of gas infrastructure avoided costs and energy consumption data for 1,500 customers.

We found that all eleven of the candidate projects would generate net benefits from a total cost perspective. Thus, if projects like these could be successfully implemented — which remains a big ‘if’ given upfront cost barriers, customer preferences and regulatory challenges — these projects would help manage the long-term gas cost challenge.

Customers participating in a targeted electrification project will face a significant funding gap for the upfront costs of building electrification, even after accounting for existing federal, state and utility incentives. These upfront costs, along with the costs to upgrade the electric panel and service where necessary, remain a significant barrier to customer adoption. One potential option to address the funding gap would be to repurpose savings from avoided gas pipeline replacement to fund the associated building electrification projects. However, this approach would reduce the long-term savings to gas ratepayers and thus does not help mitigate the cost challenge for remaining gas customers.

We also found that targeted electrification projects will likely be more cost-effective in less dense communities, i.e., sites with fewer gas customers per mile of gas main. The eleven candidate sites in the Bay Area are much denser — in terms of customers per mile — than PG&E’s service territory on average, indicating that projects in other regions of California could be more cost-effective. In other words, pruning the gas distribution system in the more rural parts of the service territory is likely to be a more cost-effective strategy than pursuing gas decommissioning projects in the denser urban core (Figure 1).

Cost-effectiveness in other regions

The cost-effectiveness picture for targeted electrification and gas decommissioning will look different in other places. PG&E has one of the densest gas service territories in the U.S., and less dense utilities would see lower total electrification costs for decommissioning a mile of gas main. Conversely, PG&E has relatively high gas pipeline replacement costs, so other utilities may see lower savings from decommissioning a mile of gas main. Climate will also play an important role in the cost-effectiveness of these projects. Relative to California, colder climates may see greater upfront costs to install larger and more efficient heat pumps. Electric system capacity costs may also be higher in cold climates, where electrification will increase peak loads on the distribution system and/or on the bulk system.

There is also an interesting consideration for planning these kinds of projects in colder climates. Our work in Massachusetts has shown that pathways that employ a mix of all-electric and dual-fuel (“hybrid”) heat pump systems may help limit severe peak load impacts on the electric grid and their associated costs. Under this kind of pathway, all-electric equipment could be geographically targeted in sites that are suitable for gas decommissioning, while dual-fuel systems could be prioritized in locations where full electrification is more challenging and where the gas infrastructure is newer and gas system investments are not needed.

Regulatory and policy considerations

Regulatory and policy changes will be necessary for targeted electrification and gas decommissioning to achieve a scale that would support meaningful cost savings for gas ratepayers. One step in this direction would be for the CPUC to require gas utilities to develop strategic long-term plans to meet decarbonization goals. Other suggestions include creating a longer-term planning process for gas capital projects to support site identification, developing better data and planning tools to identify candidate sites, and pursuing legislative reforms to the obligation to serve. These topics should be considered in the new phase of the CPUC’s Long-Term Gas Planning proceeding.

Another key lesson from this work is that coordinated planning is needed between gas and electric utilities. Both utilities must contribute data to enable site identification and must support the physical implementation of a project, and they may both provide or coordinate funding and incentives. These efforts may be difficult to achieve even within a single utility company and will be much more challenging where gas and electric utilities are different. Regulators and policymakers should take steps to support this necessary coordination.

As California continues to progress on plans for building electrification, we must also plan for managing our state’s extensive gas distribution system. Targeted electrification is a piece of the puzzle, but other measures will also be needed to reduce gas system investment and mitigate long-term cost pressures. It’s time to develop long-term plans for the gas system that put these pieces together.

Boston will electrify seven federal public housing buildings with the city’s first networked geothermal pilot project, Mayor Michelle Wu announced on Jan. 25. 

Networked geothermal uses underground pipes to heat and cool buildings in a highly efficient manner by pulling heat from the ground in the winter and transferring indoor heat to the ground to cool buildings in the summer. Boston’s project is part of a demonstration program led by the gas and electric utility National Grid.

As the city tackles climate change, “it is vital that our public housing communities come first,” Boston Housing Authority Administrator Kenzie Bok said. The project will showcase geothermal technology for multifamily housing, Bok added, as the housing authority works toward a 2030 goal of being fossil fuel-free.

Decarbonization experts and advocates are increasingly calling for neighborhood-scale building decarbonization, which gets entire groups of buildings off the gas system at once, in lieu of the current approach that relies on consumers electrifying appliances one at a time.

Cities and utilities are still figuring out exactly how to accomplish that, however. National Grid has only undertaken one other project in Massachusetts, in Lowell, through its networked geothermal demonstration program, which launched in 2021. Construction on the Lowell system broke ground in April 2023.

“Key to transitioning away from fossil fuels is to develop and expand reliable alternatives,” said Lisa Wieland, president of National Grid New England, in a statement. “Networked geothermal has significant potential to be a solution, especially for larger buildings and campuses.”

Construction on Boston’s project is planned for 2025 and will require no more than a few days of temporary relocation for residents, the Boston Housing Authority said in a news release. The design and resident engagement processes will begin this year.

The networked geothermal system, which includes ground-source heat pumps, will replace an aging gas boiler loop that serves 129 units at the Franklin Field Apartments. The system will provide in-unit cooling, meaning residents will no longer have to purchase window air conditioning units to stay comfortable during hot days. 

A jigsaw puzzle of resources will financially support the project. The Boston Housing Authority will contribute funds from the federal Capital Fund Program, which annually provides public housing authorities nationwide with money for housing development, financing, modernization and management improvements. The project will leverage state programs to fund energy efficiency improvements at the public housing buildings.

The City of Boston also received $1 million through a U.S. Environmental Protection Agency grant program, which it will use to retrofit 80 gas stoves to electric in the Franklin Field Apartments and another affordable housing development nearby. Gas stoves have been shown to pose health risks to residents, and the city is teaming up with Boston University to study the indoor air quality impacts of the retrofit project. 

The U.S. Court of Appeals for the Ninth Circuit will not reconsider its decision to overturn Berkeley, California’s first-in-the-nation ban on natural gas hookups in new construction, according to a denial issued on Jan. 2. 

A three-judge panel of the federal appeals court struck down Berkeley’s ordinance in April, agreeing with California restaurant owners that the city overstepped the federal Energy and Policy Conservation Act when it passed the ban in 2019. 

The decision led other jurisdictions in the region to reconsider their own building electrification rules to avoid legal threats, with Eugene, Oregon, reversing its gas ban altogether and Washington state changing recently adopted building codes that would have mandated electric heat pumps in new buildings. Some building electrification advocates worried the court’s decision would chill decarbonization efforts as local and state governments face down lawsuits often led by the gas industry.

The City of Berkeley filed a petition in May for an en banc rehearing of the case, in which 11 judges would reconsider the April decision. The petition drew supportive amicus briefs from stakeholders including the Biden administration, states and other cities. 

If Berkeley wants to move forward with the case in the court system, its only course of action is to ask the U.S. Supreme Court to hear it, said Amy Turner, director of the Cities Climate Law Initiative at Columbia University’s Sabin Center for Climate Change Law. Berkeley’s city attorney did not immediately respond to a request for comment on potential next steps. 

Turner noted the unusually strong and complicated denial, which includes a forceful dissent by 11 of the court’s more than 50 judges. “The dissent doesn’t have any bearing on the outcome here, but Judge [Michelle] Friedland, who authored the dissent, notes that she’s writing it to essentially speak to other federal courts who may be considering similar legal questions,” Turner said. “She essentially takes the majority judges to task by arguing that they’ve misinterpreted the definitions of key terms in EPCA."

Also in the Jan. 2 denial, the original judges that overturned Berkeley’s ordinance amended some of the language in their April decision, presumably to clarify the scope of EPCA's preemption, Turner said. “The amendments do not change the April 2023 decision,” she said. 

Heat pumps are gaining recognition across many parts of the U.S. for their energy efficiency and reduced greenhouse gas emissions compared with other building heating and cooling options.

The U.S. Climate Alliance, a bipartisan coalition of 25 governors, recently pledged to increase heat pump installations across their states to reach 20 million by 2030. Currently, the U.S. has about 4.8 million heat pump installations, according to RMI, a clean energy think tank. 

Adoption varies from state to state. In Massachusetts, concerns about initial expenses and the intricacies involved in selecting appropriate heat pump equipment have slowed adoption, putting the state behind counterparts like Maine, which has already surpassed its 2025 target of 100,000 heat pumps. Maine Gov. Janet Mills, D, recently established a more ambitious target of reaching 175,000 heat pumps by 2027. 

Facilities managers looking to deploy heat pumps in existing buildings are finding that cost concerns — despite the availability of federal incentives — along with the significant work and disruption involved in a retrofit pose challenges, however. 

Physical challenges

The feasibility of retrofitting existing buildings with heat pumps varies from building to building. “It’s certainly a proven technology. [But] just doing a swap-out of your HVAC system for a heat pump system may not be the best strategy,” said Ryan Colker, vice president of innovation at the International Code Council.

Kailash Viswanathan, director of energy at Arch Energy, a subsidiary of Consigli Construction, names two significant challenges: First, building occupancy. The ability to make such a significant renovation in a building is “very much occupant-driven,” Viswanathan said. “If it's a centralized plan, it's easier. But you still have to get into the building. You have to open up walls and change pipes to make it happen. [In most cases], such changes can be made only when occupants are leaving or when there's a turnover of tenants.”

Second is maintaining space heating and water heating temperatures. Heat pumps work best at lower water temperatures, Viswanathan said. Retrofitting heat pumps in existing buildings will involve reducing the water temperature from 180 degrees Fahrenheit to 120 degrees to 140 degrees Fahrenheit, he said. To achieve the same level of heat with lower-temperature water requires a greater flow rate. “That means you need to increase the diameter of the pipes. And that involves getting into an occupant's space and removing and changing the pipes. That's disruptive,” he said. “That's why there are 10- to 12-year plans. It’s not going to happen overnight. And challenging buildings, like historic buildings, will take a longer time to retrofit — about 20 years or so.''

Viswanathan is part of a team retrofitting heat pumps into a high-rise building at 345 Hudson St. in New York City. This inaugural initiative by the New York State Energy Research and Development Authority aims to rapidly electrify one of New York City’s century-old buildings. “We help engineers [and the clients] find solutions and … figure out what the best way [is] to reduce carbon emissions in this building,” he said.

“Facilities managers are always part of the decision-making process,” he added. ”They think about what challenges are involved in operating, maintaining and controlling heat pump technology better. There's a lot of automation that comes with it, and they have to learn that.”

Economic challenges

Another significant barrier: Installing heat pumps in existing buildings is expensive. A report from Rosen Consulting Group suggest that the overall cost in 2022 of retrofitting a typical gas-powered office building in New York state with a ground-source heat pump ranges from $17 to $24 per square foot, while the cost for an air-source heat pump would range from $12 to $21 per square foot. Those estimates include heat pump water heaters, necessary infrastructure and electrical upgrades.

The report notes that heat pump retrofits in office buildings have the potential to create “significant energy bill savings” on an ongoing basis, although estimates of those savings were predicated upon additional building shell improvements that would incur additional costs. The Inflation Reduction Act makes it possible to obtain federal tax credits and state-administered rebates to offset heat pump purchase and installation costs. 

Facilities managers need a clear understanding of the financial costs and benefits of heat pumps, including long-term maintenance factors, to validate their decision to deploy these systems, said Doug Davenport, founder and executive director of Prospect Silicon Valley, a nonprofit cleantech accelerator focused on transportation, energy and infrastructure. 

Facilities managers also need more “education and training [on] aggregating and interpreting performance outcomes from real installations to prove that the technology works as reported. [This] is going to be especially true with a wave of new designs coming to market,” Davenport said.  

One approach to reduce the cost of a heat pump retrofit is to implement a hybrid system. Geothermal heat pumps with hybrid heat exchange can help building owners and operators reduce capital expenses and bolster the economic feasibility of retrofit projects, the National Renewable Energy Laboratory reported in September. NREL added the ability to analyze such systems to its REopt tool, which aims to help building managers evaluate the mix of renewable energy, conventional energy, storage and GHP technologies they can use to meet their cost, clean energy and resilience goals.

Potential grid challenges

Despite heat pumps’ immediate benefits for decarbonization, when used at scale they can exert more strain on local power grids that may lack the necessary generating capacity to accommodate anticipated building electrification growth. “You can’t just install heat pumps and not fix the grid. What everyone is waiting for is whether the grid is going to green itself,” said Owen Glubiak, vice president of revenue at Cortex Sustainability Intelligence. 

Cortex recently rolled out an automation feature to its building decarbonization platform to help clients cut energy use and carbon emissions. Using heat pumps within a demand response-driven scenario can alleviate that strain on the grid, he said. “You see the biggest problems during the warmest and coldest days. So, demand response programs are going to become very important to ensure that you are meeting peak demand,” Glubiak said. 

One piece of the decarbonization puzzle

As Glubiak indicates, heat pumps alone are not the be-all and end-all of electrification. The benefits of electrifying buildings will be felt most when facilities managers look at adopting heat pumps as part of a full system that includes solar panels and battery storage systems, said Thomas A. Kwan, Schneider Electric’s sustainability research director.

While deciding whether a heat pump retrofit project makes economic sense or not, ICC’s Colker recommends an in-depth energy audit that can provide comprehensive insights into “where you’re going to get the most bang for your buck and where you’ll get the best climate change impacts.” 

Facilities managers looking to upgrade decades-old building systems tend to make decisions that are more pragmatic, said Mark Grinis, who leads digital transformation initiatives for EY Americas’ real estate practice. “If something is broken, let’s fix it properly. But do we want to entertain a very complex retrofit?” he said about how facilities managers typically think through the process. The feasibility of a heat pump retrofit project is also location-dependent in terms of the ability to draw broader groups of tenants and realize higher economic returns, he noted. There may be opportunities to install cool roofs and rooftop solar panels in older buildings, he added, but “I feel like I see heat pumps much more on new builds.” 

Heat pumps currently fulfill only around 10% of the worldwide heating demand in buildings, significantly falling short of the deployment necessary to align with 2050 net zero emissions targets, according to the International Energy Agency. It calls for more policy support and technical innovation to boost energy efficiency, reduce upfront purchase and installation costs and remove market barriers to complex retrofits.

Google’s 2023 Environmental Report details how the company is decarbonizing its facilities to achieve net-zero emissions across all of its operations and value chain by 2030 and measuring progress.

The company has a goal to operate all of its data centers and office campuses on carbon-free energy 24/7 by 2030. In 2022, Google achieved 64% of that goal, down from 66% in 2021. 

The tech giant says that in addition to smart temperature and lighting controls, it captures and uses heat generated by servers to heat offices and signed power purchase agreements for approximately 2.8 gigawatts of clean energy capacity.

Google’s efforts involve reducing combined scope 1, scope 2 and scope 3 absolute emissions by 50% by 2030 compared with its 2019 baseline. Due to a methodology change, the company says that instead of reporting a percent progress towards this target, it is instead providing its total greenhouse gas emissions, which sat at 10.2 million tonnes of carbon dioxide equivalent in 2022. 

The company says its scope 2 emissions, which mainly stem from electricity demands at its data centers and represent 24% of its total emissions, are a key focus because it has more direct control over its facilities than other parts of its value chain. 

Google is undertaking a number of facilities-level initiatives to reduce emissions and improve the energy efficiency of its data centers and offices. These include using natural, low-global warming potential refrigerants and smart temperature and lighting controls at its data centers, as well as LEED-certified office space and facility electrification. 

Google says that as of 2022, over 20 million square feet of its office facilities have achieved the Leadership in Energy and Environmental Design certification, with 27% achieving Platinum rating and 60% Gold rating. Google said that in addition to designing offices to meet LEED requirements, it also designs its offices to green building standards such as the Building Research Establishment Environmental Assessment Method and the International Living Future Institute’s Living Building Challenge and Zero Carbon Certification. 

In addition, Google said it is implementing energy management strategies, building optimization and data analytics to help drive efficiency related to equipment upgrades, setpoint adjustments and lighting retrofits. 

Energy management strategies include electrifying its facilities; Google says this entails retrofitting existing building systems, including electrification standards for new development and working with property owners on electrification-friendly leases. The company recently opened an all-electric Bay View campus at its Googleplex in Mountain View, California, which utilizes a geothermal installation and water retention ponds to reduce the amount of water typically used for data center cooling by 90%. 

The company also noted that heat recovery is a key part of its office development strategy “because reusing heat often requires less energy than creating new heat.”

The U.S. will need to triple its retrofit rate to meet net-zero targets, with 80% of today’s office buildings expected to still be in use by 2050, according to a report sent to Facilities Dive by JLL, a commercial real estate services company. 

The Retrofitting Buildings to be Future-Fit report, released in November, found that existing stock will have to be retrofitted at 3% to 3.5% per year if net-zero targets are to be met. 

The report points to a significant knowledge gap and emphasizes the need to upskill the labor force and encourage sustainability training for building technicians.

The report provides estimated energy efficiency savings by type of retrofit and outlines how facilities management professionals can ensure that their buildings meet net-zero carbon emission standards and decarbonization goals. 
 

The report estimated 40% to 60% energy efficiency savings for deep retrofits of whole office buildings compared with 10% to 15% for light retrofits. 

While electrifying building systems requires a large capital investment, it is more effective than incremental, small energy conservation retrofits, such as replacing a fossil fuel burning boiler with a more efficient gas burning system, JLL says. While cheaper in the short term, these retrofits do not fully remove emissions from a building’s operations. 

On the other hand, system electrification helps to future-proof assets, enables better ROI determinations for investors, and can be used to bundle initiatives into larger capex projects and reduce payback periods for the upgrades.

The rate of retrofits in the global North is about 1%, or less than a third of the required 3% to 3.5% target rate, which will not provide enough decarbonization to align with the Paris Climate Agreement. The report conservatively estimates a need for more than $3 trillion to retrofit office stock across the 17 major countries in that territory.

Even in high-growth emerging cities, where new construction could more than double existing stock by 2050, tripling the current retrofit rate will be a “formidable undertaking,” the report noted. In addition to the estimated cost for 2050 net-zero target retrofits, it also found a large knowledge gap when it comes to conducting deep retrofits. 

JLL attributes this knowledge gap to a shortage of technical expertise, pointing to an urgent need to upskill the labor force; encourage sustainability training for building engineers, architects and consultants; and apprise stakeholders of the benefits of retrofitting existing buildings. 

These changes will need to be made rapidly now, and consistently for the next 30 years, to meet climate pledge goals and decarbonization mandates. But the knowledge gap and labor shortage pressures across U.S. facilities present key roadblocks, and occupiers are already feeling the pinch. As a result, some have started upskilling workers, aiming to bridge the chasm of scarce labor supply. Biotech trade society MassBio, for instance, launched its own nonprofit aimed at training and upskilling workers in May to reduce the facilities labor crisis affecting the life sciences industry. 

The healthcare platform lists future-proofing assets, ROI, rental uplift, tenant retention and attraction, and reducing financial risk as critical factors to accelerating the race to retrofit buildings.