Three Facts about Electric Heating in California
California has a long way to go if it is going to electrify homes.
Two weeks ago a federal court overturned Berkeley's ban on natural gas in new buildings. According to the court, bans like this one are preempted by federal law, and therefore illegal. The decision raises questions not only for Berkeley, but also for the other 70+ cities in California with similar policies.
But as this "stick" goes away, the "carrot" from the Inflation Reduction Act is just arriving. Low- and middle-income households, for example, will soon be able to access point-of-sale rebates of up to $8,000 when purchasing a new heat pump. California offers additional subsidies of up to $3,000.
I’m very curious to see how these subsidies will impact choices. In some ways California is a good candidate for heat pumps and other forms of electrification but, as I emphasize in today's post, the state has a long way to go compared to most other states.
Fact 1: 28% of California households have electric heat, compared to 40% nationwide.
The U.S. has a lot of electric heating. It is the dominant form of home heating throughout the Southeast, and is quite common as far north as West Virginia, Maryland, and Delaware.
Not so much California, however. With only 28%, California is far below the national average (40%), and well below the average for all Western states (34%).
Particularly striking is the comparison between California (28%) and Oregon (48%). Based on climate factors alone we would have expected the exact opposite pattern for these two bordering states.
You may already have a hypothesis in mind. I’ll get there, but first let's look at more facts.
Fact 2: 6% of California households have a heat pump, compared to 15% nationwide.
Of the 3.7 million California households with electric heating, only 800,000 have heat pumps. To put this in context, there are more heat pumps in South Carolina (900,000) than in California, despite California's population being 6 times larger.
Whereas only 6% of California households have a heat pump, adoption ranges between 20% and 40% throughout the Southeast. In Florida, for example, 33% of households have heat pumps.The Pacific Northwest has higher adoption too, 13% in Washington and 15% in Oregon.
This distinction between heat pumps and other forms of electric heating (i.e. electric resistance) is critical from a climate perspective. With one kWh of electricity, electric resistance heating delivers one kWh of heat, whereas a heat pump delivers 2, 3, or even 4 kWh of heat. This means that as long as the electric grid is served by fossil fueled power plants, a heat pump can deliver the same heat as electric resistance heating with a fraction of the emissions.
Thus most decarbonization studies conclude that heat pumps will play a crucial role in reducing carbon emissions. A recent report by the International Energy Agency, for example, finds that global adoption of heat pumps will need to more than double by 2030 to meet the carbon abatement goals outlined by the Paris Agreement.
And it's not just space heating.
Fact 3: 21% of California households have an electric hot water heater, compared to 47% nationwide.
Californians are also much less likely to use electricity for hot water heating. As Max wrote about two weeks ago, American households use vast amounts of energy for water heating, and, in California, this energy is much more likely to come from natural gas.
Strikingly, if you rank all states in terms of electric hot water heating, California is number 47 out of 50. Throughout the Southeast, households are approximately four times more likely to have electric hot water heating, e.g. Florida (88%), South Carolina (77%), North Carolina (75%).
Beyond space and water heating, it turns out this same pattern holds for stoves and dryers too. I’ll spare you the details, but I’ve looked at the data and California households are also much less likely to use electricity for these other appliances, all of which are increasingly seeing available federal and state subsidies.
The bottom line is that California has a long way to go if it is going to electrify homes.
Why? Why so little electric heating in California?
There are certainly multiple explanations. I agree with Jim Sallee that installers and contractors play a big role. When certain choices are made over and over, there is an inertia in the system and it can be hard to go against the status quo. My colleague Carl Blumstein has also explained to me that California building codes historically tended to favor natural gas over electricity.
But the leading hypothesis has to be California's high residential electricity prices. It's pretty simple. High electricity prices discourage adoption of electric heating, electric heat pumps, and electric hot water heaters.
Yes, there are some other states, mainly in the Northeast that also have high electricity prices. And, guess what? They also tend to have low adoption of electric space and water heating.
Subsidies for heat pumps, and changes to the California building code will help steer the state toward electricity, but if we don't reform rates, we will be steering towards electrification with one hand while pulling customers away from it with the other. As Meredith and Severin recently explained, lowering the price per kilowatt-hour would reduce barriers to efficient electrification, reverse these patterns, and help decarbonize the state.
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.
Suggested citation: Davis, Lucas. "Three Facts about Electric Heating in California" Energy Institute Blog, UC Berkeley, May 8, 2023, https://energyathaas.wordpress.com/2023/05/08/three-facts-about-electric-heating-in-california/
electricity, energy effeciency, natural gas
Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is a Faculty Affiliate at the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Research Associate at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.Fact 1: 28% of California households have electric heat, compared to 40% nationwide. Fact 2: 6% of California households have a heat pump, compared to 15% nationwide. Fact 3: 21% of California households have an electric hot water heater, compared to 47% nationwide. Leading Hypothesis