What Decarbonization & Electrification Mean for California Property Owners


Motivated by the urgency to mitigate global climate change, California is actively pursuing carbon neutrality (net zero carbon dioxide emissions) by 2045. In practice, this goal translates to a divestment from carbon-intensive energy sources such as natural gas and gasoline in favor of renewable energy to power California’s building, transportation, agriculture, and industry sectors. This shift in energy supply towards low or no carbon sources is broadly referred to as decarbonization.

To achieve carbon neutrality in the building sector, California has to do two primary things: decarbonize the electrical grid and decommission the use of natural gas.

Greening the Electric Grid

California’s electrical grid transmits electricity generated from a mixture of natural gas, nuclear, and renewable energy sources. In 2017, 41% of the power was produced from natural gas, 47% came from renewable energy (i.e. solar, wind, hydroelectric, and geothermal), and 12% from other sources like nuclear and biomass. Since natural gas power plants produce carbon dioxide while generating electricity, California needs a different power source for 41% of its electricity to decarbonize the electrical grid.

Decommission Gas Boilers

The second area of focus for carbon neutrality is fuel switching which involves using electricity in place of natural gas. Buildings typically use both natural gas and electricity. While electricity is used to power lights and appliances plugged into wall outlets, natural gas is typically used to provide heating for interior spaces, cooking, and hot water for showers. Therefore, fuel switching entails decommissioning the natural gas service and equipment at a property and installing new equipment that uses electricity (ideally renewable) to supply energy for space heaters, induction stoves, and domestic hot water boilers.  

For New and Existing Buildings

For new buildings, California’s focus is on developing incentive programs and promoting clean heating technologies with support from Senate Bill 1477 to encourage all-electric buildings. There is also discussion around the new 2025 zero emission building codes which would prohibit the generation of greenhouse gas emissions on-site. In other words, no natural gas would be allowed because the combustion process emits carbon dioxide.

For existing buildings, California currently encourages some multifamily building owners through the Low-income Weatherization Program (LIWP) to retrofit natural gas central and unitary equipment with an all-electric alternative. Heat pump water heaters are one of the key technologies required to accomplish fuel switching from natural gas to electricity. Utilities are also encouraging all building owner types within their service areas to install energy-saving measures that would help reduce the costs of electrifying their properties.

Take Action

For owners of new and existing multifamily properties, this decarbonization effort is sure to have an impact.

The math for 100% carbon neutrality is pretty simple: to have zero carbon emissions, we have to burn zero natural gas. How well would your buildings function without natural gas? If you’re like most owners, your buildings burn natural gas for domestic hot water, heating, and cooking. Savvy owners are diversifying their portfolios and giving their operations staff a chance to acquaint themselves with technologies like heat pump water heaters. By getting ahead of the curve, they can leverage rich incentives like the Low-Income Weatherization Program to electrify their buildings at very low up-front costs.

The best candidate properties are those where existing equipment is nearing the end of its useful life. 2045 is only 25 years away, which in the context of boiler plants is within the range of expected equipment life. Future regulation to enforce California’s 2045 carbon neutrality goal is uncertain but may involve mandates to remove natural gas-fired equipment and/or greatly increase natural gas costs. When you need to replace equipment anyway, why not electrify before mandates require you to remove functioning equipment or make it economically infeasible to continue running it?

As of March 2019, Bright Power has brought 8 properties through the LIWP program. We have installed or under contract to install 50 central electric heat pump water heaters as replacements for traditional gas boilers in support of the decarbonization and electrification goals in California. If you have any questions about the implications for your property, let us know! Curious to learn how other states produce electricity? This New York Times article by Nadja Popovich will give you a breakdown by state.