In a recent presentation at the 2024 National Institute, scientist Iain Walker revealed an eye-opening statistic: An analysis of 22,000 homes in California by Home Energy Analytics (HEA) showed that the vast majority never reach a peak power demand of over 20 kilowatts (kW) throughout the year, indicating substantial unused residential electrical capacity. This suggests that many households can adopt electrification without the need for costly panel upgrades, challenging the notion that extensive electrical infrastructure overhauls are necessary for transitioning to a green energy economy.
Walker, the lead author of a new report by the Lawrence Berkeley National Laboratory (LBNL), shared key insights on ways to reduce carbon dioxide (CO2) emissions in the U.S. housing sector. Titled “Challenges and Opportunities for Home Decarbonization,” the report underlines the complexity and urgency of decarbonizing existing housing stock, citing the need for immediate action, innovative and scalable solutions, and robust federal support to meet the U.S. Department of Energy (DOE)’s “vision of low/no carbon emission existing homes by 2050” (p. 5).
Challenges and Opportunities: Technical, Valuation, and Cost
Decarbonizing the U.S. housing sector, while crucial for combatting climate change, faces challenges of market scalability and affordability. The report identifies three main objectives:
- Develop solutions for all households: Tailor decarbonization efforts to accommodate the diverse needs and conditions of the 118 million households across the U.S.
- Make home decarbonization affordable: Aim to reduce the high costs associated with residential retrofits—which currently average around $55,000 per home, according to an earlier study by LBNL—to make them more accessible and appealing to households.
- Support the U.S. clean energy economy: Foster a net-zero greenhouse gas emissions economy by 2050 by creating clean energy jobs and businesses, including constructing emissions-free technologies for homes.
The report also identifies key challenges for home decarbonization—categorized as technical, cost, and valuation—and proposed actionable solutions for each.
Key technical challenges include limited product availability for power- and space-constrained homes and the need to avoid costly and time-consuming electric service and panel replacement. (p. 52). These obstacles require a multi-faceted approach that spans developing inclusive and flexible decarbonization solutions, making home decarbonization affordable through technology and cost reduction, and supporting the U.S. clean energy economy.
Other pressing challenges include the increasing demand for electricity and issues of grid reliability. LBNL’s current work largely focuses on understanding and limiting home peak power with solutions such as circuit sharing; low power, high-efficiency heat pumps and heat pump water heaters (HPWHs); and smart panels that can modulate circuits. The intent is to avoid straining the electric grid with high peaks because most of the cost to the utility is in infrastructure that scales with peak—not energy—use. Ultimately, these infrastructure costs result in higher electricity bills, which are a major issue for affordability and even more so from an equity perspective. Projects such as the Oakland EcoBlock—which aims to improve energy efficiency and integrate energy storage at the neighborhood block scale—offer solutions to reduce carbon emissions, lower utility costs, and enhance grid reliability (p. 55).
Cost challenges emphasize the high expenses of home decarbonization projects, which can be especially unaffordable for low-income and renter households (p. 61). An earlier study by LBNL highlights the financial barriers to home decarbonization, with current single-family home upgrade projects aiming for 50% energy savings costing approximately $30 per square foot, or around $50,000 for an average home—these costs significantly outpace the direct energy savings and median household savings in the U.S. Strategies to mitigate these high costs include leveraging existing electric infrastructure, focusing on simple upgrades such as air sealing and insulation, and developing low-power consumption technologies. To enhance affordability, the authors suggest improving access to financing and rebates, adopting staged decarbonization strategies, and integrating project financing models akin to those used in auto sales and solar photovoltaics (PV). Emphasizing affordability and life improvement, rather than simply cost savings, is crucial for scaling up decarbonization efforts, necessitating collaboration across the building industry to standardize financing models and make decarbonization accessible to more households.
Valuation challenges relate to the difficulty in quantifying and communicating the benefits of decarbonization projects, such as increased home value and reduced energy costs (p. 72). There is a recognized need to shift valuation justifications to encompass these broader benefits, suggesting a move away from viewing decarbonization efforts solely through the lens of energy cost-effectiveness and emphasizing value instead, where the tangible and intangible benefits of decarbonization—including improved indoor air quality and comfort—are highlighted. Industry leaders like BlocPower and Sealed are pioneering this approach by focusing on affordability and the comprehensive value provided by decarbonization, rather than just energy savings or payback periods. This approach aligns with successful models used by the biggest solar companies, which emphasize financial products alongside the technology, suggesting a similar model could be adapted for broader building decarbonization strategies. Collaborative efforts with the real estate industry and data analysis on home sales are needed to clearly link decarbonization upgrades to increased property values, aiding in overcoming valuation challenges.
Why Does Home Decarbonization Matter?
Despite its high upfront costs and challenges, decarbonization offers a pathway to a sustainable, secure, and resilient future. LBNL’s report suggests that through collective efforts—such as developing power-efficient appliances, expanding the U.S. manufacturing base for decarbonization technologies, and standardizing decarbonization solutions—it is possible to accelerate the clean energy transition (p. 77). Home decarbonization is not just an environmental imperative: “Emphasizing value over cost,” noted Walker, “decarbonization brings non-energy benefits such as improved comfort, health, and safety, and potentially increases home value, shifting the decision-making process towards affordable comfort for households.”
Cover image credit: Giorgio Trovato/Unsplash