Global revenue for home electric heating, cooling and cooking equipment could increase by more than five times by the end of the decade. The surge in spending on all-electric homes is expected even though many consumers are unfamiliar with the natural-gas-displacing electric appliances on the market today.
Around 70 million American homes burn natural gas, oil or propane for space and water heating, according to Navigant Research. But the fossil-fuel-burning furnaces, water heaters and stoves many Americans have long relied on now have competition in the form of electric air-source heat pumps, heat pump water heaters and induction cooking equipment.
“Electrification technologies are rapidly becoming more cost-effective and more reliable than fossil-fuel systems in a variety of planning scenarios and climatic conditions,” Daniel Talero and Neil Strother, research analysts at Navigant Research, wrote in a new report on the global market for “fully electrified home” technologies.
Navigant expects global revenue for fully electrified home technologies to soar to $12.9 billion in 2029, up from $2.4 billion in 2020. The category includes insulation and energy management systems as well as heat pumps and induction cooking equipment.
“Tailwinds really do prevail in this market, despite the complexity,” Talero told Greentech Media. “We’re seeing a high demand for cost-effective fuel-switching technology, especially insulation, as well as air-source heat pumps, which have shown several cost and performance improvements over the last few years.”
The challenge of cheap gas
Other drivers pushing the transition to all-electric buildings include job creation in building retrofits and the potential for electric utilities to revive load growth.
In Europe, Talero cited the market-shaping potential of the Green Deal announced by the European Commission last December. The suite of policy measures in the deal includes a goal to at least double the current rates of renovation in public and private buildings across Europe beginning in 2020.
Growth is expected outside of Europe too.
“Asia-Pacific [and] the Middle East are seeing building booms, particularly in multifamily, where the economics around fuel-switching — particularly in new construction — is very favorable,” said Talero.
“Some of these technologies, when they’re applied at scale and...with the savings potential in multifamily buildings due to shared walls, the economics become really compelling.”
The landscape is not entirely favorable: Headwinds facing the market for all-electric homes include cheap natural gas as well as a lack of consumer and installer awareness of alternatives.
“The main barrier, as everyone knows, is just the cheap cost of natural gas, which...remains cheap in many, many markets,” Talero said.
Consumers confronted with a surfeit of unfamiliar options often defer to trusted third parties: the plumbers, electricians and HVAC technicians who install equipment, often on short notice.
“Installer awareness might even be more influential than homeowner awareness just because they are really the point of contact for...some of these decisions,” said Talero. “Increasing the level of installer awareness is critical.”
Academies and training centers run by equipment manufacturers, as well as local partnerships with engineering associations, will help to ensure that “some of these newer systems are part of the initial scoping and design conversation, where they can be most effective in new construction," Talero said.
Lack of consumer awareness in California and beyond
A recent poll in California underscored the lag in consumer awareness of alternatives to fossil-fuel-burning appliances. The poll (PDF), commissioned by a group of organizations that advocate for clean energy, including the Sierra Club and Earthjustice, was conducted by FM3 Research.
More than three-quarters of respondents to the poll have natural gas or propane furnaces and cookstoves. Meanwhile, electric alternatives, which get cleaner as the grid sheds carbon, barely register with most Californians. Sixty-two percent said they were unfamiliar with air-source heat pumps or heat pump water heaters, and just 53 percent said they were “somewhat familiar” with induction cookstoves.
When asked for their preferred power source for appliances in their homes, 70 percent chose the option: “Electricity that is increasingly generated from clean and renewable sources like wind or solar power,” and 22 percent chose “Gas that is drilled and fracked from the ground.”
“Those numbers show a major opportunity,” Matt Vespa, a staff attorney with Earthjustice, and Rachel Golden, deputy director of the Sierra Club's building electrification program, wrote in a recent blog post.
“With more information on the hazards of gas and increased familiarity with advanced electric appliances — through events like induction stove lending programs, city expos, and probably most importantly, training for contractors who recommend appliances — Californians’ demand for this transition will only grow.”