Beneficial Electrification and Natural Gas Bans in New Buildings, Affordable Sustainability

Transmission and distribution (T&D) utility customers have often been understood to care most about two things: reliability and cost—usually, but not necessarily in that order. Climate change and the public’s interest in mitigating it, have begun to change that conventional thinking. The ongoing beat of public climate change advocacy argues for including sustainability or environmental impact among utility customers’ core concerns.

Last month, on September 20, 2019, hundreds of thousands of people across the world, many of them from our younger generations, gathered in dramatic protest of government and business responses to climate change. The protesters’ message can be understood as indicating a process of change over the past few decades in the hierarchy of T&D utility customers’ interests. Understanding the rising environmental consciousness, is there a corresponding willingness and ability to pay more for reduced impacts? If not, the challenge is maintaining affordability while reducing the climate change impacts from the transportation and building sectors.

Demonstrating that challenge, leaders in cities like San Jose, Berkeley, Los Angeles, and New York City (NYC) are grappling with mitigation strategies to reduce emissions from city apartment buildings and the transportation sector. Last month, San Jose, CA made headlines by becoming the largest U.S. city in to enact a “reach code” that requires 70% of parking spots for apartment buildings constructed in 2020 to have electric vehicle charging stations and mandates that all parking be compatible with charging station installations.

Other cities, like Berkeley, CA, have gone further and banned natural gas from new low-rise residential buildings, beginning in 2020. Some public officials and advocates for low-income populations have expressed concern that these measures—as environmentally beneficial as they are—will make some new housing developments financial nonstarters or at least significantly more costly. Until this week, would be natural gas customers in NYC faced a moratorium on new connections imposed by National Grid, until gas infrastructure allows supply to keep pace with demand. Proponents of the new measures counter, however, that residents’ overall savings in fuel costs will offset or exceed the increased housing costs. Those projected savings will place consumers and utilities in a vulnerable, wait-and-see financial posture until experiences vet the truth behind those economic theories.

In the end the message from the public and their legislators is clear, T&D and other utilities need proactive strategies to confront the threats from drastic climate changes—from targets for supply portfolios, to storm restoration and grid infrastructure hardening. Beneficial electrification is one key component of those strategies. Yet, as the climate goals of the building and transportation sectors become tied to beneficial electrification, achieving renewable energy mandates along with the central tenets of affordable and reliable service will continue to increase in importance, both for the bottom lines and the public’s perception of utilities.