Building electrification movement will 'live or die' on affordability

Capital markets and policy must converge for building electrification to present a solution — rather than a challenge — to affordability concerns during the energy transition, leaders in the building sustainability space said during NYC Climate Week.

In the coming years, advances in demand response and automation, clean energy technology, and artificial intelligence have the potential to turn the built environment into a vast network of distributed energy resources, experts said. That could in turn help to improve utilization of electric grids, reduce ratepayer-funded investment in power infrastructure, and tamp down customer costs throughout a pivot from on-site natural gas combustion.

However, to unlock that future, policymakers must tackle the up-front cost barriers to building electrification, from high electricity rates to appliance premiums.

"Energy affordability is the issue that electrification will live or die on as a mass movement, but electrification is also our biggest lever to promote energy affordability," Sam Calisch, co-founder and CEO of induction stove startup Copper, said during a panel on all-electric buildings at the Nest Campus at the Javits Center in Manhattan.

Keys to unlocking capital flows

Panelists throughout NYC Climate Week echoed that sentiment. The proliferation of smart appliances, electric vehicles and battery backup allows homes and businesses to function as virtual power plants, not just pulling but pushing energy onto the grid.

"When we traditionally thought about buildings, we thought about energy efficiency," RMI CEO Jon Creyts said during a separate Nest Campus panel on the built environment's role in the energy transition. "But buildings could do so much more now too."

For large building fleet owners, unlocking capital flows rather than achieving climate commitments will be the main driver of electrification and technology adoption, according to Rob Bernard, chief energy and sustainability officer at CBRE Group Inc., the world's largest commercial real estate firm.

Some fleet operators are spending upward of $250 million per year on energy costs, Bernard said. At the individual building level, energy demand typically accounts for 15%-55% of a building's operational costs, with substantial inefficiencies sometimes embedded in current operations, he noted. By making buildings more energy efficient and resilient, and by leveraging connected building systems to arbitrage inefficiencies in regional energy markets, owners can transform them into revenue sources, he said.

"Once we unlock that kind of capital flow, the money will take care of it all," he said.

'A little bit of policy' needed

In response, Siemens AG Head of Sustainability Eva Riesenhuber said policy intervention is necessary, because building occupants, property owners and grid infrastructure operators do not share the same incentives. While a tenant's priority might be comfort and affordability, utilities are still incentivized to grow capital spending because they earn a return on those investments, with costs passed on to ratepayers, she said.

"For all of this to work, we do need a little bit of policy, " Riesenhuber said. "If everyone is optimizing in a silo, we're not getting to maximum efficiency."

Building codes and standards — a major mechanism for driving building electrification since 2019 — remain effective ways to prompt large-scale change by sending clear market signals, RMI's Creyts said. Electricity rates can also create incentives to adopt efficiency and load flexibility, particularly rates designed to drive electric heat pump adoption, he said.

"Some states have low-cost power, and that makes electrification pencil for everyday people," said Leah Stokes, associate professor of environmental politics at the University of California Santa Barbara. But in a lot of places, electricity costs have been rising, "and that means you don't have a payback for electrification," she said.

Policymakers should consider a model pioneered in Australia and endorsed by California gubernatorial candidate Xavier Becerra, which offers free electricity for several hours around noon, when solar power generation is abundant, Stokes said during the all-electric buildings panel. She noted that states like Texas and California regularly curtail solar generation during off-peak midday hours.

Equipment solutions, capital barriers

Such programs require appliances that can facilitate load shifting. The company Copper incorporated a battery into its induction stove, dubbed the Charlie, to allow the product to plug into a standard 120-volt outlet in New York City public housing, part of a city- and state-backed initiative. That eliminated the need for costly electrical upgrades, but also allowed the Charlie to draw power during off-peak hours.

In turn, that lets renters participate in virtual power plant programs and facilitates the Federal Energy Regulatory Commission's landmark 2020 order, Electrify DC co-founder and Executive Director Vanessa Bertelli said during a panel discussion hosted by Copper. The FERC order allowed small distributed energy resources to bundle power and sell it into wholesale markets.

"Our grid runs at about 40% efficiency today, and that's because it is sized for the peaks," Calisch said. "If we can move those peaks around, we can get a lot more electricity delivered for the same amount of embedded infrastructure. That's how we can tackle the energy affordability piece."

Still, new technology can be costly: The Charlie retails for about $6,000. That makes it critical for policymakers to offset upfront costs, said former Washington Governor Jay Inslee. He pointed to Washington's cap-and-invest program as a way to fund incentives.

"There is still some initial capital barrier for replacing any electronic equipment … whether it's an EV or heat pump," said Inslee, who joined the board of renewable power organization GoodPower in 2026. "We do need to design small public policies to help people at the lower end of the scale to be able to have the upfront capital cost."