Why Electrify?

Methane, the primary component of natural gas, is released when we use gas and has an 80 times greater impact on climate change than carbon dioxide emissions. A new report from the UN states that reducing methane emissions now will result in noticeable climate benefits in the next 10 years.  

• As the grid moves to 100% renewable power, electric renewable heating and cooling is the clear path to reducing these emissions generated by homes and buildings. Thanks to Xcel Energy’s commitment to reduce greenhouse gas emissions in the electric grid by 80% by 2030, the emissions from burning gas in buildings will overtake the emissions from delivered electricity as early as 2028.
• Today, replacing gas appliances with heat pumps will reduce greenhouse gas emissions. 
• Fossil gas burned to heat our homes and buildings results in 24% of Denver’s greenhouse gas emissions.   
• 97% of gas is used for space and water heat in homes and buildings. 

Heat Pumps are cost-effective, reliable, proven technology that provide better outcomes for the same cost. 

How heat pumps work – heat pumps work by moving heat, not creating it, and are able to achieve efficiencies of 200-300% even in Denver’s winter climate. 100% efficiency is based on a source that creates heat. To learn more about how a heat pump works, check out This Old House video. 

This transition is cost effective today for many homes and buildings.  

•  When a furnace, A/C compressor, or hot water heater fails, most homes and buildings can replace it with an electric equivalent at a similar cost to gas for both installation and operation. 
• Heat pumps will have a lower monthly bill than a traditional A/C system because they are so much more efficient, keeping homes comfortable during heat waves and grid stress events (brown-outs and black-outs).   
• Under existing electricity and gas rates, 66% of homes, 69% of multifamily units, and 49% of commercial buildings in Denver can be fully electrified when existing systems reach their end of life, while keeping construction costs and annual utility bills within 10% of gas equipment.
• As Denver begins to electrify space and water heat, and technology continues to advance, renewable heating and cooling should cost the same or less than gas heating and cooling.
• Renewable heating and cooling moves towards stable long-term utility costs because electricity prices are more stable than gas prices in both the short and long term.
• It will take 30 years to fully transition current gas-fired space and water heating to electric.   

Heat pumps provide reliable heat.  

• Heat pumps have been used since the 1800s in American refrigerators, and for decades to heat homes and buildings in Asia and Europe.
• Natural gas furnaces also do not work when the power is out because they use an electric starter to ignite and require an electric-powered fan to move heat through the home. 
• Cold climate heat pumps can provide heat efficiently even when outside temperatures reach as low as -17 degrees Fahrenheit.
• Denver’s approach won’t apply to diesel-powered emergency generators, like those used in hospitals and healthcare facilities. 

Denver’s electric system can shift to renewable electricity without significant infrastructure build-out. 

• The electrical grid is sized for summertime peaks, and has decades of capacity before winter heating loads cause the system to switch to a winter peaking profile.  
• The winter peaking profile is not likely to happen until more than 50% of all space and water heating are electrified. Local distribution upgrades may be triggered sooner. For more details on our grid analysis of Denver, read the Renewable Heating and Cooling Plan(PDF, 3MB).

Most homes in Denver today use a gas-fired water heater and a gas-fired furnace. Residents looking to electrify their home, improve indoor air quality, and lower their carbon footprint have a number of options.

• Currently, Xcel Energy has incentives and rebates for heat pump technologies, including up to $800 for heat pump water heaters and up to $1,000 for heat pumps. Xcel Energy even has up to $2,000 in rebates for ground source heat pumps. Xcel Energy also offers income-qualified heat pump rebates.
• At today’s gas and electric rates, the most cost-effective solution for most homeowners is partial electrification. Homeowners can purchase a dual fuel heat pump that uses heat pump mode down to 15 degrees Fahrenheit and then utilizes a gas furnace to provide backup heat. Another option is keeping your existing fossil system in place and utilizing a ductless mini-split to offset 80% of your gas use. This keeps operating costs the same in the near term, and helps protect the homeowner against increases in the gas rates in the future.
• Homeowners who are interested in maximizing the indoor air quality benefits, eliminating all carbon monoxide risks, and stabilizing their utility costs over the long term should consider full electrification using either a ducted or ductless heat pump. This is likely to increase utility bills by 5% but ensures the homeowner’s utility costs are stabilized across the entire lifetime of the equipment.
• Gas water heaters can be replaced by heat pump water heaters that pull heat out of the ambient air to heat the water. A heat pump water heater should only increase operational costs about 1% over their fossil fuel equivalent. Consider where the heat pump water heater is sited and vented – it will create some cold air which can be used in the summer to cool a home, but may need to be vented outside in the winter.
• Gas stoves can be replaced with either electric resistance stoves or induction stoves. Induction stoves consistently outperform gas stoves for cooking speed and control while also being easier to clean, much safer for kids, pets, and clumsy cooks because there is no exposed heat source. Electric stoves also significantly improve indoor air quality.

Choosing the best technology to electrify your building depends on the system currently in place. For detailed findings by system type, visit the Energize Denver Renewable Heating and Cooling Plan(PDF, 3MB). The plan details partial and full electrification options for commercial furnaces, boilers, PTACs, and rooftop units, including extensive economic analyses around both cost of conversion and operating cost impacts. 

Xcel Energy is offering commercial electrification incentives through its custom program. To learn more, reach out to your account executive or the appropriate business center.

Multiple studies (RMI, Group14) have found that building all-electric homes and buildings in Denver is cheaper from a first-cost standpoint compared to homes and commercial buildings that are mixed fuel and use gas for heating. A majority of the cost savings come from the avoided costs of not having to run gas to the building and throughout the building. Operating costs are similar or lower in all-electric new buildings.

Denver has a goal for all new buildings and homes to achieve net-zero energy by 2030. Denver defines “Net Zero Energy (NZE)” as a new building or home that is:

1. Highly Energy Efficient
2. All-Electric
3. Powered by Renewable Energy
4. Providers of Demand Flexibility for the Grid.

Denver’s detailed NZE goals are:

• Net zero energy, all-electric new homes in the 2024 Building Code
• Net zero energy, all-electric new buildings in the 2027 Building Code
• New buildings perform as designed (performance verification) in the 2030 Building Code

To read more about our initiatives for new buildings, go to the Net Zero New Buildings and Homes page.

The transition to renewable heating and cooling will cost-effectively bring many benefits to Denverites by providing air conditioning as temperatures rise, reducing children’s exposure to carbon monoxide and rapidly mitigating climate change by reducing methane emissions.