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Rural electric cooperatives are increasingly enthusiastic about a process that will increase their sales while saving their members money and reduce carbon emissions: beneficial electrification. Beneficial electrification refers to the replacement of fossil-fuel powered systems with electrical ones in a way that reduces overall emissions, while providing benefits to the environment and to households. An example would be switching from propane heating to electric heating, or from a gasoline-powered car to an electric vehicle. EESI partnered with the Groundwork Center for Resilient Communities, Iowa Policy Project, Midwest Energy Efficiency Alliance, RE-AMP Network, and We Own It to produce a report examining beneficial electrification as a pathway for rural electric cooperatives to decarbonize their power grids equitably, with a particular focus on the Midwest. Making cooperatives more sustainable would have a significant impact on U.S. carbon emissions: about 900 co-ops nationwide provide power to 13 percent of all Americans and 56 percent of the U.S. landmass.
Beneficial Electrification Webinar
Watch EESI's Miguel Yanez present the beneficial electrification report in this webinar.
EESI Program Associate Miguel Yanez was the lead researcher and author for the report. He is part of EESI's Access Clean Energy Savings Program, which helps rural electric cooperatives and public power utilities develop innovative programs to save their members and customers money through clean energy projects. EESI has been helping cooperatives become more sustainable for more than 10 years. As an integral part of its Access Clean Energy Savings program, EESI helps utilities determine the best pathways forward to expand electrification upgrades in their service territories. EESI also offers assistance to rural utilities that would like to set up on-bill financing programs to help customers pay for the cost of beneficial electrification conversions. EESI would like to thank The JPB Foundation, the McKnight Foundation, New York Community Trust (NYCT), and Merck Family Fund for helping to make this report possible.
This report focuses on equitable beneficial electrification as a pathway for rural electric cooperatives to decarbonize their power grid. Particularly, this report examines how Midwest rural co-ops incentivize members to switch from fossil fuel–powered end-use equipment to electric end-use equipment. About 5 million homes in the rural Midwest—mostly served by co-ops—power their space-heating and water-heating equipment predominately with propane.
The lens in which the authors are viewing this research and information is based on the ReAMP Networks’ Equitable Deep-Decarbonization Framework which states, “Include everyone, electrify everything, and decarbonize electricity.”
To address equity, we examine some of the barriers that have led to historic inequity in distribution of energy efficiency program funds, evaluate equity of existing beneficial electrification and efficiency programs, and discuss opportunities to address equity in future program design and implementation.
Rural electric cooperatives have been energy innovators and leaders since their formation around 80 years ago. Today, about 900 co-ops nationwide provide power to 13 percent of all Americans and 56 percent of the US landmass. In the Midwest, 300 co-ops serve power to about 3.7 million members across 12 states.
As nonprofits owned by their members, co-ops are guided by seven cooperative principles, which are: voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information; cooperation between cooperatives; and concern for community. Electric Cooperatives also have a commitment to serve their members by providing safe, low-cost, and reliable power. One way to better serve their members is for co-ops to offer incentives for beneficial electrification programs.
Beneficial electrification (aka Strategic Electrification) refers to switching fossil-fuel end-use equipment to electric equipment in a way that reduces overall carbon emissions, while providing benefits to the environment and to members. In buildings, this means replacing older and inefficient gas or propane-powered furnaces and water heaters with more efficient, electric space and water heat pump technology. It could also include incentives to electrify vehicles, for example, incentives to finance electric charging stations or electric school buses. Specifically, the report focuses on the replacement of fossil fuel–powered (e.g., propane and fuel oil) space and water heating with high efficiency air-source heat pumps or electric water heaters in residential buildings.
In 2018, the National Rural Electric Cooperative Association (NRECA), a trade association providing resources to all 900 co-ops, unanimously approved a resolution supporting beneficial electrification programs. This resolution indicates that co-ops should start to consider such actions and programs as part of the services they provide to their membership. This report provides a landscape view of current residential energy efficiency, energy equipment programs, and space- and water-heating beneficial electrification programs run by Midwest co-ops for their members.
The report reviews beneficial electrification reports published on this emerging topic. It also analyzes hundreds of Midwest electric cooperative websites to identify electric space- and water-heating conversion programs and assess whether these programs could be deemed “beneficial electrification.”
Unlike older fossil fuel-powered end-use devices, newer electric equipment provides multiple benefits, creating a winning proposition for the member, the utility, and the environment. For the co-op member, new equipment achieves energy and monetary savings as new generation air-source heat pumps and electric water heat pumps are two-to-three times more efficient than their fossil fuel-powered counterparts. Cold climate air-source heat pump (ccHP) technology has advanced greatly in the last five years, to the point where ccHP can efficiently heat buildings as outdoor temperatures approach 0 F.
Co-ops also benefit as these devices offer a multitude of grid management attributes including load-shifting and load-shedding capabilities. These actions flatten the load curve and make it more predictable. All these attributes provide reductions in energy usage during high-demand times, meaning savings for utilities through lower demand charges. At the same time, co-ops can experience increased load and revenue by incorporating newly converted electrical equipment into their grids.
The environment also wins with lower carbon emissions as fossil-fuel (e.g., propane) devices are replaced by residential electric space- and water-heating equipment. With more renewable energy on the grid, this same equipment can contribute to even lower carbon emissions.
Combing through hundreds of co-op websites and after carrying out a dozen surveys and interviews, our research found that about 88 percent of all Midwest co-ops offer some type of energy upgrade and/or loan program for their members to improve their energy efficiency and/or replace their heating and water equipment. Co-op energy efficiency upgrade programs can serve a dual purpose: first, they can help a member weatherize their home, which saves money, reduces energy use, and improves comfort; and second, these programs can be building blocks for a beneficial electrification program. A non-insulated home can negate the energy savings from a new electric heat pump/and or water heater. Some of these co-op energy upgrade programs are offered in conjunction with specific-conversion rebates for water heaters and heat pumps.
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