Is natural gas pricing tens of thousands of California families out of the housing market?
In California for every $1,000 increase in the price of a home 15,328 households are priced out of the market for a median-priced new home. Meaning for every $1,000 we add to the cost of home with unnecessary add-ons we leave tens of thousands of Californians stuck in our Statewide housing crisis. This data came from a 2016 National Association of Home Builders study looking at the impact of pricing for new home’s impact on households ability to purchase.
With how bad our housing crisis is we cannot afford any unnecessary costs.
With how bad our climate crisis is we can’t afford to be adding new GHG-emitting infrastructure.
It is for these two imperatives that building electrification is so important.
The Cost of building natural gas infrastructure
Natural gas use is not just a problem from a greenhouse gas and climate change perspective what with methane being 84x more potent than CO2 from a global warming perspective and making up 92-98 percent of natural gas delivered to Californians. But running homes off of natural gas unnecessarily increases the cost of housing in California.
Most home building in California lays out new natural gas infrastructure that includes a connection from the house (service line) to the main transmission line in the neighborhood (main) and whatever main extension is needed depending on the number of homes being built. The home then installs internal natural gas plumbing to get the gas from the service line to the appliances, such as stoves, water heaters and such.
Two different recent studies looked at this cost of infrastructure, a study by Rocky Mountain Institute suggested between $1,000 and $24,000 per home, with a median value of $8,800, based upon regulatory filings and customer quotes and a study by Synapse Energy Economics suggested using an average of $6,412 for these costs. This is the cost of having natural gas supplied to a home and plumbed around it.
Then we need to look at the natural gas-powered appliances and compare them to all-electric alternatives.
This year, the California Building Industry Association commissioned a report from the consulting firm Navigant to look at the costs of building electrification. The study found that electrical appliances today are already cheaper than natural gas models in three out of four categories. The report's claim that the fourth category (heat pump water heaters) are more expensive isn't borne out by the data in the study or market place.
So if we assume the lower $6,412 for natural gas infrastructure and at worst negligible cost difference for appliances we find houses that use natural gas for heating to cost as much as $6,000 more than an all electric house.
Since California’s electricity is getting cleaner every year (50 percent renewable, ~74 percent emission free such as renewable, large hydro and nuclear by 2020 and 100 percent by 2045) and we can use that clean energy to replace any natural gas appliance, all of that natural gas infrastructure is unnecessary and only adding costs to our new housing in California.
The authors of the NAHB study would look at this and conclude that $6,412 of unnecessary infrastructure at 15,328 families priced out per $1,000 in California means our natural gas infrastructure is pricing over 90,000 families out of the housing market.
Developers of new subdivisions with 40’ wide lots in PG&E territory are paying more than $6,200 for their lot’s worth of 2” distribution line, and another $16,000 for their lateral and meter set--at $22,200 per new house for gas connections. Yet a Zero Net Energy solar array for that same house is 5-7 kW, and Developers pay $2000-$3000 per kW, totaling $10,000-$21,000. For less money than a gas connection, a new homeowner will have free energy for decades to come.
What about operating costs you ask? In new homes equipped with cost-effective solar panels, required by California’s new building code in 2020, highly efficient zero emission buildings will cut energy bills by several hundred dollars annually.
A Win-Win Scenario
Ultimately, there is no question that the world will need to stop burning gasoline, coal and natural gas. For years, however, some have argued such a transition was premature, would cost too much, and would even harm disadvantaged communities.
These arguments no longer hold water.
Today the cost of electric appliances are roughly the same or cheaper than their natural gas equivalents. For new construction the message is clear: the avoided costs of natural gas infrastructure tilts the equation toward electrification.
California should continue and accelerate its commitment to electrification and zero-emissions buildings with the knowledge that it will be helping to solve both the affordable housing crisis and our climate predicament as it moves the state forward on its journey to a 100 percent clean energy economy.
Our housing-desperate families and climate impacted communities can’t afford the costs of more natural gas infrastructure.
Panama Bartholomy is the Director of the Building Decarbonization Coalition.