By Jessica Silber-Byrne, Thermal Energy Networks Communications Manager
Let’s make it a beautiful day in the neighborhood
Picture your neighborhood: its residents, its buildings, its environment. What powers it—keeps the heater humming, ignites the stove, warms the tap water? For about 60% of homes in the United States, that work is done by methane gas. The issues associated with fossil fuel combustion in homes and buildings are by now well-known: increased emissions, poor air quality, and health risks. To achieve the ambitious federal goal of net-zero emissions by 2050, we need clean energy solutions for all of our buildings. We need decarbonization and electrification at a neighborhood scale.
Neighborhood scale building decarbonization is an invitation to envision a new energy future. It’s a strategy in which all stakeholders in a neighborhood—state and municipal leaders, utilities and workers, organizers and advocates—coordinate a broad and equitable transition to clean energy sources and electric appliances.
In 2023, we published our white paper report on the neighborhood scale concept. In January 2024, we hosted our highest-attended BDC Presents webinar yet: Neighborhood Scale – The Future of Building Decarbonization. We were joined in that discussion by Rachel Kuykendall, Principal Strategic Analyst at Pacific Gas & Electric, and Jared Rodriguez, Principal at Emergent Urban Concepts, who shared their own key ideas and lessons.
Here are 10 takeaways for anyone new to the neighborhood scale movement.
1. Let’s start at the beginning: we need new, effective, rapid decarbonization plans for buildings.
Buildings contribute to about 30% of U.S. emissions. About half of that percentage derives from on-site combustion, which typically occurs out-of-sight in water heaters, dryers, and gas furnaces. The home-by-home electrification strategy targets these gas-powered appliances for replacement with electric ones, a necessary step for building decarbonization.
But think through the scale we’re dealing with. There are about 110 million buildings in the U.S. About 99 million of those are single-family homes. That means we’re talking about needing around half a billion individual decisions from homeowners, landlords, and building managers to upgrade various appliances, and these decisions are often deferred until appliances break down. In brief: to meet climate goals, we need to move faster, and we need more coordination.
This doesn’t mean you should now close all of your browser tabs researching induction stoves or heat pumps. Neighborhood scale building decarbonization complements the appliance-by-appliance electrification approach. Alongside a coordinated decarbonization strategy, everyone in the neighborhood can meet their goals, whether it’s improving health, lowering energy bills or reducing emissions.
2. We need shared language.
To pull off a task as monumental as decarbonizing all of the buildings in a neighborhood—let alone in the country—we need to develop shared language. Mutually-understood terminology improves clarity and trust, and helps unify people with diverse expertise and experience working toward a shared goal. Here are a few terms that may seem obvious, but deserve explanation.
- Neighborhood: Used here to mean clusters of buildings undergoing coordinated decarbonization. Rockefeller Center, New York and West Union, Iowa, are both neighborhoods with vastly different buildings and constituents. But “neighborhood” is a term that emphasizes the presence and importance of people in both of these spaces.
- Scale: The size and scope of decarbonization within a particular area or set of buildings.
- Decarbonization: The process of eliminating emissions, particularly from fossil fuel combustion, and shifting to non-emitting energy sources.
- Targeted electrification and zonal electrification: These terms fall under the umbrella of “neighborhood decarbonization,” but differ in motivation, scale, and funding strategies. Rachel Kuykendall explains that at PG&E, targeted electrification focuses on smaller-scale projects that make economic sense: in other words, electrification costs less than it would to repair the gas infrastructure. Zonal electrification is motivated largely by factors other than cost, like geography, risk assessment, and equity. This approach may prioritize electrification of a low-income area, or quickly decommissioning a risky part of the gas pipeline.
3. There’s more than one way to decarbonize a neighborhood.
Just as no two neighborhoods are the same, there’s not a one-size-fits-all approach to neighborhood scale decarbonization. But BDC proposes two primary pathways to achieve it.
First, the electric network: Buildings depart the gas system to rely on their area’s electric grid. At the building level, this involves replacing gas appliances with electric ones. At the grid level, this reduces emissions as states and utilities increasingly adopt clean and renewable energy sources to power the grid.
Second, the thermal energy network (TEN): Buildings achieve combustion-free heating and cooling by capturing, storing, and recycling heat through underground water-filled pipes, connected to buildings via ground-source heat pumps. TENs come in different configurations; some use shallow boreholes to take advantage of the Earth’s stable temperature below ground, while others exchange heat from sources like wastewater or building cooling systems. The “network” aspect is key, as the more buildings that connect to the system, the more efficient it becomes. (Learn more about BDC’s work on TENs here.)
Choosing the pathway requires thinking across technical, social, and political domains. On the technical side, planners, utilities and engineers must consider upfront and operational costs, a neighborhood’s building density or proximity to heat sources, and potential hazards to the system. On the social and political sides, the right pathway requires meaningful community participation, public engagement, market readiness, and political support.
4. Systemic problems need systematic solutions.
The 20th-century expansion of the gas system heated homes and fueled stoves. It also created systemic problems that we have an opportunity and obligation to correct. Environmental and social justice (ESJ) communities are those that absorb the burdens of the current gas system—such as exposure to pollutants, chemicals and toxins—without accruing any of the advantages. Residents of these communities are disproportionately Black, Brown, or low-income, and are more likely to live in homes with polluting appliances. An unsystematic, unmanaged approach to building electrification allows early adopters with the financial means to transition their homes off of the gas system. In the meantime, ESJ communities find themselves “late to the starting line” of electrification and stranded on the deteriorating gas system, but stuck with bigger shares of the costs to maintain it.
Neighborhood-scale decarbonization is a systematic solution that mitigates these risks. It integrates technological approaches with coordinated practices and supportive policies. It is an opportunity to prioritize communities left behind in the previous century’s energy transition. And to do this most efficiently, it means gas utilities have a large opportunity: they can protect their most vulnerable ratepayers while prioritizing the decommissioning of gas infrastructure in historically marginalized neighborhoods. Kuykendall shared that PG&E’s Zonal Equity Electrification Pilot Solicitation purposefully incorporates California’s map of legally-designated disadvantaged communities. Utility-led thermal energy network pilots have also worked with political leaders and community members to prioritize installation in ESJ communities, like National Grid’s pilot in an affordable-housing community in Boston.
5. We need to appreciate heat.
As Jared Rodriguez pointed out to Neighborhood Scale webinar attendees, heat is a precious resource. Electricity is, after all, the conversion of heat to energy. But our current systems treat heat casually, even indifferently. Heat escapes through steam grates in sidewalks, as a waste byproduct of air-conditioning, and down the drain into the sewer. Building energy efficiency plans must include heat recovery, recycling, and storage.
The thermal energy network pathway brings the most efficient system available for climate-friendly heating and cooling into neighborhoods. There are a multitude of configurations of thermal energy networks that have different methods of capturing, storing, and exchanging heat. A geothermal network uses boreholes at depths of approximately 100-600 feet to harness the mild, stable temperature of the Earth below the frostline. Other thermal energy networks draw heat from large bodies of water, energy-intensive buildings, or wastewater. In both cases, the more buildings that connect to the network, the more efficient it becomes as buildings that must stay constantly cool, like data centers or grocery stores, exchange excess “waste heat” with buildings that need warmth.
6. We need to decarbonize the obligation to serve.
The “obligation to serve” refers to utilities’ legal requirement to serve energy to all customers in their service area who are willing to pay their rates. Regulators bestowed utilities with this obligation in return for the privilege to operate as a monopoly. In exchange for market control within a territory, access to public property and legal rights of way, utilities were obligated to provide service to anyone who requested it.
But in the age of decarbonization, the obligation to serve has become something of a barrier, with some gas utilities arguing that this legal principle requires them to continue investing in fossil fuels. State-to-state context differs, but Kuykendall points out that the obligation to serve has traditionally been interpreted very conservatively in California. So theoretically, if a single customer requests gas, then PG&E must provide it—which could stall an entire neighborhood’s electrification and require millions of dollars to replace or maintain gas lines that could or should be decommissioned.
Proposed legislation in some states have purposefully begun reforming and redefining the obligation to serve. For example, Massachusetts’ 2023-2024 “Future of Clean Heat” bill would permit gas companies to meet the obligation to serve by providing customers with thermal energy.
(BDC released Decarbonizing the Obligation to Serve in March)
7. We need to scale up high-road jobs.
Electrifying a single household takes work, but decarbonizing a neighborhood requires the coordinated work of many. This illuminates important advantages and benefits for both utilities, who bring a strong existing workforce to the clean energy transition, and for labor unions, whose extensive training, expertise, oversight and experience ensure the quality of long-term infrastructure projects. Installing thermal energy network infrastructure, for example, requires the skills of pipefitters, and early pilot projects in Massachusetts have shown the transferability of workers’ existing skills to thermal energy networks. In some states, like Colorado and New York, alliances have formed between labor organizations, utilities, and clean energy advocates, who support legislation that includes provisions for labor involvement in a utility-scale transition to thermal energy.
8. We need matchmakers.
Put another way, as Jared Rodriguez explained to Neighborhood Scale webinar attendees: “We need to network people, plans, and heat.”
Accelerating decarbonization with an equity mindset means getting to know a neighborhood in its full context. These aren’t just sets of buildings with heat leak problems. They are communities comprising people in their holistic identities as workers, caregivers, elders, and children who know their own needs best. Successfully matching a project to a place requires matchmaking. It requires pairing large-scale or out-of-town entities with trusted local leaders and organizations to establish communication. It means making data public and providing analysis and design approaches that are open and understandable.
As trust builds, technical knowledge can be matched to lived experience and political priorities. Utilities, engineers, and the workforce understand the condition of the electric grid, its existing peak demand and capacity, and the condition and location of gas pipelines. Local governments know which planned infrastructure projects might make sense to pursue concurrent to decarbonization. And community-based organizations, embedded advocates, and local leaders can communicate their neighborhood’s history, culture, behaviors, practices and desires, matching plans and designs with needs and realities.
If you approach neighborhood scale without understanding the various needs of a community, you’re probably going to fail.
Jared Rodriguez
9. We have the technology…
…but regulatory, policy and financing innovation must match the scale of technological innovation.
In terms of physical pieces of technology, neighborhood decarbonization uses many of the same tools as appliance-by-appliance electrification. The electric network pathway requires widespread adoption of heat pumps, electric resistance or induction stoves, and heat pump or electric clothes dryers—equipment that, although it’s continuously improving, already exists. And for their part, thermal energy networks have been operational on college campuses and downtown business districts throughout the country for many years; it’s the utility ownership model that represents a new innovation.
Technological innovation is impressive, but it won’t bring us across the finish line. We need thoughtful innovation in legal and policy spheres that can evolve technologies from revolutionary, single-home devices to regular components of a mature system. We need innovation in policy as states amend utilities’ obligation to serve to clear the path for a transition to clean energy. We need innovation in financing, as utilities and regulators devise rate models to incentivize communities away from fossil fuels while exploring questions like: how exactly should we charge for thermal energy? And to get really innovative, we can choose to see this moment as an overdue opportunity to revisit how we conceive of cost in its full extent, including the social and environmental costs of fossil fuel combustion that have never been adequately captured by a framework of capital, expenses, revenue, and profits.
10. There’s a lot to learn, but we’re sharing what we already know.
Building something completely new, something never-before-seen in most neighborhoods, means that there are inevitably questions for which the answers are not yet clear. Together with partners, utilities, researchers, and other electrification organizations, we’re tackling questions like: How much will it cost in different settings and contexts, and who pays for what? How can we stabilize a gas rate base with geothermal energy? How can we ensure that labor, equipment manufacturers, regulators, and legislators are all at the starting line of decarbonization together, rather than running separate races?
State energy offices, utilities, equipment manufacturers, and nonprofit partners are already convening to securely share data to accelerate decarbonization lessons and to replicate and adapt successful projects around the country.
To evaluate and compare areas for zonal electrification, Kuykendall shares that PG&E developed a Gas Asset Analysis Tool that includes data such as customer income, geographic risks, and electric capacity. The utility offers a version of this tool to local governments (under a non-disclosure agreement) to allow collaboration. And as utilities begin to break ground on the first utility-owned thermal energy networks, the Massachusetts-based organization Home Energy Efficiency Team (HEET) is recording as much as possible through their “Learning from the Ground Up” research initiative. Verified data, crucial measurements, and studies on economic, health, and equity impacts will eventually be published in an open-access model for maximum benefit.