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BDC Presents

The [Building] Electrification Imperative

Climate Action and Planning, Efficiency and Building Performance, Electrification

Summary

There are two key races in the energy transition: the renewables race to generate electricity, and the electrification race to supply final energy demand for heat, mobility, and other services.

In this webinar, Ember’s Daan Walter and BDC’s Panama Bartholomy discuss why electrification is the more consequential race today. Join us to discover why making electrification the central driver of decarbonization will accelerate the clean energy transition, make energy more affordable, and unlock the largest economic opportunity of our time.

 

Resources

Notes

Framing [Building] Electrification Progress in the United States (Panama Bartholomy, BDC)

Buildings play a critical part in the electrification of the U.S. economy 

  • The U.S. is the number one market for heat pumps in the world. For the past three years, heat pumps have been outselling furnaces, with sales of 4.2 million heat pumps in 2024. 
  • The U.S. used to be behind China and Europe in heat pump sales, but thanks to government agencies, non-profits, installers, and consumers, the U.S. is now a leader in this space.
  • State regulators are working to establish a transition away from fossil fuels. 15 states have Future of Gas Proceedings to identify a plan to wind down the gas system. 
  • States continue to introduce building decarbonization policies; in 2025, 130 bills were introduced in 27 states across the United States.  

 

The Electrification Imperative (Daan Walter, Ember Energy)

  • Two views on energy transition dominate the conversation: scaling renewables and reducing emissions. Both views are critical, but do not necessarily capture the whole picture of the energy transition. Electrotech is a new way to view the energy transition.
  • Electrotech: a technology revolution, where new, scalable technologies are rapidly pushing out the old and can take over the energy market. Electrotech falls into three buckets:
    • Supply Side: technology that generates electricity, such as wind and solar 
    • Demand Side: electricity that provides services for consumers, such as electric vehicles and heat pumps
    • New Connections: battery storage, new power lines, and software 
    • With these new technologies, over 75% of the global energy system can be electrified
      • Almost all of the building sector has already been electrified or can be electrified economically
  • Drivers of Change for Electrotech compared to fossil fuels
    • Physics: Electrotech is 3x more efficient compared to the current fossil energy system, which loses 2/3s of the energy we put into the system. For example, heat pumps are 3-4 times more efficient than a gas boiler. 
    • Economics: Electrotech beats fossil fuels economically. For example, solar panel production costs decrease over time, whereas fossil fuels will continue to require more expensive technology to dig.
    • Geopolitics: 50 countries depend on fossil fuels and must import more than half of it into their countries. Fossil fuel dependency means exposure to high risk, whereas electrotech offers a path to permanent energy security.
      • If countries move to electrotech, it removes exposure to fossil volatility, and electrotech costs remain stable.
      • According to Ember's research, 93 countries have at least 10 times enough solar and wind energy in their country to power their whole energy system. 
      • Leapfrogging: Countries in the Sunbelt (areas that have abundant solar energy)  will have the lowest electricity cost due to their constant access to the sun for solar power, which will further encourage electric technology adoption.
  • Current State of Electrotech
    • China is the first major electrostate, and other countries are joining the race
    • Emerging markets are skipping fossil fuels, and ⅔ are ahead of the U.S. in solar deployment and a ¼ in electrification
    • The electrotech movement is trending upwards, but locally, it may be a mix of lagging and leading, depending on the policies within the countries 
  • In this Electrotech era, many new technologies and solutions will be offered. To gauge the opportunity with new energy technology, use these fundamentals:
    • Does it make the energy system more efficient?
    •  Is it small and modular, so it can be manufactured at scale and benefit from learning curves?
    • Does it enhance the independence and security of its users?
  • Two key races: scaling up renewables and electrifying the system. However, most of the public and policy attention is directed to scaling renewables with little focus on electrification.  Five reasons why electrification is the more consequential race today (to learn more, read the Electrification Imperative):
    • Targets a larger part of the energy system
    • Brings energy security
    • Makes more money
    • Delivers more value to final customers
    • Is a global differentiator in energy leadership

 

Fireside Chat 

Panama: We saw a number of elections in states where affordability was the main talking point. Could you dig more into how building electrification has a key role to play in keeping the transition and people’s bills affordable?

Daan: At the moment, unaffordability is mainly driven by two forces: global commodity prices for fossil fuels rising, and grids being underprepared for what's coming. What can be done at this moment is to vote for people who will help get grid costs down, such as unbundling fossil fuel prices and electricity prices to reduce volatility for consumers. Second, is to implement these technologies in your own home.

 

Panama:  What are the hidden pieces that we need to leverage to make sure buildings play their role in the Electrotech revolution?

Daan: Digital systems and offering flexibility. Buildings can play a role in balancing the grid if software is implemented to help direct energy when it is needed, and buildings could be a net energy producer. 

Panama: Absolutely, we’ve seen conversations about data centers and flexibility and how companies are looking to use software to make these data centers good grid neighbors as they are going live. We are also seeing some aggregators of demand response, particularly with the rapid proliferation of batteries, heat pumps, and heat pump water heaters to help avoid blackouts. 

 

Panama: What surprised you the most about how different countries or regions are looking to electrify buildings?

Daan: Something surprising to me is the driver of why heat pump sales grew in each region. For Europe, it was more of a security measure. Whereas China promoted it as an independence play. In the Global South, we’ve seen this, as this is the first energy technology households are building. Generally, the first thing that buildings need is lighting, but the second thing often is heating and cooling needs. 

 

Panama: From the building sector, what types of policy signals are you finding the most influential globally? How do some of these policies differ by country?

Daan: What would be most impactful is to make a consistent long-term policy. In China, they are doing long-term planning, strategic investments, and recognizing that these investments take time to realize a change. Another impactful policy solution is to create the right market conditions to make this transition inevitable.

 

Panama: What’s the most important thing people should understand about how building electrification demand growth interacts with energy system reliability in your scenarios? 

Daan: If we scale up electrification across the economy, electricity price costs will go down if we can strategically use your grid and assets. So the role buildings can play in the immediate term is to scale heat pumps while putting controls in place to use all of the flexibility that’s being opened by with extra grids with batteries. 

 

Panama: After completing this report, what’s one question that you think deserves a lot more research or attention on the electrotech revolution and the building sector side?

Daan: Two things. One, how small can you go with localizing electricity systems? Once we know that, we may see a completely different energy system in the future. Second, what is the risk exposure of our electric and gas distribution systems? Currently, the gas distribution system is extremely risky, so we need to know how much it costs to keep these distribution systems as they are, and this will help us better understand what the tipping point is towards electrification.