BY IEC STAFF
“The shift to residential electrification creates numerous business opportunities for electrical contractors,” says Brian Schmalberger, residential market development manager at ABB. “New regulations, incentives, and code changes are driving homeowners to look at electrical alternatives.”
Brian is committed to simplifying the overwhelming amount of information in the marketplace and to helping electrical contractors seize new business that takes advantage of the shift to electrical appliances (which includes electric vehicles, solar, and battery storage) and home energy projects. He indicates ABB is a resource they can tap as they explore the opportunities in front of them.
“Homes are changing,” Brian says. “Around the country, homes are being electrified today and are quite different than the homes of even five years ago. There is more demand than ever for electricity. People are buying electric vehicles (EV) and installing chargers. We’re seeing a shift away from gas furnaces to heat pumps and away from gas stoves to electric ranges. There are other electrical appliances that are much more popular today than they were even two years ago.”
This requires more electricity in homes, and homeowners need expert electrical contractors to help them navigate, he says. One reason for this electrification is the local and federal incentives available to homeowners who move to electric appliances and away from fossil fuels.
“Electrical codes are being updated to reflect the shift to residential electrification,” Brian says. “Homeowners need advice and this presents opportunities for electrical contractors. Being knowledgeable about the changing technology, the incentive landscape, and other factors driving the need for electrical system upgrades can create more projects and bring in new customers.”
What’s Changing?
Brian summarizes increased electrical needs for residences in the new scenario with four examples.
EV Charging
- Expected to be 30-42 million EVs on the road by 2030
- Residential charging (L1/L2) needed to support these vehicles estimated to be 26-30 million units
- Incentives available for vehicles, home charging, and electrical system upgrades
Old Circuit: N/A
New Circuit: 30-80A @ 240V
Heat Pumps
- Heat pumps (HP) overtook gas furnace sales in 2022 despite high install costs
- Gas furnace efficiency is ~90 percent, while HPs can achieve 400 percent efficiency
- HPs use 50 percent less electricity consumption vs. resistance heaters
- Incentives available for heat pumps and electrical system upgrades
Old Circuit: 20A & 120V or 240V
New Circuit: 20-60A @ 240V
Appliances
- Includes ranges and water heaters
- Sales of heat pump water heaters grew 26 percent last year, while sales of gas water heaters declined by 17 percent (expected to grow 6-10 percent per year)
- Incentives available for electric appliances and electrical system upgrades
Old Circuit: 20A @ 120V
New Circuit: 50A @ 240V
Solar and Battery Storage
The annual growth rate of the residential battery energy storage system (BESS) market is estimated to be 22 percent through 2030
- The market is expected to grow from $1B million in 2023 to $4.8B million by 2030
- Utilities are introducing time-of-use rates making BESS useful beyond back-up power
- Incentives available for installation of these systems
Old Circuit: N/A
New Circuit: 50A @ 120/240V
What Contractors Can Do
Brian indicates the best way to position yourself for this new business is to become a trusted source of information for homeowners to help them understand the appropriate regulation, incentive, and code change information playing into their project decisions.
“States are starting to propose and pass legislation to ban or restrict gas use or to implement electrification requirements,” Brian notes. “The Inflation Reduction Act in August 2022 was the largest investment in clean energy and climate action ever in the history of the country.”
This includes two key provisions to incentivize homeowners and builders to consider energy projects — 25C (residential energy efficiency tax credit) and 25D (residential clean energy tax credit). There are numerous specifics, but all require electrical panel upgrades. While these incentive dollars are awarded to the homeowners, they need contractors to do the work, Brian says.
“The Inflation Reduction Act also includes multiple provisions that incentivize the purchase of electric vehicles, which aim to increase EV adoption and home charging infrastructure,” Brian adds.
Inflation Reduction Act incentives are available to homeowners through 2033.
Additional incentives still being developed are arising through states. One is the Home Electrification and Appliance Rebate (HEAR) with $4.3B in grants to states for energy projects. Another provision in the Inflation Reduction Act sees dollars allocated for electrical contractors. States are applying for grants ($200M allocated) to develop and implement training for electrical contractors doing home electrification projects. It also provides states the ability to award electrification rebates to contractors through the High-Efficiency Electric Home Rebates (HEEHR) and Homeowner Managing Energy Savings Rebate (HOMES) programs.
“These two are not yet available, but states are expected to begin rolling out programs in early 2025,” says Brian. “Keep your eye on the website Rewiring America for updates on these programs. Rewiring America is a great resource for additional details about the various federal and state incentives for different projects. You can quickly narrow in on what’s going on in your state with their tools.”
Brian says that the NEC® 2023 began responding to technology changes necessitated by regulation, incentives, and consumer choice for more electrical appliances in homes. The code expands on needs to add circuits, increasing the size of circuit and wiring, increasing the size of the electrical panel, and increasing the service from the utility.
“The National Electrical Code has been updated to allow energy management systems to manage loads to remain under the allowable current of a set point (vs. the rating of the load center),” Brian explains.
Residential electrification opens up many new opportunities for electrical contractors, and Brian advises contractors to be prepared to:
- Create new offerings for customers to help them electrify their homes
- Capture new revenue associated with home electrification and energy projects
- Use training programs to become more knowledgeable about the shift to residential electrification
- Become a local expert that homeowners will contact for project needs
“The shift to electrification is only going to be effective if there are people knowledgeable and trained to do the work,” Brian concludes. “I encourage you to be that resource and let me know how ABB can help you.”
Editor’s Note: This article was adapted from a webinar presented June 2024 by ABB, Electrify the Future of Housing: New Project Opportunities for Electrical Contractors. IEC members can access the presentation in the Business and Marketing section of the Webinars page on the IEC website. Brian Schmalberger can be reached through LinkedIn.