What’s Really Stopping Your Electrification Project?

Takeaways:

• • All-electric heat-pump retrofits can cost only 15-20% more than a like-for-like gas replacement, before incentives.
  • Utility incentive programs for energy efficiency can support electrification investments.
  • In one project example, HVAC electrification was installed over a single weekend, with no disruption to building operations.
  • Without intentional facilities team engagement, electrification projects often stall, even without cost or technology limits.

Imagine you’re an owner that needs to electrify your existing buildings, whether due to building performance standards (BPS) or company targets.

First, you’ll want to present the business case. We began to cover this in our recent post, outlining whether electrification is financially feasible for existing buildings. Long story short: it often is, when integrated with smart capital replacement planning and designed around existing infrastructure. In Stok’s experience, retiring gas-fired HVAC equipment with an all-electric heat-pump system can require only a ~15-20% premium over a conventional like-for-like replacement, plus added benefits like energy and operating cost savings, greenhouse gas (GHG) reductions in alignment with corporate sustainability goals, avoided lock-in to natural gas price escalation, and access to incentives.

Yet even when electrification is shown to be financially feasible, it can stall in implementation. Why? Let’s answer three common questions from building owners and operators when moving from electrification feasibility to actual implementation.

#1: HOW CAN WE REDUCE UPFRONT CAPITAL COSTS?

Incentives can significantly reduce the incremental cost of electrification implementation. For example, utility providers like Silicon Valley Power (SVP) provide up to $2 million per year to customers implementing building decarbonization, including electrification upgrades like HVAC and service hot water food service, alongside solar photovoltaics, electric vehicle charging, smart controls, and other energy efficiency measures.

The main caveat is that these incentives are location dependent. That said, many of Stok’s clients are eligible for significant electrification incentives through utility providers like SVP and PG&E in California, and Con Edison in New York. Some of the key incentives we help our clients apply to include:

Utility	Qualification Criteria	Value
Silicon Valley Power (Silicon Valley, CA)	Heat pumps and VRF system	$650/ton
	Unitary heat pump water heater	$3,000-7,000/unit
	Various kitchen appliances (e.g., electric fryer, electric 4-ft griddle, and hundreds more options	$5,000/vat for electric fryer, $6,000/piece for electric 4-ft griddle
Con Edison (New York, NY)	Full-building space heating electrification	$120/MMBtu
	Phased electrification	$70/MMBtu
	Domestic hot water electrification	$200/MMBtu

Some utility incentives available for existing buildings in Silicon Valley and New York. Disclaimer: Incentive details mentioned are as of this article’s date of publication. Always check with your local utility for updates.

One large California-based commercial real estate developer and owner is in the process of electrifying one of their existing buildings in the Bay Area. Stok is supporting the pursuit of incentives from the utility in the region, specifically for:

• • Retiring gas-fired boilers and rooftop AC units with an all-electric VRF (variable refrigerant flow) system
  • Replacing gas water heaters with electric heat pump water heaters
  • Retrofitting the gas kitchen to an all-electric kitchen

To take advantage of incentives, start planning early: many programs require pre-approval before equipment purchase and installation. To search for potential available incentives, check your local utility’s website or work with a consultant to navigate qualification criteria and submissions.

#2: HOW CAN WE ELECTRIFY WITHOUT DISRUPTING OUR BUSINESS?

Replacing equipment like boilers and rooftop AC units can be challenging and present logistical constraints, often resulting in disruption to operations, like noise, dust, and restricted access as construction crews work through the occupied space. Beyond the headache for your facilities manager, this can result in lost revenue, like event spaces that have to shut down for the retrofit or a commercial kitchen going offline during an upgrade.

That doesn’t always have to be the case. With careful planning in one project, even major HVAC retrofit work was turned over within a single weekend. A global software firm that Stok supported with electrification implementation successfully got new equipment installed over a weekend with no disruption to operations.

Installation of VRX RTU replacing the legacy rooftop unit. (Courtesy of US Air Conditioning)

“Low-impact electrification starts with designing the equipment around the building, rather than forcing the building to accommodate standard equipment. By closely matching the existing curbs, duct connections, utilities, and capacity requirements, the VRX semi-custom approach can reduce field work, compress the construction schedule, and help an occupied facility remain operational during a major HVAC transition.” –Mike Sabbaghian, Applied Equipment Manager, US Air Conditioning Distributors

Decarbonization can be implemented while keeping the business running, whereas a standalone retrofit may require extended downtime, disrupting operations. Ultimately, downtime depends on the equipment type and technology selected, as well as whether a traditional or customized solution is used.

#3: WHAT IF OUR FACILITIES TEAMS DON’T WANT THE CHANGE?

Even with a business case, electrification projects can fail to deliver their expected savings and benefits if the new equipment isn’t operated as the design intends. Operating heat-pump technology is simply not the same as a gas boiler, and the changes to maintenance, controls, and troubleshooting can cause enough pushback to halt an electrification project before it starts, or leave installed equipment running short of its design intent once it’s in service.

This often traces back to facilities teams being left out of the planning process and thus aren’t adequately prepared to operate what they’re handed. Aligning operations and maintenance early supports project approval and protects the value of the investment for as long as the equipment runs.

Luckily, there’s a straightforward fix: engage operators early so they’re involved in shaping the solution, rather than handing them a brand-new system at project completion that they now have to make work. A sustainability charette that integrates operators can support post-installation optimization and confidence in operations. Asking operators about their concerns and ideas not only brings them along in a critically collaborative process, but can also improve the design and operation of your system to reach intended results. ASHRAE’s decarbonization guides also suggest early operator engagement via a decarbonization charrette in design, meant to collaborate and align early across the project team.

Ready to move from electrification feasibility to implementation?

Electrification doesn’t have to sit in feasibility. Exploring available incentives, planning for business continuity, and engaging facilities teams early for operational readiness unlocks a path to implementation. Alongside embedding electrification into normal capital replacement cycles, owners can decarbonize their existing buildings while achieving strong ROI.

Still unsure about the business case for existing building decarbonization, or ready to drive value across your portfolio? Talk to our team to get started.

Disclaimer: Incentive details mentioned throughout this article are as of this article’s date of publication. Always check with your local utility for updates. You can also check DSIRE (Database of State Incentives for Renewables & Efficiency) for opportunities throughout the U.S.