Challenge

In the transition to a clean energy economy, an estimated 60% of single-family homes are not electrification ready, with electrical panels unable to handle required loads (e.g., less than 200 amps) to fully electrify.¹ About one-third of these homes have electrical panels rated at or below 100 amps.² Another study found that half of newly-constructed homes (over 500,000) lack electrical panels that support full electrification. Federal tax credits to support panel upgrades, which were available through the Inflation Reduction Act, will expire at the end of 2025³ leaving homeowners to cover the full cost of panel upgrades, which range between $1,000 and $5,000⁴ or more in markets like California. 

While electrical panels are a significant challenge, they are not the only one. Residences may also require rewiring (e.g., to replace old knob-and-tube wiring, or to install 240 V plugs for electrified appliances) or space modifications (e.g., to accommodate heat pump water heaters, which are typically larger than gas water heaters). Renters can face split incentives, lacking the support and engagement of building owners in electrification readiness.⁵ Pre-existing lead, mold, asbestos, and other structural problems⁶ can be other challenges.

Policy Solution

Electrification readiness programs for low- and moderate-income households can facilitate fuel switching by increasing eligibility for electrification programs, thereby reducing cost barriers and saving households thousands of dollars on needed upgrades

Model Policy Features

Key policy components that make pre-electrification programs effective include:

• Deep subsidies or zero- to low-interest loans to low- and moderate-income households and affordable multifamily homes tiered by income level (e.g., 100% or 150% of the Federal Poverty Level).
• Provides funding for panel upgrades, replacement of old wiring, 240V outlets for electric appliances,⁷ and other structural upgrades or accommodations needed to enable adoption of electric appliances.
• Stacking capability (i.e. assistance can be used with other funding mechanisms), paired with system navigation assistance for applicants, to take advantage of other federal, state, or local incentive programs.
• Paired with whole home assessments to support weatherization. 
• Multifamily affordable home incentives which provide benefits to both tenants (e.g. in-unit upgrades) and building owners (e.g. common area upgrades) to address the split incentive challenge.
• Provisions to allow for deed restrictions that strike a balance between the needs and interests of low- and moderate-income households and the protection of public investments (i.e. preventing property flipping), such as agency discretion in application of deed restrictions, deed restriction duration, and other measures to maintain low-income housing stock. 
• Reductions in participation barriers, such as language access, consolidation of existing programs and/or no-wrong-door approaches, categorical eligibility (whereby participation in other government assistance programs qualifies a household for eligibility in offered programs), plain language contracts, simplified applications, robust outreach, and bans on application/exit fees and credit score review.
• Tenant protections, such as prohibitions on landlord cost recovery through rent increases, eviction protections, displacement protections and/or assistance during renovations (e.g., alternative living spaces, assistance with moving or storage expenses), right to return without rescreening, grievance procedures, and anti-harassment provisions.⁸
• Provisions for regular data reporting and public transparency (e.g., public-facing data dashboards, program evaluation, audits to ensure meaningful benefits reach intended populations).
• Includes high road job and training or apprenticeship opportunities, including strategies to reach underemployed communities.

Potential Policy Drawbacks and Pitfalls

• Trade-offs between whether funding should be allocated to 120V electric appliances, which can be plugged in immediately and may not require electrical wiring and panel upgrades but are less efficient, or to invest in electrical work to enable 240V appliances.  
• Requires up-front planning for full residential electrification to ensure panel and wiring upgrades are sized appropriately. For example, a panel upgrade may not be needed if select appliances are 120V rather than 240V, but appliance electrification is often conducted in sequence as appliances fail and need replacement rather than all at once, meaning decisions about future appliance replacements may have to be made years in advance.

Complementary Policies

Complementary policies that increase the effectiveness of efficient residential electrification policies include: 

• Pre-weatherization programs, weatherization, and efficient residential electrification to improve the overall energy efficiency of the home in order to reduce energy costs.
• Comprehensive DER valuation to enable electrification readiness to be paid for, in part, through compensation of any broader benefits provided to the grid from subsequent electrification, such as deferral of distribution upgrades or peak demand reduction. 

Additional supporting policies include contractor education and public housing energy efficiency improvements.