Analysis of the Costs, Benefits, and Barriers to Building Highly Energy-Efficient and All-Electric Homes in Flagstaff, Arizona: Filling the Data Gap
 

This presentation will share the results of a study conducted by an external energy expert to evaluate the costs, benefits, and barriers to building energy-efficient and all-electric homes in Flagstaff. The results of this study can inform future program and policy development.

Introduction
The City of Flagstaff (the City) is committed to advancing its climate and housing goals, while maintaining a high quality of life for residents. A key strategy for reducing greenhouse gas (GHG) emissions and monthly utility costs is the expansion of energy efficiency and beneficial electrification in new residential construction. While several national studies provide evidence suggesting energy efficiency and electrification can bring health, economic, and other benefits to residents of cold climate Western cities, industry experience has shown that national studies may not always reflect local construction realities.

Recognizing this disparity, the City commissioned a study by Noverra Collective to evaluate the capital and operational costs, barriers, and opportunities of building highly energy-efficient and all-electric new construction. The intent of this analysis is to address a critical data gap and inform City decisions about how to reduce energy use and emissions in the built environment while prioritizing long-term affordability. Through this work, the City seeks to develop defensible, locally grounded cost insights that reflect Flagstaff’s real-world construction practices, while highlighting both the economic and non-economic barriers to and benefits of energy-efficient, all-electric development.

Methodology
This study was informed by two research methods:

1. Interviews and a focus group with 13 Flagstaff architects, builders, general contractors, and sub-contractors who provided feedback on estimated capital costs, modeled operational costs, barriers, lessons learned, and recommendations.
2. Modeling to explore capital costs and the impacts of different Arizona Public Service (APS) electricity plans on operational costs for single- and multi-family homes (APS is the electricity provider for the Flagstaff region). Scenarios explored the differences in capital and operational (utility) costs for mixed-fuel (natural gas/electric), homes, all-electric (ducted and ductless) homes, and highly energy-efficient (HEE) homes. HEE homes were modeled as a 24% improvement in energy efficiency over Flagstaff’s current energy code. Scenarios include:

 

Scenarios Modeled
Single-family home (2,500 sf)	Multi-family home (990 sf)
Base case: Mixed-fuel (electricity and natural gas)	Base case: Mixed-fuel (electricity and natural gas)
Scenario 1: Ducted all-electric	Scenario 1: Ductless, all-electric
Scenario 2: Ductless all-electric	Scenario 2: Mixed-fuel, HEE
Scenario 3: Mixed-fuel, highly energy-efficient (HEE)	Scenario 3: Ductless all-electric, HEE
Scenario 4: Ducted all-electric, HEE
Scenario 5: Ductless all-electric, HEE

Key Findings
Costs for single family homes:

1. It is less costly to construct an all-electric, ductless single family home, compared to a mixed-fuel home in Flagstaff; all-electric ducted homes cost more to construct than a mixed-fuel home.
2. It costs less to operate an all-electric ductless home than a mixed-fuel home on all APS electricity plans.
3. For all-electric ducted homes, the picture is mixed: using the APS Time of Use (TOU) Plus Demand Charge Plan reduces costs versus a mixed-fuel home; on all other APS plans, it is more costly to operate an all-electric ducted home.
4. Energy efficiency features add to construction costs for all home types but lead to long-term utility cost savings.

Costs for multifamily homes:

1. It is less expensive to construct an all-electric ductless multifamily home than a mixed-fuel home in Flagstaff.
2. It costs less to operate all-electric multifamily homes than a mixed-fuel home on all APS rate plans. Greatest utility cost savings come from the APS TOU Plus Demand Charge Plan.
3. Energy efficiency features add to construction costs for all home types but lead to long-term utility cost savings, although the cost savings are lower than for single-family homes because multifamily homes tend to use less energy (they are smaller, and attached housing is more energy efficient).

Report development was informed by valuable insights from 13 local building practitioners. The report discusses barriers that local practitioners face in building energy-efficient and electric homes, including a small labor pool, client preferences for gas stoves and fireplaces, existing high construction costs, and ideological leanings. It also discusses common narratives that may act as a barrier, some of which the report found to be misconceptions, including:

• Highly energy-efficient and all-electric homes are too costly to install and operate
• The City bans, or at a minimum, strongly discourages wood-burning fireplaces
• Electric heat pumps do not work in cold climates
• Electric heat pumps will shut down should a power grid outage occur, while natural gas appliances will still work

 The report also details the non-economic benefits of energy efficiency and electrification in new homes:

• Improved indoor air quality in all-electric homes
• Improved safety in all-electric homes
• Homeowner pride in highly-energy efficient and all-electric homes
• Reduced greenhouse gas (GHG) emissions up to 58% in energy-efficient, all-electric homes (compared to mixed-fuel homes built to Flagstaff’s current energy code)

Recommendations:
The report concludes with recommendations based on study findings to advance energy efficiency, electrification, and reduce monthly utility costs for Flagstaff residents:

1. Adopt the 2024 International Energy Conservation Code (IECC) and Appendix RG: 2024 IECC Stretch Code to improve energy efficiency over Flagstaff’s current energy code.
2. Encourage new homes to be all-electric through education, outreach, and incentives. Focus on electric heating and cooling, since these appliances are responsible for the bulk of energy usage.
3. Adopt the 2024 IECC Appendix RK: Electric Ready Construction to make it easier for residents in mixed-fuel homes to switch to electric appliances in the future.
4. Provide extensive education and outreach to encourage energy efficiency and beneficial electrification in new home construction.
5. Offer incentives and equipment purchasing support for energy efficiency and/or all-electric features to reduce upfront costs and shorten the return on investment, such as a heat-pump bulk-buy co-op, and an incentive to offset additional costs of installing all-electric features (particularly ducted, all-electric systems).
6. Strengthen relationships between the City, APS and the building community.