Beneficial electrification, the transition from fossil fuels to electricity for various energy needs, is a hot topic in government, and throughout the energy industry. As community leaders consider how to promote electrification, they are exploring ways their policies can benefit businesses by blending environmental stewardship with economic efficiency.
A Business Guide to Beneficial Electrification
New trend in regulation helps communities consider business benefits as they plan for the future.
Provided By Xcel Energy
August 19, 2024 at 5:00AM
Policymakers focused on beneficial electrification in buildings are setting new standards and goals for their communities, which can create opportunities for businesses interested in using electricity instead of fossil fuels like natural gas, propane, or fuel oil for heating, running appliances or operating machinery in their buildings.
As Minnesota businesses navigate this fluctuating landscape, understanding what is driving these emerging trends is pivotal in harnessing the full potential of electrification initiatives.
Factoring in the Social Cost of Carbon (SCC)
One key trend shaping beneficial electrification is the integration of the Social Cost of Carbon (SCC) into cost-effectiveness testing. SCC is a way to calculate the financial impact of each additional unit of carbon emissions released in terms of climate and other impacts on society.
By factoring in SCC, the full value of strategically displacing fossil fuels becomes apparent. It can help regulators identify which fossil fuel applications should be the focus of initiatives and helps justify and align programs with the community’s broader environmental and policy goals.
In the future, businesses may have the SCC of their fossil fuel use included in calculations used to determine eligibility for beneficial electrification projects. Legislation in states like Massachusetts and Colorado underscores this trend, directing business program administrators to incorporate SCC into cost-effectiveness assessments, emphasizing the broader societal benefits of electrification.
A Nationwide Yet Local Effort Coordinating Utilities and Communities
Coordination among stakeholders is fostering collaborative approaches to advance electrification initiatives across the country.
In Colorado, legislation encourages utilities to engage in regional partnerships, ensuring consistency and efficacy in electrification endeavors. In New York, partnerships between utilities and organizations like the New York State Energy Research & Development Authority (NYSERDA) are driving electrification efforts. By aligning goals and implementing innovative models, utilities can streamline efforts and overcome participation barriers, expediting the transition to electrification.
These collaborations are resulting in substantial investments in beneficial electrification and energy efficiency initiatives. In Colorado, the Public Utilities Commission (PUC) recently approved ambitious electrification goals and budgets for Xcel Energy. With a budget of over $429 million, Xcel Energy is implementing programs aimed at helping all 3.7 million customers.
Building electrification and energy efficiency measures are baked into the regulations, mandating substantial emissions reductions. These kinds of programs are being considered and approved in many communities, and Minnesota businesses should be on the lookout for opportunities to participate.
Providing Guidance for Beneficial Electrification
As a part of its Partners in Energy community collaboration program, Xcel Energy has developed a beneficial electrification toolkit developed for local community leaders as they explore ways to promote a cleaner, more resilient energy future. You can find it at Beneficial Building Electrification Toolkit | Xcel Energy | Partners in Energy (xcelenergycommunities.com).
Some recommendations in the toolkit directly impact businesses and building owners:
- Starting with efficiency and weatherization education: These are steps towards reducing energy use that can have a big impact on a business’ bottom line.
- Promoting an electrification workforce: As communities make the change from fossil fuels to electric alternatives, skilled tradespeople are needed to complete the work. Local governments can help ensure this workforce develops.
- Simplifying the permitting process and reducing permit costs: To remove or reduce common barriers to electrification.
- Incentives, financing, and rebates: In addition to programs run by Xcel Energy, local governments can establish their own efforts to help offset costs for businesses.
Embracing beneficial electrification trends offers businesses opportunities to drive sustainable growth while mitigating environmental impact.
By collaborating with community leaders, championing creativity, and engaging with beneficial electrification efforts, Minnesota businesses can spearhead the transition to a cleaner, more resilient energy landscape, reaping the rewards of a brighter, electrified future.
Visit bizenergyhq.startribune.com to view more tips from Xcel Energy and discover how your business can get started saving money and energy today!