Electrification of residential and commercial space heating

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Often the conversation around the energy transition is solely focused on the power and transportation sectors. However, the rapid decarbonization of other sectors is critical to meeting national or regional climate goals. Despite being highly carbon intensive and approximately 35% of global energy consumption, heat is commonly overlooked. Our report, The Electrification of residential and commercial heat, tackles this sector by examining one route to space heating decarbonization: electrification.  

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Key takeaways of this report include:

  • As the power sector accelerates its decarbonization efforts, converting from direct combustion of fossil fuels for heat to electricity will lead to lower overall emissions. Electric heating technologies, particularly heat pumps, are more efficient than heating technologies using fossil fuels.
  • Policies that indirectly expand heat electrification include clean energy targets and carbon prices, such as renewable portfolio standards in the U.S. and the Green Deal in the European Union. Policies with direct impact on electrification include fuel-switching targets, bans on fossil fuels in existing and new construction, and financial incentives.
  • Heat pumps are the most energy-efficient electric heating technologies and are already commercialized. Both air-source or ground-source heat pumps will struggle with challenges such as customer preferences and high upfront costs; as such, heating technologies other than heat pumps with positive decarbonization characteristics are expected to play a crucial role. These include district heating, hydrogen, biogas and solar thermal, among others.

This report is only available to subscribers of WoodMac's Energy Transition Service or its Grid Edge Service.

Clients can access the report here.