Maryland’s climate goals are aggressive and likely to become more rigorous when the General Assembly reconvenes in January 2022. At least that’s the indication from a preliminary study by the state’s climate consultant.

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Maryland has already adopted policies to transform how utilities generate power and accelerate the transition to electric vehicles.  Direct energy use in buildings, however, generates 13% of state-wide emissions. Maryland cannot meet its greenhouse gas reduction (GHG) goals by mid-century without eliminating emissions from buildings. 

This summer, the state’s climate consultant, Energy and Environmental Economics (E3), is taking a deep dive into building decarbonization scenarios that can meet the GHG mandate at least cost.  The early and preliminary study results favor electrification of new construction, and dual fuel heat and hot water systems in existing buildings. 

E3 compared three scenarios for transitioning building heat and hot water to zero carbon: high electrification, electrification with renewable gas heat backup, and high use of renewable natural gas and hydrogen. E3’s findings include:

  • All scenarios achieve zero direct building emissions by 2045 but require commercialization of new technologies and accelerated implementation.   
  • The high electrification scenario causes electricity demand to shift from summer to winter, significantly increases peak electricity demand and results in high consumer costs to expand electric generating and distribution infrastructure. 
  • Electrification with fuel backup lowers the cost for new electricity system infrastructure by 80% compared to the other scenarios. 
  • Fuel costs increase in all scenarios.

One key consideration is how any change would impact peak demand and infrastructure needs in Maryland’s electric system. Currently, that system experiences peak load in summer months. Since buildings are largely heated by natural gas, the scenario featuring high building electrification would shift peak loads to winter months and would more than double the peak electricity demand by 2045.

Under a dual fuel scenario, peak electricity demand would only be about 15% higher in 2045 than today. The scenario adopting high use of renewable gas and hydrogen produces little increase in peak loads. 

The cost of any change is also an obvious consideration. Meeting electricity demand in the high electrification scenario would require about $2 billion to $3 billion of annual incremental spending on generating capacity, transmission and distribution. The dual fuel scenario could save more than 80% of those incremental costs by avoiding the need to expand electric infrastructure. The scenarios involving high methane use and the electrification with gas heat backup have wide cost ranges because the study authors see uncertainty in commodity costs for renewable natural gas.  

Gas rates increase significantly under all scenarios, but for different reasons. Electric rates are generally unchanged or increase slightly under the dual fuel/gas backup scenario. The high electrification scenario shows a rapid electric rate increase of approximately 50% by 2049 due to costs related to infrastructure capacity needed to meet peak demand.

According to E3, electrification with fuel backup should be the relatively low cost and low risk path among the three scenarios. This scenario benefits from lower overall costs and less uncertainty. This scenario is expected to be the least expensive option when both capital and operating costs are considered. Dual fuel or hybrid customers can save money by utilizing old fuel-based heating equipment to provide backup heating during the coldest hours of a year, and by not having to upgrade building shells.

Total resource costs for the high electrification and high decarbonized methane scenarios are driven higher by building shell upgrades. The report notes that the deep energy efficiency retrofits and heat recovery needed to reduce electricity costs, produce highly uncertain and location-specific results. 

The final study results will have a strong influence on the direction the state takes on construction codes and building energy efficiency policy.