Berkeley economist Meredith Fowlie explains why the drive to electrify everything in American homes is at odds with electricity rate setting practices, and explores pricing reforms to deliver rapid and equitable electrification.
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“Electrify everything” has become a mantra of decarbonization, and it’s one of the key strategies to reducing reliance on fossil fuels. Yet the process of electrifying everything from home heating to transportation creates challenges for the electricity system, which will need to grow to accommodate renewable energy and rising demand for power.    

This raises a fundamental question: How can society make costly investments to grow the supply of power, while keeping the cost of electricity low enough that electrifying everything remains an attractive proposition for all consumers?  

Meredith Fowlie, an energy and environmental economist at the University of California, Berkeley, explains why existing frameworks for setting consumer electricity prices can be at odds with the need to rapidly decarbonize. She also explores potential solutions to ensure that electrification happens rapidly, with costs and benefits that are equitably shared among households at all income levels.  

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The Economics of Building Electrification https://kleinmanenergy.upenn.edu/research/publications/the-economics-of-building-electrification/

Energy Policy Now is produced by The Kleinman Center for Energy Policy at the University of Pennsylvania. For all things energy policy, visit kleinmanenergy.upenn.edu

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