Why All Electric? Total Household Cost of Energy

​I’ve lived with a single bill from my electricity provider for transportation and home energy use for a few years now.  It is wonderfully convenient to run your entire household off a single utility – the electricity from the grid and in part provided by your own solar panels.  This is in contrast to the way we all grew up, with separate providers of gasoline for transportation, electricity for our homes, and gas for our homes.
This concept of total household cost of energy was first presented at a conference a few years ago and I’ve been thinking about it ever since.  So I thought I’d redo the analysis now with today’s utility costs, lower compensation rates for exported solar power (NEM3), and what I know about living with EVs.

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Results

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​I’ll detail the assumptions next, but let’s go to the results first.  A traditional household has total energy and transportation costs of about $8,000 a year.  If that same household switches their home energy source to all-electric and their vehicle(s) to EVs, their total costs drop to just over $6,000, a savings of 25%.  If they put solar panels on their house too, their total household cost of energy drops below $5,000 a year, a savings of 40% compared to the traditional multi-fuel household.  Plus, they have the convenience of paying a single bill for all of it (except the occasional vehicle maintenance).

Methodology

I. Transportation costs​
For transportation costs, I used 20,000 miles a year.  For the traditional gasoline household, that amounted to $2,746 a year based on 33.5 miles per gallon and $4.60 prices at the pump.  Maintenance was based on $0.101 per mile[1] for the gasoline household or $2,020 a year.  That seemed reasonable for a typical household having two cars.
The Electric+EV household scenarios used the same 20,000 miles traveled in a year, 3.5 miles per kWh, and $0.25 cost per kWh to charge at home.  That came out to $1,429 in “fuel” per year, almost half as much as the gasoline cost.  Maintenance was based on $0.061 per mile[1] or $1,220 a year.  Our experience with driving EVs for 9 years now bears this out.  So transportation comes out way ahead when electric by over $2,000 a year.  Note we used the Southern California Edison TOU-D-PRIME off-peak rate of $0.25/kWh for EV charging, since it’s so simple to program your car to start charging after peak period has passed and still be fully charged in the morning.

II. Home Energy Costs
For home energy costs, I used the California Energy Commission’s prototype 2-story home and modeled it first as a mixed fuel home, then the same home all-electric, and finally the all-electric home with a 12-panel PV system (4.8 kW).  I assumed the home was in Southern California’s Inland Empire, Climate Zone 10 to simulate some real weather.  I plugged the hourly gas and electricity usage of each home into our proprietary utility cost calculator, assuming today’s rates and NEM3 compensation rates for exported solar energy, in the case of the PV scenario.  I assumed code-minimum efficiency gas furnaces and water heaters and code minimum heat pumps, just what’s widely available on the market today for no extra cost.  I also assumed it had a nothing-special building envelope, such as was typical for 1980s construction – R-11 walls, R-19 ceilings, and old windows and doors.
The models came up with a typical gas bill of $795 a year and typical electric bill of $2,638 a year (3,433 total).  The all-electric scenario estimated household energy costs just slightly higher at $3,711, but no monthly minimum gas charges.  Add the 12-panel PV system, and household energy costs were estimated to be $2,133, savings of 38%.


[1] U.S. Department of Energy, June 14, 2021, https://www.energy.gov/eere/vehicles/articles/fotw-1190-june-14-2021-battery-electric-vehicles-have-lower-scheduled#:~:text=The%20estimated%20scheduled%20maintenance%20cost%20for%20a,vehicle%20(ICEV)%20totals%2010.1%20cents%20per%20mile.

Takeaways

I really like this way of looking at the decision whether to electrify one’s home.  With real savings like shown here, how can you NOT do it?  The energy cost for the typical home is $8,199 a year and it’s $4,757 a year for the all-electric home with EVs and PV.  That’s savings of over $3,400 a year or 42%.  Even if the PV costs you $15,000 up-front (assuming no federal tax credit and ~$3/watt), that investment pays off in 5 years. 

Another way of looking at this is energy burden.  Several presenters I’ve seen have looked at energy costs this way and it stuck with me.  Those recurring energy costs we pay every month have to be met before we can invest in our good ideas, pay off credit cards, and before we can have any fun.  Energy burden is total household energy costs as a percent of household income.  For many households, energy costs are a force dragging them toward poverty.  I used California median income of $106,605 for this calculation.  Looked at this way, a traditional household has 7.7% energy burden, an all-electric household has a 6.0% energy burden, and the all-electric plus PV household cuts it to 4.5%.  That’s income they can do better things with.

A third way of looking at this is Carbon emissions.  If you aren’t convinced to go all-electric-plus-EVs-and-PV based on convenience and 42% cost savings, maybe the Greenhouse Gas comparison will change your mind.  The all-electric household has 33% lower GHG emissions than the multi-fuel one, and the all-electric-plus-PV household comes in at 57% lower than multi-fuel.  So when a household goes all-electric, gets EVs they charge at home, and puts on a PV system, they save 42% on energy costs, drop their energy burden to 4.5%, and cut their GHG emissions 57%.  This is how I’m going to start presenting it to my clients; I think it will be more compelling than the comparison for the home alone or the EV alone.

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