Electrification 101: How Going Electric Can Slash Emissions and Save Money

In Energy Matter’s weekly podcast, Road to Zero, we’ve been asking renewable energy industry insiders about the trends to watch in 2022. Time and time again, the concept of electrification has come up as a major trend – so what does it mean?

“Electrify everything” is the rallying cry of a growing number of energy experts who say that electrifying as many aspects of our lives as possible is the cheapest, fastest route to emissions cuts. For Australian home and business owners, going electric can also mean big savings.

In this article, we’ll discuss what electrification involves, what the benefits are, potential barriers to its success and some notable alternatives.

What is electrification?

While much of the discussion around climate solutions have centered on the supply side of things – i.e. generating more renewable energy – electrification focuses on the demand side, or reducing our need for fossil fuels.

Electrification involves replacing the vast amount of technologies that use fossil fuels (coal, oil, and natural gas) with technologies that use electricity as a source of energy.

In households, it would mean replacing petrol cars with electric vehicles, gas and wood-fired heaters with heat pumps, gas dryers with electric dryers, gas stovetops with induction cooktops, and so forth.

For the transportation, commercial, and industrial sectors, it would mean electrifying light, medium, and heavy-duty vehicles, commercial buildings (space-heating, water heating and cooking), and industrial processes (heating and feedstock).

How does electrification reduce emissions?

Upgrading demand-side machines and appliances to electric alternatives at their next retirement offers great potential benefits for our environment. However, the environmental benefits of electrification vary depending on the resources used to generate electricity.

Significant emissions reductions through electrification are only possible through the decarbonisation of the electricity grid and widespread adoption of distributed renewable energy generation – like rooftop solar PV and battery storage.

In Australia, where coal still dominates the electricity grid, electricity generation is still our largest source of emissions. Fortunately, the share of renewables is steadily increasing, and by 2030, 69% of the electricity market is projected to be renewable.  Consequently, technologies that use electricity as a fuel source result in lower carbon dioxide emissions on average than those that use fossil fuels directly. 

Experts say the electrification of our public and private transport sector will result in significant emissions reductions regardless of how the electricity is generated – and this is even when accounting for emissions from battery production. The reason for this is simple – electric vehicles are exceedingly more efficient than petrol and diesel cars.

According to Stephen Corby from Cars Guide, a petrol or diesel-powered internal-combustion-engine vehicle with good efficiency will extract about 40 per cent of the available energy from fuel, while the other 60 per cent is lost due to heat and friction. An EV, however, is approximately 90 per cent efficient when converting coal-fired energy to power.

In further good news, more than 30 per cent of Australian households now have rooftop solar PV – and that figure is continually growing. For these households, switching to all-electric appliances and, in time, electric vehicles means that they will be achieving an exceptionally small carbon footprint.

If you combine all-electric living with rooftop solar AND a home battery, these homes are essentially net-zero carbon dwellings. This means that over a year, the home’s energy use from carbon-emitting sources will be equal or lesser to the amount of renewable energy it produces.

An all-electric net-zero carbon home in Victoria

As you can see, we do not need a fully renewable grid to start reaping the environmental benefits of electrification – however, as we continue to phase out our dirtiest power plants and replace them with cleaner alternatives, electrification will become an increasingly effective emissions reduction strategy.

What are some other benefits of electrification?

Not only would electrification help us meet our emissions targets – switching to efficient electric alternatives for our cars and appliances can save thousands of dollars every year in running costs.

This is true whether or not you have solar installed – although solar households undoubtedly achieve the most significant savings.

Savings in the home

A case study undertaken by Sustainability Victoria last year analysed annual performance data on gas and electric appliances without the associated benefits of solar. The study showed that efficient electric appliances were still overall cheaper to run than efficient gas appliances, saving hundreds in energy costs annually. 

What about solar households?

In 2021, Environment Victoria released a report revealing that an efficient all-electric home with solar in Geelong saved $1901 a year, cutting bills by 75% from a basic dual fuel (electric and gas) home. Without solar, an all-electric home was found to save $905 annually over a basic dual fuel home.

If you already have solar but are still using gas in your home, upgrading your appliances to energy-efficient electric alternatives can more than double your electricity bill savings. In the same study by Environment Victoria, Geelong households with solar reduced their annual energy bill on average from $1,432 to $618 by switching from dual fuel to all-electric.

If you are building, going all-electric with solar from the get-go is the ideal scenario for low energy bills. Transitioning a mixel-fuel home to all-electric can be costly but can also be done gradually, as you replace appliances as they age or when you renovate.

Savings on the road

Switching to an EV saves Australians, on average, around $1600 in fuel costs annually – that’s around 70% cheaper compared to a car with an internal-combustion engine powered by petrol or diesel, according to the Electric Vehicle Council. If you charge your car with solar-generated electricity, those savings are even greater.

Additional to fuel savings, electric cars are cheaper to maintain than petrol or diesel cars. They have far fewer moving parts (no engine, no transmission, no exhaust system) so there are fewer opportunities for something to go wrong.

Barriers to electrification

So now we know the benefits of electrification, but what’s holding us back from electrifying everything?

Experts agree that most barriers are economic and political rather than technical, although there are some technical barriers when it comes to heavy transport and industrial sectors.

For households, we’ve already spoken about managing the upfront cost of transitioning to all-electric appliances but, for lower-income families, this transition may be out of reach without government loans and subsidies.

The upfront cost of EVs compared to petrol and diesel-fuelled cars is currently higher, but price parity is expected within the next decade as battery technology continues to improve and mass production drives down costs. In the meantime, state government subsidies (such as WA’s $3,500 EV rebate) can help make the upfront cost of EVs more affordable.

As for infrastructure, we need to upgrade the grid and integrate large-scaled energy storage so that it can manage all this extra electricity demand. We also need more charging stations for EVs to combat ‘range anxiety’

While there’s a sizable cost to the task, Griffith and The Australia Institute’s discussion paper called “Castles and Cars” claims that Government investment to assist households in the transition to an all-electric lifestyle will more than pay for itself.

“As this electrification continues past the break even point, we predict gigantic economic savings for the Australian economy. This should be understood as an investment that returns enormous dividends to our households and the country as a whole, not as an expense that “costs too much.”

In some cases, outdated regulations stand in the way of progress. In Victoria, for instance, the Victorian Planning Provisions (VPP) state that ‘where available’ residential developments must be connected to ‘the satisfaction of the relevant gas supply agency’.22 (Clause 56.09-2) Not abiding by these provisions could impact on the ability of a developer to procure a planning permit. 

Alternatives to electrification: biogas, hydrogen & carbon capture and storage

When we talk about electrification as a means of emissions reductions, there are, of course, other pathways to decarbonisation that warrant discussion.

Green hydrogen

Of all technologies discussed, green hydrogen is possibly garnering the most attention and its development in Australia has been backed by industry and government. Green hydrogen is hydrogen fuel that is created using renewable energy instead of fossil fuels. On paper, it sounds great – it has the potential to provide clean power for manufacturing, transportation, and more — and its only byproduct is water.

The technology, however, does have its drawbacks. One drawback is inevitable efficiency losses and then, of course, there’s the cost. While there are government strategies focused on reducing costs through economies of scale and innovations in electrolyser efficiency, hydrogen is currently very expensive to produce. In addition, compared to electrification for the transport sector, the infrastructure requirement to create a hydrogen refuelling network is lagging far behind.

Most experts agree, however, that green hydrogen has it’s place alongside electrification in a clean energy future, filling the gaps in areas that are especially energy-intensive or hard to electrify like steel-making, long-range transport, as a seaborne export commodity and in chemical feedstock applications such as ammonia/fertiliser production.

Biogas

The production of biogas – also known as ‘green gas’ or biomethane – is another way to decarbonise the gas grid. Green gas is made by taking methane (the main component of natural gas) and ‘scrubbing’ it of carbon dioxide. The methane is then injected into the gas grid, where it can be used in place of natural gas.

According to The Climate Council (CC), shortcomings of biogas include there not being enough, it being insufficient to reaching net zero, and it being used as a smokescreen for the gas industry to delay real action on climate change.

The CC did concede that there are some tasks that are simpler to accomplish with biogas than electrification, namely its use as chemical feedstock and in the refining of some metals.

Carbon capture and storage (CCS)

Carbon capture and storage (CCS) involves capturing, transporting and storing greenhouse gas emissions from fossil fuel power stations, energy intensive industries, and gas fields by injecting the captured greenhouse gases back into the ground. The CC and many environmental advocacy groups are scathing in their assessment of the technology, which they claim is unproven, expensive and “an attempt to prolong the life of polluting fossil fuels in our energy system”.

The bottom line

While there are some barriers to contend with, data demonstrates that the electrification of *almost* everything is the cheapest, fastest route to emissions cuts.

Transitioning to electric technologies would transfer most emissions to the power sector. This allows policymakers to focus on decarbonising our electrical grid to reduce emissions, rather than focusing on myriad pathways for each and every sector.

There is, however, a role for other technologies such as biogas and green hydrogen in our energy future. These technologies can complement electrification to provide the best possible outcome for emissions reductions.

Electrification also present households and businesses with an opportunity to slash energy bills right now, particularly when combined with rooftop solar and batteries.

battery and solar calculator

Looking to go solar? We can help.

Assisting over 30,000 Australians in their transition to clean energy, Energy Matters can guide you toward a solar and/or battery storage solution that fits your lifestyle and budget. Receive up to 3, obligation-free quotes from our trusted network of accredited solar installers. It’s fast, free, and takes the hassle out of shopping around.