Author: Brett Knox
July 2, 2024 - 11 MIN. READ
As our energy sector transitions from using fossil fuels to power our homes and buildings to electricity, this presents a huge opportunity for Electrical, HVAC, and Plumbing contractors to grow their businesses. Experts are referring to this transformation as the "electrification revolution."
Electrification is transforming the way we power our vehicles, homes, buildings, and industrial infrastructure.
As more businesses and consumers embrace modern electricity-powered solutions, new opportunities emerge for HVAC and electrical contractors ready to upgrade their skills and guide customers through their electrification journey.
This article discusses new opportunities for HVAC, electrical, and plumbing contractors and shares some strategies for accessing electrification jobs.
Electrification is changing the way we produce, distribute, and consume energy on an unprecedented scale.
In the transportation sector, EVs are providing businesses and consumers with a clean alternative to ICE vehicles. Driven by incentives and savings on fuel, EVs now account for nearly 8% of all car sales in the U.S.
Homeowners and building managers are also embracing the clean energy revolution. With heating and cooling representing half of all energy consumption on a global scale, solutions like electric heat pumps result in significant cost savings and environmental benefits. These electrification trends fit within a broader effort to retrofit buildings and make them more energy-efficient.
Electrification's positive impact on air quality will support public health for future generations. Driving an EV can reduce pollution and carbon emissions by anywhere from 30 to 90 percent, depending on how green a state's energy grid is. Improved energy efficiency and lower costs are additional benefits of upgrading the country’s energy infrastructure.
Several industries have already felt the economic impact of electrification. Electrification has been a key transformative force for the automotive and utility sectors. For HVAC, plumbing, and electrical contractors, electrification is creating new opportunities in the form of electrification jobs that have higher profit margins.
The HVAC industry sees ample opportunities and challenges with electrification. Let’s take a closer look at HVAC opportunities and what it means for contractors.
Several factors are driving the transition from fuel-based solutions to electric HVAC systems.
Incentives at the state and federal levels and “all-electric” mandates by state and local governments are making HVAC electrification appealing as these programs seek to support the purchase of 7.6 million space heating and cooling heat pumps and over 800,000 heat pump water heaters to reach decarbonization targets.
New industry standards are also playing a part. Considering the updated SEER standards that went into effect in 2023, it’s clear that regulations will continue to require more effective heating and cooling, making heat pump solutions with improved energy efficiency a sound investment.
The rise of new electric HVAC products is also contributing to the growing demand. Modern electric heat pumps use 50% less electricity than old electric-resistant systems, creating a strong argument for electrification for cost-conscious consumers and businesses.
Besides reducing energy costs, relying on electricity provides homeowners and building managers with peace of mind as fossil fuel prices continue to fluctuate. Plus, more families and organizations are becoming aware of their environmental impact and seeking solutions for reducing pollution and their carbon footprint. In this context, electric HVAC solutions align with ecological values and ESG goals.
It's also worth noting that when property owners with an electric or natural gas furnace but no air conditioner replace it with an electric heat pump, they immediately get both heating and cooling from the same unit. This is why most heat pump buyers have made the transition - they want improved cooling capabilities in cold climates. This factor is driving demand for heat pump solutions in certain geographic areas.
Consumers and building managers have access to more electric HVAC solutions than ever. These innovations are unlocking additional benefits in terms of energy efficiency, cost savings, and customization.
Electric heat pumps are one of the key technologies driving the electrification of the HVAC sector. Heat pumps considerably reduce energy consumption by transferring existing heat rather than generating it. They also provide effective cooling capabilities by using refrigerant to extract heat from indoor air. This is a huge benefit to homeowners that currently do not have air conditioning in their home.
With an industry growing at a CAGR of close to 12%, manufacturers are constantly expanding the range of products and features they offer.
Heat pumps come in a wide range of sizes and capacities. They can also use different heat sources, including outside air, a nearby body of water, or ground-sourced for geothermal heat pumps.
Advanced features such as two-speed compressors, variable-speed motors, and scroll compressors enhance energy efficiency and give users precise control over their heating and cooling experience.
The process of heating water represents around 10% of a home’s energy consumption. Electric water heaters are already widespread, but electric heat pump water heaters can reduce energy bills by as much as $550 a year for the average household by displacing heat rather than generating it via electric resistance.
You can also find combination systems that redistribute heat to the indoor air and water tank to provide air heating and water heating capabilities.
In most areas where the temperature doesn’t get below 30 degrees, replacing an electric furnace with a heat pump will save homeowners money on their utility bills and they will get both heating and cooling in one solution.
Electric furnaces have a lower upfront cost but over the long-term, heat pumps will save home and building owners money. Over time as consumers and contractors better understand heat pumps, electric furnaces will become very niche products.
Mini-splits distribute heating or cooling to specific zones via ducts or thin refrigerant lines for ductless systems. This HVAC solution is a versatile option that is ideal for room additions, temporary buildings, retrofit projects, and multi-family units because they can be combined with electric heat pumps or other HVAC solutions, allowing for a customized approach..
Mini-splits have been used for years in Europe with great success. They can be a viable solution in homes where homeowners have rooms that are rarely used. Each room has a mini-split, which allows you to only use the mini-split when the room is occupied. The drawbacks of mini-splits are they mounted on the wall of each room and many Americans don’t like their appearance, they don’t tend to de-humidify effectively, and maintain multiple units over time can be expensive.
Demand is definitely up for HVAC electrification in new construction and retrofit projects and will continue through 2032 due to all the federal incentives in the Inflation Reduction Act. The return on investment (ROI) for contractor can be lucrative because these jobs are high margin projects.
If you’re considering pursuing electrification, here’s a few things you’ll need to do:
Experts believe the U.S. will need 80,000 new electricians a year between now and 2030 to support the increase in electrification jobs. Electrical contractors play a crucial role, with high-value opportunities ranging from grid-scale projects to home upgrades.
Demand for electricity is growing as a direct consequence of EV adoption, home and building electrification, and other sectors embracing electrification.
Modernizing the country’s energy grid is a priority, with the Department of Energy having invested $3.5 billion across 58 projects in 2023. Utilities are also investing in grid-scale projects to produce more energy, increase the share of electricity that comes from renewables, and distribute energy more effectively.
Another defining trend is the emphasis on local energy production and distribution. Developing a decentralized energy infrastructure is a crucial step in reducing energy costs and increasing resilience.
Utilities are also exploring virtual power plants and holistic load management to enhance resilience. Partnering with utilities, municipalities, and other local players can lead to exciting electrification jobs for electrical contractors.
New technologies are driving the demand for electrification, creating new use cases and opening new electrification jobs for contractors.
The electrification of the transportation sector means the country will need 28 million EV chargers by 2030. The country currently only has 130,000 public chargers.
For electrical contractors, installing EV chargers will unlock a wide range of electrification jobs, including public EV charging projects and EV owners looking to upgrade their homes with a Level 2 charger to support the 80% of EV charging done at home. Businesses will also need charging for EV fleets, and schools and municipalities will explore charging solutions for electric school buses and public transit vehicles.
Repairing and servicing the public and private charging infrastructure will create ongoing opportunities as charging reliability emerges as an area of focus.
The residential solar panel industry is thriving. The sector has now reached maturity, and costs are going down. Homeowners, businesses, building managers, and community projects need qualified installers.
Besides installing solar panels, contractors can access high-value electrification jobs by designing and implementing interfaces that allow users to store the clean energy produced in a battery or upload it to the grid to take advantage of net metering programs.
The energy storage market is increasing, driven by innovations in battery technology and a need for reliable energy solutions. There is a rise in grid-scale projects as utilities invest in resilience, and community energy storage is emerging as the demand for microgrids increases.
Buildings and homes can also benefit from battery storage. The perks include storing energy when time-of-use pricing is low and using the stored energy to power the home when time-of-use pricing is at its highest rate. The other benefit is if there’s a power outage or blackout, the home can be instantly powered by the battery storage system.
From charging an EV to powering an electric heat pump, electrification projects often require increased electricity usage. Experts believe 48 million American homes will need a new panel before they can join the energy revolution.
For many homeowners or building managers, investing in electrification entails upgrading their electrical infrastructure, starting with a new electric panel. As an electrical contractor, you can help customers plan their electrification projects by performing a load calculation and recommending a panel upgrade to reflect changing energy needs.
Many customers are opting for smart panels, creating electrification jobs for contractors willing to update their skills and familiarize themselves with the automated or digital components of these panels.
Because electric heat pumps run on a dedicated 240V circuit, their installation requires a licensed electrician. Partnering with HVAC contractors can give you access to exciting opportunities as you work together on installing and wiring electric heating and cooling solutions.
Electrification is creating opportunities on several fronts, but these projects tend to require advanced skills. As an electrical contractor, you should look into upskilling and updating your hiring strategy.
Partnerships are also crucial. Working with HVAC contractors can give you access to high-value electrification jobs as the demand for wiring electric heating and cooling solutions grows. You should also consider partnering with utilities, municipalities, businesses with fleets, building managers, and other electrification players.
The first step toward finding exciting electrification jobs is to focus on training and education. Electrification projects tend to be complex and require advanced skills and expertise. Plus, upskilling will inspire trust and help you deliver optimal value for your customers.
Industry organizations are essential in establishing new standards and best practices for electrification. They’re also offering recognized certifications and electrician training programs.
The EVITP certification is a great introduction to EV charging for electrical contractors. NABCEP offers a wide range of certifications for solar projects and energy storage, and state-level Home Energy Efficiency Contractor programs funded by the DOE can also be valuable electrical contractor training programs.
As an HVAC contractor, you can upgrade your skills with an Energy Star Credentialing program, take an electricity basics course with ACCA, or earn an Energy Skilled certification through Esco Group.
Partnerships are also an important path to learning and upskilling. We recommend partnering with other electrification professionals and developing close relationships with suppliers so you can become an expert on the products you recommend and install.
With $9 billion in investments from the Inflation Reduction Act, electrification is happening quickly and transforming the HVAC, plumbing, and electrical markets. As an HVAC, plumbing or electrical contractor, you have an essential role to play in supporting the transition from fossil fuels to electricity, and taking part in the energy revolution will result in strategic growth for your business.
Raiven can help you get started on this journey. Our mission is to transform buying and help contractors like you build a successful electrification business as well as improve your core electrical, HVAC or plumbing business by simplifying your purchasing processes and enable you to pay less for all your equipment, materials and supplies.
How can Raiven give you a competitive advantage?
Our platform leverages technology to deliver a streamlined purchasing experience. You’ll get supply chain alerts when prices or availability changes, a customized marketplace with your preferred suppliers, and AI-powered purchasing tools that automatically find the best prices, even outside your preferred supplier network.
Learn more about joining our purchasing program, or explore electrification jobs with Qmerit!