Budget boost for energy efficiency — what architects and property managers need to know about electrification
The Federal Budget for 2024/2025 heralded good news for energy efficiency, nationwide.
The announcement of close to $2.9 billion to support business decarbonisation, energy efficiency and electrification signals a significant step forward. For small businesses, an ‘energy incentive’ is on its way in the form of a bonus tax discount to help with electrification. Now is the time to leverage good design and engineering to ensure the built environment can support and sustain these important transitions. Here, our associate Lara Bailey, shares important insights for architects and property managers making the switch to electrification.
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Why electrify and why now?
The world is rethinking energy in the face of climate change and the urgent need to decarbonise. “Electrification is critical as we transition to renewable energy and cut out fossil fuels,” Lara says. But where does this leave property managers with portfolios full of older building stock that is still reliant on gas?
Energy use and energy source are separated in the new Green Star ratings, including performance ratings. By 2026, buildings will need to be fossil fuel free to achieve a 6-Star rating, with all ratings to be fossil fuel free by 2040 – a little more than 15 years away! It is also likely that the National Construction Code update in 2025 will introduce new electrification requirements.
“Buildings that don’t keep pace with changing codes, ratings and regulations risk becoming prematurely obsolete and ending up as stranded assets,” Lara warns. As a result, investors are increasingly looking for good ESG performance across their property holdings, placing pressure on property managers to phase out gas.
Pressure is also coming from tenants wanting to make the switch away from gas because of its negative impact on health, utility bills and the environment.
For anyone managing property or designing within existing buildings, electrification is not a question of ‘if’, only ‘when’. So, what are the considerations and where should you start? The following is an overview of the key issues and processes.
Getting rid of gas – what technology is needed?
The three main gas systems in buildings are space heating, water heating and cooking. According to Lara, all can be electrified to be cleaner, more efficient and more economical to run.
For space and water heating, gas systems can be replaced by electric heat pumps. Heat pumps work like fridges and air conditioners. They extract heat from another source, amplify it and transfer it to where it is needed. The heat source can be the air, geothermal energy in the ground, or nearby sources of water or waste heat.
For cooking, gas appliances must be replaced by electric ones. Gas has historically been sold as the best energy source for cooking and it’s a common misconception that commercial kitchens can’t operate without it. Chefs around the world are being trained to work in all-electric kitchens, and this will soon be the norm. Induction cooking is the best option – it is healthy, safe and offers very high levels of control. Note that recent research shows a strong link between gas particulates in homes and childhood asthma.
Some buildings have additional gas-powered systems, for example steam sterilisation in hospitals. These systems need to be assessed and electric alternatives explored.
What impact does electrification have on building infrastructure?
“Notably, the two considerations that arise from the removal of gas-powered systems are electrical capacity and space,” Lara points out.
Not surprisingly, an all-electric building will need more electricity. The anticipated peak demand will establish whether the building’s electrical system needs to be upgraded to cope. Bear in mind that adding EV charging will increase the electrical load.
Heat pumps are very efficient but require good ventilation and make additional demands on space. A building assessment is needed to establish where existing plant equipment is located and whether there is sufficient space and ventilation for the replacement technology. Energy storage batteries also require space. Equipment may need to be relocated to a roof or to space reclaimed from somewhere else.
Property managers need to make a plan
Lara highlights the important first step towards electrification — i.e. planning. “Understanding what you need to do and mapping out the journey will quantify the costs and benefits and allow you to budget for the switch,” she says.
For each building, step one is a feasibility study to assess the parameters. What current systems use gas? What are current energy demands and how much space is available on site for alternative technologies? And what stage of its lifecycle is the building at? Generally, the start of the electrification process is triggered by another upgrade. Examples include a gas system reaching the end of its life; tenancy refits; base-build upgrades; the installation of electric vehicle charging or on-site renewable energy.
Once the feasibility study is complete, step two is to commission an engineer to audit the existing gas and electrical infrastructure and prepare a report detailing the options for electrification, aligned to the trigger events described above.
Having quantified what needs to be done and when, you can budget for the switch and, importantly, consult with stakeholders to ensure a smooth, staged changeover. Tenants may need to be educated about why electrification is needed and its benefits. Incentives may help move things along.
A building’s existing gas system may be more carbon-efficient than an electric system now, because of the building’s energy source, but that will quickly turn around as renewable energy is implemented nationally. The sooner the switch to all-electric, the greater the benefits over time.
Architects and design professionals need to stay informed
Architects and design professionals should consult regularly with trusted engineers to stay informed about the most relevant, up-to-date electric technology, and to stay on top of changes to building codes, regulations and ratings. “The opportunity to win more work is there for those who can advise on the best design strategies to deliver healthy, efficient and future-proofed buildings,” Lara says. Conversely, get left behind and you may find it increasingly hard to compete.
Changing people’s perceptions is key to accelerating electrification in the built environment. Property managers, architects and design professionals all play a role in educating the market on the importance of eliminating gas and safeguarding the future for all.
For more detailed information, an excellent and comprehensive reference is the Green Building Council’s ‘A Practical Guide to Electrification for existing buildings’.
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