Home Electrification: Benefits and Process for Your Home

Switching from gas and fossil fuels to electric appliances, systems, and vehicles can have a host of benefits. Full home electrification, especially with solar panels providing most or all of your home energy, will also save you money and likely give you improved safety, comfort, independence, and convenience. 

Total home electrification is a great goal, but you don’t have to go 100% electric all at once. You can improve your home’s clean-energy usage one or two projects at a time. Here’s how to save money and have a more comfortable, independent, and greener home with home electrification.

Understanding Home Electrification

Home electrification is the process of replacing appliances, vehicles, and other machines that use natural gas, oil, propane, or another fossil fuel with alternatives that run on electricity. An electrified home runs entirely on electricity. When you cook dinner, take a warm shower, or turn up the heat on a cold day, there’s no gas involved.

Natural gas, despite its green-sounding name, is a fossil fuel that releases climate-warming emissions when burned in a furnace, stove, or oven. (So are the propane and heating oil used to heat homes in some places.) If the electricity that powers your house comes from power plants burning fossil fuels, an electrified home might indirectly generate carbon emissions, but as wind, solar, and other renewable energy are installed and greenhouse gas emissions from the grid fall, your home’s emissions will fall, too.

If you don’t want to wait for your utility to clean up its energy supply, you could install solar panels on your home. An electrified home running on zero-emission solar electricity is about as green as a home can get. It can also boost the economic benefits of both electrification and solar panels.

Swapping out gas appliances for electric ones will increase your home’s demand for electricity, even with the most efficient electric models. Depending on your local electricity rate, it can be a significant ongoing expense. But covering that extra demand with at-home solar panels can help you avoid that additional cost.  

Because solar panel installations are often sized to cover your past electricity use, if you’re planning on electrifying your home and installing solar, some experts recommend installing solar second so the array can be sized to meet your increased needs.

Credit: U.S. Energy Information Administration

Assessing Your Home’s Suitability for Electrification

Before you start swapping out appliances and vehicles, a bit of planning can be helpful. An energy audit done by a professional can give you a good idea of how you can improve your home’s energy efficiency first. New insulation, better windows and doors, or other home improvements can make your home more energy efficient and comfortable, even before you update to electric appliances. A house that doesn’t leak warm air outside in the winter might be able to get by with a smaller heat pump, saving you money down the road when you swap out your furnace.

Even without professional help, you can conduct a DIY energy audit following the Department of Energy’s directions. It won’t be as thorough as a professional audit, which can include tests that see where your house is leaking air, but you can make some improvements.

Taking a close look at your house might reveal some challenges to your home electrification dream. You might find you should do the less glamorous work of better insulating your house before getting a heat pump. You might learn you need to upgrade your electrical panel or service before moving ahead. If adding solar panels is part of the plan, you may find that your roof isn’t large enough to fit the number of panels you hoped to install.

Still, most homeowners will be able to electrify their homes, though what projects you tackle and the order you do them may vary.

Making the Switch: Steps to Electrify Your Home

If you have to swap out multiple appliances, you likely won’t do it all at once. Here’s a list of common steps to an electrified home. Keep your receipts for all these projects since there’s likely a tax credit or rebate you can claim.

Most of the projects below will require professional installation, especially if you need to disconnect a gas line. 

Replace your furnace with a heat pump

Heating and air conditioning account for over half of the average home’s energy consumption, according to the US Energy Information Administration. Heat pumps can do both of those jobs efficiently. And, after years of struggling with cold weather, newer models can handle frigid temperatures.

Some people, especially in cold climates, add a heat pump without replacing their gas, heating oil, or propane heaters. Keeping a fossil fuel furnace wouldn’t be home electrification, and with better cold-weather heat pumps available, it will become less common. 

Most heat pumps move heat to or from the outside air when they’re cooling or heating your home. Some models, called geothermal or ground source heat pumps, move heat between your house and the ground. They’re more efficient but cost more to install.

Other electric heating options, like electric resistance baseboard heaters, are much less efficient and cost more to run than heat pumps, though you could technically use them to replace a furnace.

Replace your water heater

Water heating is another major energy consumer in the home, though there are a few more electric water heater options available to replace a gas one.

Heat pump water heaters work the same as those that can heat your home. They have the bonus of cooling the space they’re in. Some heat pump systems combine space heating and cooling with water heating.

Electric resistance storage water heaters heat water using electricity and store it in a large tank for later use. Other electric options include on-demand water heaters (though some models can be gas-powered), which heat water as it’s needed. Both options are typically less efficient than heat pump models.

You could also install a solar water heater, which uses the sun’s energy to heat water (typically on your roof). They typically have some other electric backup for when the sun’s not out.

Install an electric stove

Electric stoves have been around for a long time, but new induction models offer more control and are more responsive than standard electric models. Gas stoves can leak harmful chemicals into your home, even when off. An electric stove doesn’t.

Install an electric clothes dryer

Electric dryers come in a few different styles. One of the more efficient types is the heat pump clothes dryer, which can be 28% more efficient than standard dryers, according to Energy Star. There are other electric dryers that operate less efficiently, though they may be cheaper upfront.

Getting an electric vehicle

Besides your gas bill, fueling your car might be the only other place you directly buy fossil fuels. Electric vehicles take care of that. If the level 1 charger your car comes with doesn’t match your needs, you can install an at-home level 2 electric vehicle charger, which powers up your battery fast enough to cover most typical uses.

Electrical panel upgrade

Upgrading your electrical panel isn’t always necessary, but it can be if you’re adding a lot of new, larger electric appliances. Some might require larger breakers or heavier wiring to accommodate their greater electricity demand.

Solar panels and battery

While not technically necessary for an electrified home, solar panels can help cover some of the increased electricity demand. In fact, people with higher electricity bills stand to save more money with solar panels.

Professional installation of solar panels is essential to ensure system longevity and your safety. As with all these upgrades, maintenance is important. Palmetto’s maintenance and support program, Palmetto Protect, will get you the maintenance and repair your system needs, often before you even notice something’s wrong. That will ensure that your solar panels keep producing all the electricity your newly electrified home needs.

Benefits of Home Electrification

Decarbonizing American homes is an important step in the energy transition, and running electric appliances on renewable energy will reduce their climate impact.

Electrifying your home can also save you money, though the savings from each specific improvement might vary. Electric vehicles, for instance, often have a lower total cost of ownership than comparable gas-powered vehicles, by as much as 30% in some parts of the U.S.

Heat pumps, because they’re more efficient than furnaces or other electric heaters, will generally cost less to operate, though their installation costs may be higher.

Heat pump water heaters also have a higher initial cost, but energy savings over 10 years make them cheaper or comparable to gas alternatives, according to Energy Star. That’s before considering rebates and tax credits. 

Using Energy Star’s most expensive estimate, heat pump water heaters would cost $4,600 to purchase and operate for 10 years, while a tank gas water heater would cost $4,500. After applying the tax credits available for both at the highest purchase price, the electric option would cost $3,700 and the gas $4,050. Additional local rebates might also apply.

Heat pump clothes dryers are cheaper to operate and don’t vent outside your home, removing one more path for air to escape and taking some pressure off your home's HVAC system.

Induction stoves are more expensive than their gas counterparts, though the Inflation Reduction Act laid out incentives for them, too. The benefits of ditching a gas stove could be more than just monetary, as recent research shows that gas stoves leak a lot of methane into your home, even when they’re off.

Of course, the savings and emissions calculations improve significantly if you’re running your appliances on solar power from your roof. Solar panels require an upfront investment but can often save more than they cost over their lifetime of 25 years or longer.

Lease and power purchase agreement options, like Palmetto’s LightReach Energy Plan, can eliminate the upfront cost and supply you with energy savings in your first year.

Another benefit of an electrified home with solar and battery storage is reliability and independence. Power outages have been more frequent in recent years, led by more frequent and powerful severe weather. A battery backup can power parts of your house during a power outage. Paired with solar, it can be a long-term source of energy.

Credit: US Energy Information Administration

Electric Appliances Rebates and Tax Credits: Making Home Electrification Affordable

For many of these projects, there are federal tax credits that return up to 30% of the project’s cost on next year’s taxes. Here are the tax credits available and the limits that apply.

(These tax incentives and others are currently subject to debate and could be altered in an upcoming legislative process. Consult with a tax professional about your situation.)

Heat pumps: Up to $2,000 per year for heat pumps and heat pump water heaters.

Energy efficiency improvements: Up to $1,200 per year for the following improvements, called residential energy property. 

• Up to $150 for an energy audit if it comes with a written report highlighting the biggest energy-saving opportunities prepared by a certified auditor. 
• Up to $600 for energy-efficient windows. 
• Up to $500 for doors ($250 each). 
• Up to $600 for efficient air conditioners. 
• Up to $600 for electrical panel and circuitry upgrades. 
• Up to the full $1,200 for insulation.

Home EV chargers: Up to $1,000

Solar panels: You can claim the full 30% for solar panel projects installed at home. There’s no upper limit.

Solar water heaters: You can claim the full 30% for solar panel projects installed at home. There’s no upper limit.

Backup batteries: You can claim the full 30% for solar panel projects installed at home. There’s no upper limit.

Some rebates are also available for relevant appliances, though they’re not yet available in most places as states get their plans for distributing the rebates approved by the federal government. The fate of this rebate funding has been shifting and less certain in 2025. Always confirm incentives are available before counting on them.

Electric stoves: Up to $840.

Heat pump clothes dryers: Up to $840

Electrical panel upgrade: Up to $4,000

If solar panels are part of your home electrification plan, lease and power purchase agreements may offer an affordable way to do so. If you can’t afford the upfront cost of solar, high interest rates for loans might eat into your potential savings.

Palmetto’s LightReach Energy Plan replaces the upfront cost of ownership with predictable payments and monthly savings on energy costs. Instead of purchasing solar panels, you’ll lease them or buy the power they produce. You won’t have to pay for maintenance or monitoring, either.

Note: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors. 

Leveraging Technology for Efficient Home Electrification

Technology can give you greater control over aspects of your life, and it’s no different when it comes to your home energy use.

Devices like smart thermostats and smart plugs and the ability to schedule when you run your dishwasher or water heater make it easier to use energy when it’s cheapest, coming from your solar panels, or most beneficial to you. Besides helping you navigate time-of-use rates and eliminate times you forget to adjust the thermostat over a long weekend away, you can put your smart devices to work by enrolling them in a virtual power plant.

By letting a VPP adjust your thermostat a few degrees or switch off a smart plug for an hour, you can often earn a bit of money or other reward for small changes you may not even notice.

Smart technology also lets you learn how you’re using energy. The Palmetto App lets you track how much electricity your home is consuming and whether it came from your solar panels or the grid. It also lets you explore how certain upgrades, like a smart thermostat, LED lighting, or a heat pump, will impact your energy consumption and savings. Devices like smart plugs let you track how much energy a specific device has used over time.

Choosing to Electrify Your Home 

Home electrification can be an undertaking but has the big benefits of saving money, helping our environment, and in some cases, increasing safety and convenience. 

Electrifying your home will likely require careful planning. Because some electrification projects involve major purchases, a multi-year plan may be more financially feasible, especially since many of the tax credits have an annual cap. Still, an electrified home can save you money over time.

As you consider electrifying your home, consider which projects will benefit your comfort and bank account the most. Palmetto’s Energy Advisor can help. If you’re considering adding solar, go to our solar savings calculator and get an estimate for your home.

Frequently Asked Questions

What appliance in your home can make the biggest difference by making it electric?

Switching to an electric heat pump for home heating and cooling can make the biggest difference in your monthly energy bills, as well as home comfort, convenience, and even air quality. Energy consumption — gas, electric, propane, or other fuel sources — for heating and cooling is more than half of an average home’s energy consumption.

What is the Energy Efficient Home Improvement Credit?

The Energy Efficient Home Improvement Credit is a federal tax credit for 30% or up to $3,200 on qualifying expenses on energy-efficient home improvements, energy audits, and appliances such as heat pumps and water heaters. You can find more on the IRS website.