Electrification vs. Pipeline Replacement: A Cost-Effectiveness Analysis

Strategic Insights -

Matthias Paustian, a resident of Ward 4, presented a cost-effectiveness analysis of pipeline replacement versus electrification in low-density neighborhoods in Washington D.C. He argued that electrification is significantly more cost-effective than pipeline replacement, with a long-run cost of $50K per home compared to $77,000 per home for gas service. Paustian's analysis was based on his own experience of electrifying his home in phases between 2016 and 2020, and he used data from WGL's filings to estimate the costs of pipeline replacement.

Key Takeaways:

  • Paustian's analysis showed that the long-run cost of serving a house with gas is about 50 percent more expensive than electrification, with a cost of $77,000 per home compared to $50K per home for electrification.
  • The cost of electrification includes $40K for mini split heat pumps, which was a conservative estimate, and a $10K buffer for potential upgrades to the electric grid.
  • Paustian's example block, with 27 homes, has only one all-electric home, suggesting that electrification is a viable option for many single-family homes.
  • Washington Gas's proposal to decide pipeline replacement based on an opaque risk factor model is equivalent to randomly replacing any segment of the 30 percent pipes most at risk by material.
  • Paustian recommended that regulators prioritize repair, not replacement, and encourage Washington Gas to explore alternative fuels, such as geothermal networks, which are connected to boreholes that extract heat from the ground.

Statistics:

  • The average cost of main pipe replacement is about $10 million dollars per mile.
  • The average cost of service line replacement is about $25,000 per service line.
  • The long-run cost of gas service per home is $77,000 per month, excluding fuel costs.
  • The cost of mini split heat pumps used in Paustian's example was $12,100 in 2016, which is estimated to be $40K in today's dollars.
  • The total cost of electrification is estimated to be $50K per home, including a $27K buffer for potential upgrades to the electric grid.

Sources:

  • Testimony of Matthias Paustian in FC 1179
  • Washington Gas's filings and Commissioner Beverly's proactive data requests
  • Order No. 21593, which recognized the possibility of encouraging Washington Gas to develop alternative fuels.