All-electric new buildings coming as housing crisis persists
ALBANY — Gas stoves will be virtually extinct in all new buildings constructed in New York beginning in January, marking another milestone in the state’s clean energy goal but also igniting a debate between home builders and those demanding swift action to meet fossil fuel reduction mandates.
The first-of-their kind regulations will require the use of all-electric appliances in new single-family and low-rise construction starting next year. In 2029, all new buildings in the state are scheduled to be subject to the rules, with some limited exceptions.
Many builders in New York have derided the move, arguing it will reduce consumer choice and drive up the cost of living, worsening the state’s already crippling housing crisis.
“It comes at a bad time when the state is in dire need of more housing production,” said Michael Fazio, executive director of the New York State Builders Association. “In our view, (the rules) unquestionably will slow housing production, (and) increase housing costs.”
Well-known Capital Region home builder Robert Marini Jr. told the Albany Business Review he’s likely going to move the majority of his business to Knoxville, Tenn., by 2027 because of the new rules.
“The goose is cooked, they sealed the fate of home-building companies in New York,” Marini told the Business Review. (Marini declined to respond to requests to be interviewed by the Times Union.)
Clean energy advocates downplay or outright deny the notion that all-electric construction is more expensive, citing the new regulations as essential in the fight against climate change.
“We started with wood, moved to coal, moved to oil, moved to gas, and now we have this movement to electrify, and each time, the results have been better and ultimately more cost-effective,” said Chris Halfnight, senior director of research and policy at the Urban Green Council. New residential construction is a “small fraction” of the state’s housing stock, meaning it won’t have immediate meaningful impacts, Halfnight added. The housing added between 2012 and 2022 amounts to about 5 percent of the state’s available units.
Most homes, apartments and buildings connect to both the natural gas system and the electric grid. Gas is used for things like heating, cooking and drying clothes. Air conditioning and lighting generally draw electricity.
Electric heat pumps work by extracting warmth from cold outside air in the winter and distributing that warm air inside a structure. In the summer, they push the warm air inside a home to the outside, cooling the structure. Under the new rules, gas fireplaces will be practically extinct in new construction.
The rules, approved by the State Fire Prevention and Building Code Council, will not affect any existing structure. Alterations, additions, renovations or repairs of existing structures will not be subject to electrification requirements. For example, an existing gas stove can be replaced with a newer model or fixed without issue.
If a building changes uses, say from commercial to residential, it would still be exempt from the regulations. Agricultural structures, critical infrastructure, hospitals and backup generators make up most of the exceptions.
Whether a demolished and rebuilt structure from a fire or natural disaster would qualify under the rules depends on the circumstances, according to Department of State spokesman Jade Kraft.
All-electric buildings have long been seen as essential to delivering on the state’s ambitious clean energy goals enacted under the 2019 Climate Leadership and Community Protection Act. The new rules were proposed to go into effect earlier this year under the Scoping Plan, which outlines recommendations on meeting clean energy and fossil fuel reduction mandates.
The state Legislature affirmed the recommendation, passing a directive to implement the policy in the state budget two years ago. Opponents, including the Builders Association, failed to block the rules in court and have called on U.S. Attorney General Pam Bondi to intervene.
The advocates contend there’s been plenty of time to prepare for the regulations, given the long and very public run-up to them being adopted.
Criticizing builders for not acknowledging the inevitable passage of electrification mandates fails to see the whole picture. Developers are required to pay a deposit up front to gas companies to hook up new construction to the system. When that home or building is finished and hooked up, the deposit is returned. If that deposit has already been paid, but a new construction does not get a gas meter because it falls under the new rules, the money won’t be returned.
Philip J. Nanula, a western New York home builder, said he has over $80,000 in deposits he won’t get back. Nanula doesn’t pass those costs along to customers because they’re usually returned. But now he will.
'What actually happens’
Whether electrifying new construction will raise costs is hotly contested and critical to the state easing a persistent housing crisis.
Rents have risen significantly faster than median household income since 2000, a New York University study reported. And New York is only permitting about half as many housing units per 1,000 residents as the national average.
New York added 462,000 housing units between 2012 and 2022, ranking 32nd in the nation, a 2024 study from the state comptroller’s office found. New York also had the “third highest rate of housing cost burden among states” at the time of that report.
“There is no one in this state who is more concerned about the housing crisis,” said state Sen. Brian Kavanagh, co-sponsor of the all-electric buildings act and chair of the Senate Committee on Housing, Construction and Community Development. “We know these buildings will be affordable to build, and that they’ll be affordable to maintain over the long haul.”
The state commissioned studies on the impact of the new regulations on both residential and commercial structures.
New single and multifamily homes will use 17% less energy, according to an analysis done by Resource Refocus, an energy use consulting company. Most of the savings come from electric heating. Refocus estimates that over 30 years, about 220,000 metric tons of CO2 will be saved.
An average-sized Albany County home could be about $5,000 more expensive under the new rules, according to data from the Refocus report and the Federal Reserve Bank of St. Louis. It would take roughly 11 years to make back that initial investment with energy efficiency savings.
A report focused on commercial construction found an average savings of about $10 per square foot when factoring in energy savings over a 30-year period. The upfront cost of electrification varied significantly, depending on building type. Schools, for example, are projected to be more expensive while large offices are anticipated to be cheaper.
Halfnight pointed to research from the clean-energy-leaning New Buildings Institute, which estimates all-electric, single-family homes to be $7,500 cheaper to build. The ability to only connect to the electric grid without needing gas lines accounted for much of the savings in the study.
“There is what researchers claim and what actually happens,” said Jared Enriquez, an assistant professor at the University at Albany’s Department of Geography, Planning and Sustainability. As a city planner, Enriquez said he’s heard builders “exaggerate” concerns with various code updates and zoning changes before, but in this case, he said, “they’re not.”
It’s questionable whether electrification alone will provide enough reliability in the winter — or savings — to make it worth it, Enriquez added. The lack of passive design mandates is particularly concerning. Passive design ensures buildings are constructed in the most efficient way possible, so the need for excessive heating and cooling is lowered. The mandates only require electrification without ensuring new construction is also being done in an otherwise efficient manner.
Increasing the upfront cost of housing, even if it means future savings, is another “barrier” to families looking for a home, Enriquez said. Adding a slew of higher-priced homes to an area might also raise surrounding property values broadly, having a “gentrifying effect,” Enriquez added.
Nanula, the Buffalo builder, said it’s going to be about $25,000 more expensive to use an all-electric heat pump system in new homes.
“If these houses are going to cost $10,000, $20,000 or $30,000 more, those people have to qualify for higher mortgages,” Nanula said. “It’s going to be in their property taxes for the rest of their life, and there is zero assistance for them.”
Meanwhile, subsidies are available in the existing home market for residents to upgrade fossil fuel systems to high-efficiency electric ones.
Fazio said he believes in climate change and that builders need to be “good stewards of the environment, but it has to be balanced with common sense and economic reality.” Fazio maintained new construction is already far more efficient than the existing housing stock.
Kavanagh, the Manhattan state senator, pointed out that the state is building all-electric affordable housing right now.
“Our fully electric new construction projects have already proven that clean, affordable, all-electric housing is not only viable but already happening in New York state,” said Department of Housing and Community Renewal spokeswoman Shachar Roloson.
Steamboat Square, an apartment complex in Albany, received a $42 million renovation, which added 37 new apartments. The complex’s gas HVAC system was replaced with electric geothermal heating.
Upfront costs are just “one data point,” said Halfnight, with the Urban Green Council, adding that greenhouse gas emissions need to be reduced because worsening climate change has health costs, raises insurance premiums, and causes property damage.
“It’s not a question of do we pay or do we not pay, it’s a question of how we pay,” he said.
Any development with a “substantially complete building permit application” before the end of the year will not be subject to the new rules. It may seem opportune to rush in permit applications before the end of the year.
Building permits rose nearly 25% across the Capital Region in 2024, according to the Capital District Regional Planning Commission.
“There’s nothing in the data that points to the All-Electric Buildings Act as the driver (of increased permitting),” said Mark Castiglione, executive director of the commission.
It’s also hard to ramp up applications if a project is still far off from being built because most localities have limits on how long a building permit is valid.
Another challenge for the grid
Electrifying all new buildings relies on the premise that using electricity will be cleaner, more efficient, and cheaper than relying on a fossil fuel-reliant natural gas system.
The electric grid can get to zero emissions by removing emitting energy sources and proliferating non-emitting ones like nuclear, solar and wind. Natural gas and fuel oil heating are inherently fossil fuel-based, leaving little room for improvement.
Moving all energy to just the electric grid saves New Yorkers from having to finance improvements to expensive gas infrastructure, advocates argue. The Natural Grid utility rate increase taking effect this month included $1 billion to maintain the gas system.
Even though electricity is more expensive than gas, all-electric structures — in theory — use less energy overall, leading to savings.
Shifting to an all-electric energy system is a gamble and coming at an inopportune time. Electricity consumption grew steadily in the 1990s and early 2000s, but flat-lined until the onset of the COVID-19 pandemic, according to the Energy Information Administration.
The rate of anticipated power demand growth has risen fourfold since 2021, the Rocky Mountain Institute found in a recently published study. “Load growth continues to be a critical concern for many utilities, as current load projections are much higher than they were a year ago,” the report states.
An ongoing reshoring of manufacturing, as well as the proliferation of data centers needed for artificial intelligence, is driving the growth. New York is not immune to the broader trends. The state is a hub for AI data centers and is getting large manufacturing, like the Micron chip fab facilities expanding in upstate New York.
Electricity demand in New York shrank from 2015 to 2024, but is projected to rise about 17% over the next decade, according to data from the New York Independent System Operator, which manages the state’s power grid.
Managing electrification, data center growth and manufacturing all while pushing for clean energy development is a challenge. But there’s a uniquely thorny issue arising from building and vehicle electrification.
“Historically, investments have been made to meet high summer demand,” the New York Independent System Operator wrote in a recent report. “As more consumers rely on the electric system to meet space heating needs, however, the NYISO must ensure the grid is prepared to supply winter (demands).”
The changes will result in the state shifting from peak in the summer months to the winter months in less than 15 years, the same study posited.
In the third week of January, temperatures in New York plummeted, driving up the price of both gas and electricity. That increased strain won’t be met with two systems in a world where buildings are only connected to electricity. Building electrification alone is suspected to conservatively add 2 gigawatts of power demand in the next decade, according to NYISO data.
“It’s a real pickle,” former Public Service Commissioner John Howard said of the move to winter peaking. “If everyone in my neighborhood went all electric, I don’t think the grid could supply us with the current infrastructure.”
NYISO has less ability to scale down demand in winter. Certain large energy users temper operations when needed during peak energy demand periods. That’s critical in the middle of summer when available resources begin to bump up against usage. The tool appears to be less effective in the winter, as about a third more power can be reduced from large users during summer months, according to NYISO data.
The fighting is not done
There’s still one last squabble over new building electrification. The rules direct the Public Service Commission to develop an exemption for projects where it’s not “reasonable” to only use electricity. With an exemption, fossil fuel infrastructure can be used.
Fazio, from the Builders Association, said he’s hoping to get as “liberal” a ruling as possible to save projects that might otherwise be in jeopardy.
If it will take an additional 18 months or more for the utility to upgrade electric infrastructure to meet a new development’s needs, the builder should receive an exemption, the Department of Public Service staff recommended.
Developers are tasked with paying for transmission improvements when building something new. Because new buildings will require more electricity, the costs of improvements may be higher and take longer to complete.
Kavanagh, the legislation’s sponsor, endorsed the 18-month plan and said including the exemption was meant to assist extraordinary cases, like a cabin in the woods, far away from any electrical grid hookup.
The18-month timeline is “just killer, it could kill a project,” Fazio said of the Public Service proposal. That’s because the viability of a project could be lost in less than that 18-month period, he noted. Or, grid upgrades may be so cost prohibitive a developer can’t afford to move forward.
To address those concerns, the Builders Association called for the exemption to factor in the costs of upgrading transmission infrastructure, not just how long it would take.
But some advocates are tired of builder backlash and want to see a very limited exemption. Rewiring America, a nonprofit focused on electrifying buildings, argued the exemption should be set at two years instead of 18 months.
“Enough is enough,” said Michael Hernandez, New York policy director at Rewiring. “It’s time to hold the line, for the sake of New Yorkers who deserve clean, affordable, healthy homes.”
Investigative Reporter
Ezra Bitterman is a Joseph T. Lyons Investigative Fellow for the Times Union. He is from Los Angeles and studied Journalism at the University of Missouri. Ezra previously reported for the St. Louis Post-Dispatch, Columbia Missourian and Euractiv. He's reachable at Ezra.Bitterman@TimesUnion.com.
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