What is Electrification, and Why Should Electrical Contractors Embrace Electrification NOW?

Raiven electrification opportunitiesAuthor: Brett Knox
June 27, 2024 - 14 MIN. READ

Our energy sector is undergoing a revolution. A rapidly growing number of businesses and consumers are replacing fossil fuels with electricity in an effort to save money, reduce pollution, and lower carbon emissions. Experts are already referring to this phenomenon as the "electrification revolution." 

Multiple stakeholders are supporting this energy transition and addressing the associated challenges. Federal and state governments are developing modern policies and financing this transition. Businesses are increasingly focusing on ESG values, and more consumers than ever are ready to embrace a sustainable lifestyle. 

All these factors are accelerating electrification, but finding enough qualified contractors willing to explore electrification opportunities remains a challenge.  

As an electrical contractor, you’re uniquely positioned to become an important player in the energy transition while expanding your business. Let’s examine some of the many available electrification opportunities and introduce the key technologies driving the energy revolution forward. 

What Is Electrification? 

Electrification is the ongoing transition from fossil fuels to electricity. It involves replacing gas-powered vehicles, natural gas and oil furnaces and boilers, generators, and appliances, with electric alternatives. What's more, electrification entails rethinking how we generate and distribute electricity to meet the growing demand for clean energy. 

Electrification is happening in every sector of the economy, and transportation and building electrification are taking center stage. Electrification is also happening at the residential level, with homeowners embracing clean energy, at-home EV charging, electric heat pumps, and energy-efficient appliances. 

Why is electrification important? It’s a crucial step in building a decarbonized economy. Electrification allows consumers, businesses, and public organizations to rely on modern solutions that waste less energy while reducing pollution and harmful emissions. 

The benefits of electrification include improved air quality, better public health, and stable energy costs. Experts believe that, compared to driving ICE vehicles, switching to EVs can reduce transportation emissions in the U.S. by 66%. 

Electrification Technologies Driving the Energy Transition 

Let's look at the electrification technologies that are creating value for residential and commercial customers who want to cut energy costs and reduce carbon emissions. In addition to a growing interest from businesses and consumers, incentives and programs at the federal, state, and local levels are supporting the adoption of these innovative technologies. 

Level 2 EV Chargers 

Level 2 EV chargers deliver 12 to 80 miles of range per hour of charging. They run on dedicated 240V circuits, making them ideal for charging at work or overnight charging at home. Plus, their low initial cost makes them suitable for most customers. 

Besides the growing demand from homeowners, there is a major push to develop a nationwide Made-in-American EV charging network. Over $25 billion in public and private investments will be required to support the 28 million charging points needed by 2030. 

Level 3 EV Chargers/DC Fast Chargers 

Compared to Level 2 EV charging, Level 3 or DC Fast Chargers (DCFC), offer a lightning-fast charging experience by charging EV batteries with DC power. 

There are no residential applications for Level 3 chargers due to the electrical infrastructure needed, but electrical contractors can explore opportunities for commercial fleets, public transit, charging depots, and highway charging networks. 

Experts believe the U.S. will need 182,000 DCFC ports by 2030, creating exciting electrification opportunities for contractors willing to upskill and learn the nuances of installing DCFC chargers. 

Battery Storage Systems 

Recent innovations in battery technology combined with the growing need for lower utility bills and reliable sources of electricity are powering the rise of the battery storage industry. 

Many consumers are unaware that their solar panels will not provide electricity to their homes if there’s a power outage, which is why adding battery storage to an existing solar system is becoming very popular. Homeowners and businesses are investing in battery energy storage systems to store power from the grid or excess power from their solar panels so if there is an outage, their house can run off the battery storage system. 

Battery Storage systems can also save consumers and businesses money if their utility company has time-of-use (TOU) charges.  When TOU charges are highest (usually 3 pm – 9 pm), you run your home off solar and battery storage system, when TOU charges are lowest (usually at nighttime), you use battery storage or the grid for power.  This can result in substantial savings each month. 

There are many battery storage opportunities to explore, with the current capacity projected to double by the end of 2024. Innovations and demand will continue to grow by way of the $3.5 billion in federal investments pledged to support domestic battery manufacturing. Plus, battery storage systems could give old EV batteries a second life, making storage solutions even more affordable and accessible. 

Bi-Directional Charging 

Bi-directional charging is a relatively new technology that will soon become the norm. It allows EV owners to plug their vehicle into the grid or connect it to a battery system to upload unused energy. This technology creates an additional source of value for EVs and contributes to a more resilient energy infrastructure where users are also prosumers (they produce electricity and are consumers of electricity). 

There is a broad need for electrification contractors who can design vehicle-to-grid, vehicle-to-home, and vehicle-to-load systems, as this market is growing at an annual rate of over 20%. 

Solar Power Systems 

Solar and battery storage represent over 80% of new additions from utilities in 2024. Demand is also strong in the residential market, with the Inflation Reduction Act extending solar tax credits and the industry reaching maturity, resulting in lower costs. Multifamily properties, commercial buildings, and community solar projects also contribute to the growing demand. 

For electricians, becoming a solar installer is a viable career path. Other opportunities include solutions that integrate renewables into the grid, storage solutions, or microgrids. 

Electrical Heating and Cooling 

You can explore electrification opportunities in the heating and cooling markets by partnering with HVAC contractors. There is a need for electrical contractors who can wire these solutions and integrate them into broader electrification projects to create near-zero emission homes and buildings. 

Heat pumps are emerging as an energy-efficient solution. This technology displaces existing heat instead of generating it, reducing energy consumption in homes and commercial buildings considerably. Thanks to incentives from utilities and $63 million in federal investments, the heat pump market is accelerating, along with other electric heating and cooling solutions like mini-splits. 

Water Heating Heat Pumps 

Water-heating heat pumps are similar to regular heat pumps. Instead of displacing heat to create warm air, these modern appliances displace energy to replace traditional gas or electric water heaters. 

The demand is up because water-heating heat pumps are a relatively affordable electrification investment for homeowners, and the benefits are immediate, with the average household saving $550 a year. Plus, customers can qualify for a federal tax credit. 

An HVAC contractor will need to install the water-heating heat pump before you can wire it. There are significant opportunities to form partnerships in this space. 

Smart Devices 

The building automation market is growing at an annual rate of close to 12%. Property managers are actively seeking ways to streamline energy management to reduce costs. 

There is also a growing interest from residential customers for solutions like smart lights, smart outlets, smart thermostats, and automated sprinkler systems. As an electrification contractor, you can design and install customized smart systems 

Even though installing home automation or smart devices aren’t big ticket jobs, they are a great way to open up a dialog with the home or building owner about other electrification solutions or electrical problems they are having at their property.  

Panel Upgrades and Infrastructure Requirements 

What makes electrification opportunities particularly lucrative for electrical contractors? In addition to the work of installing energy-efficient solutions, many projects involve an infrastructure upgrade. 

Electrification replaces fossil fuels with electricity, resulting in increased electricity consumption. The current electrical infrastructure is in dire need of upgrades to support higher production, distribution, and consumption levels.  

For instance, at-home Level 2 EV charging draws anywhere from 15 to 80 amps. According to Pecan Street, 60% of U.S. homes will need an upgrade to a 200-amp panel to accommodate EV charging along with future electrification enhancements, such as installing an electric heating and cooling solution or installing a second EV charger. 

Plus, replacing an old electrical panel is an opportunity to upgrade to a smart panel. Smart panels deliver many benefits, including advanced energy management capabilities that help reduce costs and enhance visibility over energy consumption. 

Experts believe that as many as 48 million U.S. residences will need electrical panel upgrades to achieve full electrification. Homeowners can offset the cost of this investment by taking advantage of a federal tax credit for energy-efficient home upgrades and local incentives. 

Commercial and industrial electrification opportunities also abound. More than 70% of commercial buildings will need a load center upgrade before they can offer EV charging as a perk, and utilities are also investing in large grid-scale projects to modernize the energy infrastructure. 

Electrification Opportunities and Economic Advantages for Contractors  

Electrification opportunities are ramping up quickly. By 2028, the electrical contractor market could be worth an impressive $283 billion.  

Several factors are supporting the growth of this market. Public and private investments are creating long-term opportunities, and we’re also seeing an evolving partnership ecosystem involving multiple competencies that facilitate the planning and implementation of complex electrification projects. 

Electrification Opportunities and ROI 

Can you make money doing electrification jobs? Absolutely!  You can expect higher-than-average margins when working on electrification projects. Compared to traditional electrical repairs, electrification opportunities tend to have a much larger scope, often require electrical panel upgrades or adding load shedding devices, and commercial projects can entail longer-term work. All of this results in higher profits and ROI in both residential and commercial projects. 

Besides, many customers approach electrification as a journey. Many businesses have ESG plans with annual decarbonization targets, and residential customers are likely to continue investing in electrification once they embrace sustainable values, want to reduce their utility bills or be prepared for power outages.  

As an electrical contractor, you can become a long-term partner and advisor who guides customers on the path to electrification by recommending relevant solutions. 

Industry Verticals and Expertise 

Focusing on a specific electrification vertical can be a great advantage. Acquiring specialized skills in an area such as EV charger installation, integrating renewables, or wiring electric heating and cooling solutions is a differentiator that can unlock significant growth. 

Of course, it will be necessary to maintain these new systems as they age. Creating maintenance plans is a relatively simple way to generate recurring revenue streams.  

Overall, the demand for contractors is expected to exceed the supply, with 80,000 electricians needed each year for the foreseeable future. These market conditions allow you to seek high-value jobs, set your own rates, and develop long-term partnerships with customers who value your expertise.  

Other Reasons to Embrace Electrification 

Besides supporting growth for your business, electrification opportunities give you access to additional benefits.  

Environmental Benefits 

One of the primary benefits of electrification is the reduction of pollution and greenhouse gas emissions. On a global scale, experts estimate that harmful emissions contribute to four to ten million deaths each year. 

As an electrification contractor, you can make a difference by reducing pollution at the local level and improving health outcomes for your community. 

Energy Prices 

Fossil fuel and electricity prices are volatiles. On average, electricity rates went up 12.7% in 2023 in the U.S.  Homeowners are eagerly looking for solutions to reduce their utility bills and electrification is an answer.  When your customer decides to purchase an EV, their electricity use will go up.  Sure, they won’t have to pay for gasoline anymore but what about their utility bill?  When you go to provide a quote for an EV charger installation, this is a great opportunity to discuss solar, battery storage, converting all their lighting to LED, smart switches and motion sensors to reduce lighting usage, upgrading their 20-year-old air conditioner, upgrading their 25-year-old refrigerator, and more. You become a trusted advisor and likely just earned a customer for life.  

Regulatory Requirements and Expectations 

There is a strong regulatory push to support electrification. An example is the growing number of cities with ordinances for EV-ready buildings. Demand for electrification services will continue to increase as more states and municipalities adopt similar rules. 

These regulations are also shaping how consumers view electrification and creating new expectations regarding access to these services. 

Sustainability and Leadership 

Embracing electrification opportunities now establishes your business as a leader in this field. As an early adopter, you will have less competition and promoting your electrification services on your website will give you an early and sustainable lead with Google’s search algorithms. 

Electrification Opportunities and Considerations 

There are potential challenges to consider and address to ensure a successful transition for contractors who want to pursue electrification opportunities. 

Cost Considerations 

The rising cost of materials has been affecting the electrical industry as a whole. Inflation is driving prices up, but supply chain challenges also contribute to unpredictable costs. 

 For electrification projects, these challenges can result in higher customer costs or make it difficult to come up with accurate quotes. Possible solutions include adopting a modern procurement process and joining a buying program. 

Technical Challenges 

Electrification is a relatively new field, and installing these modern solutions requires you to be familiar with various emerging technologies. You’ll also have to navigate a market where each manufacturer has its own best design practices. 

Becoming an expert on the products you install will help you address any technical challenges that arise. You should also look into partnering with manufacturers to stay up to date with their latest best practices. 

Training and Certification 

Having a background as an electrical contractor puts you in a strong position to go after electrification opportunities, but it’s not sufficient. You’ll have to pursue upskilling and training opportunities to familiarize yourself with new technologies if you want to stand out from the crowd. 

Obtaining an EVITP certification is a good place to start if you’re interested in installing EV chargers.  

Becoming a Certified Automation Professional is another option to consider if you want to participate in commercial building electrification. 

Variations in Demand 

Demand for electrification can vary from one region to another. For instance, some states have better incentives for EV adoption, while some areas don’t have an ideal climate for heat pumps. Study your local market to determine which electrification solutions are likely to do well. 

It’s also important to remember that many electrification services are relatively new. Connect with your audience and educate them on the benefits of these solutions to generate more interest. 

Are you Ready to Start Capitalizing on the Electrification Revolution? 

Now is the perfect time to explore electrification opportunities and prepare your business for this shift. One of the things you can do is streamline your procurement process and gain a competitive advantage by paying less for your equipment, and securing access to affordable equipment and materials for future electrification projects. 

How? Join a purchasing program like Raiven that is dedicated to electrical contractors. Companies like Raiven combine the buying power of all their members and negotiate deep discounts, service terms, and exclusive pricing agreements. You’ll pay less for EV charging stations, battery storage, load management devices, lighting, wire, panels, conduit, specialty tools, and more, and you don’t have to squabble with suppliers. 

Gain access to pre-negotiated discounts of 7%-30% from industry-leading manufacturers and distributors in our private and customized marketplace.  Save with ABB, Alpscontrols, ChargePoint, EnelX/Juicebox, Ferguson, Grainger, Graybar, HD Supply, Home Depot, Lowe’s, Office Depot, Sunbelt Rentals, Schneider Electric, United Rentals, and more! 

Win more electrification jobs and make more profit by paying less for electrical supplies and electrification equipment. Visit Raiven today to learn more about our innovative platform and start planning electrification jobs more effectively.