As California pushes toward a clean energy future, the city of San José has emerged as a leader in building electrification, offering valuable lessons for other cities nationwide. With residential buildings representing the largest source of natural gas use in the city, San José’s initiatives aim to reshape how these buildings are powered while prioritizing community needs, equity, and affordable housing. In 2022, ULI partnered with San Jose on an Advisory Services Panel (ASP) to inform this policy direction for multifamily buildings of all types. The aim of the ASP was to support the city in enabling property owners to step up their electrification retrofit efforts, encourage the adoption of on-site solar and batteries, and move the market forward.
The city’s Electrify San José: Framework for Existing Buildings Electrification, approved in June 2022, stands out for its deep community engagement. Beyond the industry and community input solicited in the ASP process, the city’s approach was deeply rooted in extensive neighborhood outreach and carefully considering the impacts on historically marginalized communities. “The high cost of housing in the Bay Area and increasingly poor air quality exacerbated by wildfires and extreme heat are prevalent concerns in San José,” explains Julie Benabente, deputy director of the city’s environmental services department.
Driven by the need to meet California’s climate goals and to protect human health, cities like San José and the state of California are taking strategic measures to make building electrification a reality. Staving off the most catastrophic impacts of climate change means transitioning away from fossil fuels and powering everything with clean energy. Electrification in homes also addresses immediate health risks as numerous studies show that gas appliances produce cancer-causing benzene and generate dangerous nitrogen oxide (NOx) pollution indoors.
California has allocated nearly $1 billion to electrify its building stock, and San José’s complementary programs demonstrate how cities can advance both climate action and public health. And this November, San José is launching its EcoHome Rebate program, offering financial support for heat pump HVAC and water heating systems, insulation, and pre-wiring for future electric appliances. The program follows the remarkable success of Electric Homes San José earlier this year, which saw its funding fully reserved within just 17 days of launch—with 74 percent of the funds going to historically underserved communities in San José.
In a parallel initiative, San José Clean Energy is also piloting an innovative on-bill financing program, providing zero-interest loans for heat pump upgrades, repayable through electricity bills.
Critical success factors
The electrification journey for multifamily building owners is both financial and technical. Here are four critical considerations:
- In California, every building owner’s first step should be to get in touch with the state’s Building Initiative for Low-Emissions Development (BUILD) program for free technical assistance, which can provide invaluable guidance through the myriad financial incentives and requirements, as well as assess building needs and define the scope of the retrofit.
- Successful electrification requires thorough preparation. Tom White, director of building performance and sustainability at Eden Housing, emphasizes the need to perform a comprehensive building assessment, including a detailed analysis of the building’s energy budget and current consumption patterns. Property owners need to evaluate their building envelope and understand their residents’ thermal comfort needs to avoid installing oversized systems.
- A thorough electrical capacity assessment is another critical step. Many buildings that have relied on gas for heating, water heating, clothes drying, and cooking may need to upgrade their electrical infrastructure to support these converted loads.
- Early utility coordination is essential for budget and timeline management. Owners need to determine whether the utility has installed appropriate equipment from the street and if the transformer is sized appropriately (some large buildings may have more than one). PG&E, the region’s investor-owned utility, has been prioritizing wildfire prevention and mitigation, pushing out dates on other efforts, which is directly impacting building projects. White notes, “We had a rehab where we could not electrify because our funding source required a completion time by a certain date and PG&E could not meet that deadline.”
Resistance and roadblocks to electrification
As with all changes to the status quo, building electrification has been met with some resistance. In San Jose, there is justifiable concern as to how all-electric buildings will operate in the context of power outages, an aging electrical grid, and rising energy cost.
Fortunately, all-electric buildings are equally or more resilient than gas-reliant buildings. In an electrical power outage, many modern gas appliances also require electricity to operate. Post earthquake, electric power is estimated to return within days, versus months for gas service, without the risk of fire from gas lines.
Concerns about grid capacity are diminishing as the state’s energy infrastructure evolves. California’s grid reached a major milestone in 2024 when it was powered with 100 percent renewable energy via solar, wind, and water, for at least two hours per day on 115 days, with no blackouts from grid strain reported—a huge leap from previous years.
However, it is true that California’s electricity has become costlier—nearly doubling in the last 5 years alone. Emerging from a backdrop of wildfires, lawsuits, and a bankruptcy filing, PG&E (the utility covering San Jose) has raised its rates at time when the need to electrify and transition to clean energy is increasingly urgent.
Further, industry education is needed for HVAC contractors to increase their comfort with heat pumps and other electrification technologies. Currently, some contractors are increasing their estimates for work they are less familiar with and in some cases even directing owners away from electrification.
The race to electrify
The city of San José’s efforts come in the context of numerous other cities, states, and regulatory bodies finding ways to minimize the use of gas and incentivize all-electric buildings. Notably, San José’s community-centered approach led to robust public support in the city council in the approval process for its electrification framework. By elevating this equity focus and continuing to craft programs to meet the challenges that owners face, the city is modeling what is possible for other cities and providing building owners with the technical and financial resources to meet this moment. As other cities look to follow suit, the question isn’t whether to electrify, but how quickly the transition can scale to meet the urgency of the climate crisis.
Resources for Bay Area and California multifamily building owners
- BayREN (no-cost technical assistance, rebates)
- State of California BUILD program (no-cost technical assistance, incentives)
- The Switch is On (contractors, rebates, incentives, products)
- Multifamily Energy Savings (affordable housing upgrades, assistance)
- ULI Net Zero Imperative
