Building Decarbonization Codes and Your Electricity Plan (2026 Guide)

A wave of building decarbonization codes is sweeping through states and municipalities, and the consequences for homeowners and commercial building owners are more immediate than most people realize. If you own or rent property in a jurisdiction adopting these codes, your electricity plan choice may become significantly more consequential — and your electricity consumption is almost certainly going to grow.

What Are Building Decarbonization Codes?

Building decarbonization codes are regulations that require new buildings — and sometimes existing buildings undergoing major renovation — to meet energy efficiency and electrification standards that reduce or eliminate fossil fuel consumption on-site. The most direct expression is a prohibition or strong disincentive against installing natural gas appliances: furnaces, water heaters, stoves, and dryers.

Instead, new construction is required or strongly incentivized to use electric alternatives: heat pumps for space heating and cooling, heat pump water heaters, induction ranges, and electric resistance or heat pump dryers. The result is a building that runs entirely or primarily on electricity rather than a mix of electricity and natural gas.

Where Are These Codes Currently in Effect?

California has been the most aggressive jurisdiction. The state’s updated Title 24 building efficiency standards effectively require all-electric new construction in most cases. Several California cities — including Berkeley, San Jose, and Los Angeles — passed local reach codes ahead of the state standard. Over 70 California jurisdictions now have some form of building electrification requirement.

Beyond California, New York state adopted updated energy codes in 2022 that strongly favor electrification. Massachusetts, Colorado, and Washington state have frameworks in various stages of implementation. At the municipal level, cities in states like Illinois, Maryland, and New Jersey have passed or are actively considering electrification ordinances.

The federal side matters too: the 2022 Inflation Reduction Act created substantial tax credits and rebates (up to $14,000 per household via HOMES and HEAR programs) for homeowners who electrify heating, water heating, and cooking — accelerating voluntary adoption even in jurisdictions without mandatory codes.

How Decarbonization Affects Your Electricity Load

The most immediate impact on building occupants is a significant increase in electricity consumption. A home that previously split its energy use between electricity and natural gas will consolidate almost all energy demand onto the electric meter after full electrification:

A cold-climate air source heat pump running in heating mode draws roughly 1–3 kW depending on conditions and equipment size, operating 1,500–2,500 hours per year in a northern climate. A heat pump water heater draws 500–1,000 kWh per year, replacing a gas water heater that drew zero electricity. An induction range adds relatively little (electric ranges were already common), but combined with heat pump heating and hot water, total annual consumption in a fully electrified home in a cold climate can easily exceed 15,000–20,000 kWh versus 8,000–10,000 kWh before electrification.

This matters for your electricity plan in two ways: your annual bill will be larger in absolute terms (though hopefully smaller when you factor in eliminated gas bills), and your demand profile will shift — particularly in winter, when heat pump loads peak and electricity demand becomes less summer-concentrated.

Electricity Rate Structures That Matter Most for Electrified Homes

If you’re in a deregulated electricity market, the increased load from full electrification creates new incentives to optimize your electricity plan carefully:

Time-of-use rates reward shifting heat pump operation — pre-heating or pre-cooling during off-peak hours, and using smart thermostat scheduling — to reduce on-peak consumption. An electrified home with a programmable heat pump and smart water heater can materially reduce its effective electricity cost per kWh by concentrating demand in overnight or shoulder-period windows.

Fixed-rate supply contracts become more attractive when your electricity spend is high. The dollar value of locking in a favorable rate for 12–24 months is proportionally larger when you’re consuming 18,000 kWh/year than when you were consuming 10,000 kWh/year.

Demand charge structures that exist in some commercial and semi-commercial accounts penalize peak demand moments, which heat pumps can create on very cold days when they cycle at full capacity. Being aware of this and using equipment buffering or thermal mass to smooth demand spikes can reduce bills.

Green Electricity Plans and Decarbonization Goals

Many homeowners who electrify their buildings do so specifically to reduce their carbon footprint. Pairing an all-electric home with a renewable electricity plan — whether a 100% renewable supply contract from a competitive supplier in a deregulated state, or community solar subscription, or on-site solar — completes the decarbonization loop: no fossil fuels burned on-site, and no fossil-fuel-generated electricity drawn from the grid.

In deregulated states, this pairing is straightforward: choose a 100% renewable supply contract, keep the utility as your delivery company, and your home is effectively fossil-free. The economics depend on the premium (if any) of the renewable supply contract versus standard supply rates, which varies by state and market.

What Building Owners Should Do Now

If you’re in a jurisdiction adopting or considering decarbonization codes, several steps make sense regardless of whether your building is subject to mandatory requirements yet:

Audit your current energy use split between electricity and gas. Understand what full electrification would do to your electricity bill at current rates. Then model the bill under alternative rate structures or supply contracts — particularly time-of-use options — to find the most cost-effective approach for your higher-electricity future.

If you’re in a deregulated state, shop supply contracts before beginning major electrification projects. Locking in a favorable multi-year rate before your consumption significantly increases protects you from market rate volatility during the transition.

Consult with your utility or a building electrification contractor about service upgrades. Older homes with 100-amp electrical service often need upgrading to 200 amps to support heat pump HVAC, EV charging, and heat pump water heating simultaneously. This is a capital expense that belongs in the electrification project budget.

Frequently Asked Questions

Do building decarbonization codes apply to existing homes?

In most jurisdictions, current codes apply only to new construction and major renovations (typically projects exceeding a certain percentage of the building’s assessed value). Existing homes are generally not required to retrofit immediately, though future codes may expand scope. Voluntary electrification with IRA incentives is moving faster than mandates in many markets.

Will my utility bills go up after electrifying my home?

Your electricity bill will increase, but the gas bill disappears. In most cases, the combined energy bill is lower — particularly with a high-efficiency heat pump versus gas heating — though results vary significantly by climate, equipment choice, utility rates, and local gas prices. In cold climates with low electricity prices (like the Pacific Northwest), the savings can be substantial. In regions with high electricity rates (parts of New England), the math is tighter.

Can I stay on natural gas if codes require electrification in my area?

If a code applies to your project (new construction or qualifying renovation), compliance is generally required to get a building permit. For existing buildings not undergoing qualifying work, current codes in most jurisdictions don’t require immediate retrofit. Check with your local building department for specifics.

Does a heat pump work in very cold climates?

Modern cold-climate heat pumps (also called “low ambient” heat pumps) operate efficiently down to -13°F (-25°C) and maintain significant heating capacity below 0°F. Manufacturers like Mitsubishi, Bosch, and Daikin have product lines designed specifically for cold-climate applications. The efficiency advantage over gas heating diminishes at extreme temperatures, but doesn’t disappear until very low temperatures.

What’s the difference between a reach code and a state code?

State energy codes set a baseline that applies statewide. Local jurisdictions can adopt “reach codes” that go beyond the state baseline — more aggressive efficiency requirements or earlier effective dates. California’s reach code framework has enabled dozens of cities to require full electrification ahead of the state timeline.

How does electrification interact with rooftop solar?

Electrification and solar pair exceptionally well. A solar array sized for a pre-electrification home will be undersized once heat pumps and EV charging are added — but the combined system of rooftop solar plus a heat pump-powered all-electric home can achieve near-zero net annual energy cost in many climates. Sizing the solar system for the post-electrification load, and pairing with battery storage, is the optimization target for maximum long-term benefit.

Building decarbonization codes are reshaping the economics of building ownership — and the electricity plan that made sense for your home three years ago may need revisiting as your load profile changes. In a deregulated state, you have the tools to find a plan that fits your new all-electric reality. Start with a usage audit, then shop suppliers who offer time-of-use or renewable options that match how your electrified home actually runs.