Electrification
Increase electrification of end uses across transportation, buildings, and industry, while safeguarding reliability, promoting affordability, and maximizing opportunities to use load flexibility as a resource.
Electrification is a powerful energy efficiency and greenhouse gas reduction tool.
Electrification can also deliver significant GHG reductions both today and in the coming decades, since Oregon’s electric grid already produces fewer emissions than many fuels and it will become even cleaner as more renewable energy comes online. Delaying electrification in transportation and buildings leads to significantly higher economy-wide decarbonization costs. However, electrifying today does not always lead to lower energy bills for households and businesses, particularly when it comes to installing heat pumps.
Incentives can help overcome the cost differences, as well as education on the value of heat pumps in providing cooling. Affordability for low- to mid- income households and environmental justice communities, including renters, especially those in publicly supported or naturally occurring low-income multi-family housing, must be a key consideration when designing and implementing electrification measures.
While the modeling demonstrates the benefits of early electrification, public engagement and additional analysis underscore the need for a carefully managed transition – one that accounts for all key considerations, including ambitious decarbonization goals, grid reliability, upfront and ongoing affordability, equitable access, and additional benefits like cleaner air and improved cooling in homes. The concept of “strategic electrification,” elaborated later in this strategy, is an approach to advancing electrification while working to account for these other crucial considerations.
Widespread electrification will require a significant expansion of the electricity sector. At the same time, electrification technologies can strengthen the grid by providing load flexibility. By shifting demand away from peak periods, load flexibility can lower costs, reduce environmental impacts, minimize the need for new power plants, and better integrate variable renewable generation. Realizing this potential depends on customers – from large businesses to households to EV drivers – contributing through batteries, water heaters, and other flexible electric uses.
In the energy strategy modeling Reference Scenario, which represented the least-cost scenario modeled, electrifying on-road transportation alone reduced economy-wide energy demand by 27 percent thanks to the significantly higher efficiency of electric motors compared to internal combustion engines. In the buildings sector, electrification is the largest driver of household energy savings and – when paired with complementary measures like weatherization and efficient lighting – can reduce energy consumption in households by 47 percent.
Electrification Policies
Each policy has a short-hand reference shown in italics used throughout the strategy.
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Near-term transportation electrification is critical to achieving Oregon’s clean energy goals – and delaying action will drive up both costs and emissions. Oregon has established a strong policy foundation to accelerate near-term adoption of zero emission vehicles, notably through the Advanced Clean Cars II and Advanced Clean Trucks rules.
While these rules are facing challenges at the federal and state level, the energy strategy modeling shows they are critical to advancing vehicle electrification – and support the most cost-effective pathway to a clean energy transition.
Electrifying transportation not only cuts emissions but brings broad economic and public health benefits:
Lowering energy costs for most households
Keeping more energy dollars in-state, reducing harmful air pollution
Creating a fleet of batteries that can serve as a flexible grid resource.
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Achieving Oregon’s climate and energy goals will require a fundamental transformation of the transportation sector centered on a rapid shift to zero-emission vehicles, including battery electric and hydrogen fuel cell electric vehicles.
To accelerate the transition and create a stable funding source for Oregon’s roads, the state must decouple transportation revenue from fossil fuel consumption. Current transportation funding is dependent on gas and diesel taxes and thus an inherent incentive to continue fossil fuel consumption. A more sustainable, technology-neutral revenue stream that better reflects actual road wear and tear regardless of vehicle fuel type is needed. A Road Usage Charge – a mileage-based user fee that charges drivers based on miles driven rather than fuel consumed – is one alternative approach gaining traction in Oregon and across the country.
Oregon must also dramatically increase the availability, accessibility, and reliability of zero-emission vehicle charging and fueling infrastructure, with solutions tailored to renters, homeowners, multi-family housing, ride-hailing drivers, and fleet operators. Targeted support is needed for fleet owners navigating the complex and often costly transition to zero emission technologies, as well as more information on technology readiness and feasibility that is grounded in the real-world operating needs of Oregon fleets.
By aligning infrastructure, incentives, and funding mechanisms with its climate goals, Oregon can turn its ZEV policy commitments into widespread, equitable adoption on the ground.
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Achieving rapid electrification will require removing persistent barriers that continue to hinder progress.
While electric vehicles offer long-term savings through lower fueling and maintenance costs, their higher upfront cost continues to be a major hurdle, particularly for low-income households and especially as federal grants and tax credits are rolled back.
Even with available incentives, the upfront cost is still unaffordable for some. Special consideration is required for those who need more access to no-interest financing or stronger incentives to participate in transitioning to EVs.
The erosion of federal support at a time when electrification must accelerate to meet climate goals threatens to slow adoption and widen the gap between those who can afford to transition to EVs and those who cannot.
As Oregon works to expand the availability, accessibility, and reliability of public EV charging, it must address the needs of rural drivers and those without access to at-home charging, ensuring they have convenient, affordable options to power their vehicles.
Commercial and public fleets also face significant informational and operational barriers to adopting EVs, including uncertainty around vehicle availability, range, and suitability for specific use cases. In sectors like long-haul freight, further evaluation is needed to determine where and when electrification can realistically meet business needs.
Widespread transportation electrification will require a substantial expansion of electricity generation and upgrades to the electric grid to support new demand.
The success of this transition is closely tied to the ability to scale the electricity system (Pathway 2), including sustained investments in clean energy and a reliable, resilient grid.
Advancing this transition will also involve strategies to promote load flexibility, such as time-of-use rates, smart charging and vehicle-to-grid integration, to strengthen grid reliability, make better use of existing infrastructure and lower costs by reducing the need for new power generation.
3a
Advance and expand efforts to electrify transportation, with a focus on removing barriers to ensure the state meets its zero-emission vehicle goals. (Electrify transportation)
3b
Facilitate and accelerate the interconnection of EV charging infrastructure and related distribution system upgrades to enable faster deployment, lower costs and complexity, and improve grid readiness. (Distribution system readiness for EVs)
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Charging station installations will need to ramp up quickly to support growing numbers of electric vehicles. Deployment of charging stations requires close coordination with local utilities to identify sites where sufficient distribution capacity exists to avoid or defer costly grid upgrades. While utilities have traditionally handled upgrade requests on a case-by-case basis, the expected surge in demand from EV charging – as well as other electrification technologies – requires a shift toward a more proactive, streamlined, and scalable planning approach.
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Until recently, the electricity and transportation systems operated in silos, with little need for shared data, coordinated planning, or aligned policies. But as electric vehicles become more common on Oregon’s roads, the two systems are becoming increasingly interdependent. Oregon has taken important steps toward integration – for example, requiring investor-owned utilities to submit transportation electrification plans to the Oregon Public Utility Commission every three years. In addition, ODOE’s EV mapping project provides Oregon’s consumer owned utilities with information about where electric vehicles are charging on their systems, to support growing EV adoption in Oregon.
However, greater data sharing and cross-sector alignment are needed. As EV adoption accelerates, it is critical to understand where the grid has sufficient capacity to support new charging infrastructure and help guide efficient siting decisions for both public and private investments. In addition, Oregon must proactively coordinate planning across agencies and utilities to ensure the distribution grid can accommodate new demand while maintaining reliability and minimizing long-term costs for ratepayers.
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In many areas, the existing electric distribution system lacks the capacity to handle the growing EV load. This challenge is particularly acute at large sites – such as multi-family housing, fleet depots, and fast charging stations – which place intense, localized demand on the grid. Meeting these needs often requires locating sites with existing available capacity, which is not always feasible or known in advance, or undertaking costly and time-consuming grid upgrades. Compounding this issue, current distribution system planning processes are often too slow and fragmented to keep pace with the scale and urgency of this rapid growth.
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The energy strategy modeling demonstrated that aggressive electrification of end-uses is essential to least-cost economy-wide decarbonization. Strategic electrification – also referred to as beneficial electrification – is a guiding framework for advancing electrification while supporting affordability and reliability.
For electrification to be considered strategic, it must advance one of the following areas without adversely affecting the others:
Benefits consumers over the long run
Enables better grid management
Reduces negative environmental impacts.
Consideration of grid management must account for resource adequacy needs, including the effects on load growth. It includes approaches to mainstream load flexibility such as time-of-use tariffs and automated load shifting that enable flexible integration of electric loads wherever possible.
Other factors, such as cooling needs in some communities, must also be considered. To most effectively implement this policy the strategic electrification framework must be part of an integrated planning process for the state.
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While Oregon has set targets to reduce carbon emissions from electricity, transportation, and direct-use fuels, there is no state guidance on the role of electrification in achieving carbon emission reduction goals that take into account interactions between these sectors. There is also no electrification target for buildings, apart from a statutory target for the state to have 500,000 heat pumps by 2030. It is important to build on the insights from the energy strategy modeling and other economy-wide studies to more clearly define an electrification pathway for the sectors and applications most able to electrify.
Applying a strategic electrification lens to inform policies to promote building, commercial, and industrial electrification can ensure that the transition will be structured to benefit consumers and the grid. It can help inform key policies including building performance standards, energy codes, appliance standards, OPUC planning processes and ratemaking, ratepayer- and publicly- funded programs, and zoning and planning.
Together with the Equity and Justice Framework, it can help focus policies and programs to overcome barriers to adoption of the most energy efficient electric technologies among environmental justice populations, including heat pumps for space heating and cooling, heat pump clothes dryers and heat pump water heaters. It can inform programs that educate households and businesses about their energy use, how their buildings compare to other similar buildings, and what they can do to reduce energy use.
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The electricity system is already constrained and will need to expand to accommodate new loads as they electrify.
While efficient electric heat pumps generate energy savings, they may not always generate financial savings for consumers. The energy wallet analysis found that factors affecting affordability included the type of housing, type of heating technology being replaced, household cooling needs, and the relative cost of electricity and gas.
Some households – and energy burdened households in particular – may require support to transition from a natural gas or other fossil fuel reliant system to an electric heat pump. Programs to advance heat pump adoption will need to carefully balance strategically targeting households with bill savings potential and supporting energy-burdened households who may not see savings to ensure they are not inadvertently harmed or left behind.
Heat pumps can increase winter peak loads, requiring additional electricity system investments. To maximize heat pump savings, the highest efficiency heat pump equipment should be used, and homes may require additional weatherization measures, increasing the amount of initial investment needed.
Challenges in the large commercial and industrial sectors include technology limitations.
Current heat pump technology is not suitable for high temperature processes and retrofitting existing systems can be cost prohibitive. Identifying where electrification vs. low carbon fuels are appropriate solutions will be a critical aspect of strategic electrification in these sectors.
Fuel switching from natural gas to electric heat pumps erodes natural gas utility revenues, raising questions about how business models might adapt to a low-carbon future. Over time, as fewer customers remain on natural gas distribution networks, the costs of maintaining the network will fall on fewer customers, potentially raising bills and increasing energy burden in gas-dependent households.
There is also a risk of stranded assets, and a need to manage retirement of parts of natural gas distribution systems that otherwise may require costly upgrades.
3c
Promote strategic electrification across the residential, commercial, and industrial sectors to align policies and investment to deliver affordable, reliable, and clean energy. (Strategic electrification)
Load flexibility refers to the ability to shift electricity use to times when electricity is abundant and cheap. For households, this can include charging an electric vehicle, running a home battery, or preheating water during off-peak hours. These are things anyone with the necessary equipment can do, and utilities can encourage this behavior by offering lower rates at these times and supporting automation tools that make shifting energy use seamless – such as programmable thermostats or smart EV chargers. Commercial and industrial customers can also shift their consumption by adjusting operating schedules or activating backup energy systems to reduce demand during peak periods.