Understanding CA’s Low-Income Housing Stock to Electrify It

California could electrify millions of homes while giving an economic boost to the residents who need it most, but policies must be designed with an understanding of where and under what conditions low-income Californians live. A new, in-depth analysis of California’s housing stock and census data provides insights to inform policy, showing the vast majority of low-income Californians live in Southern California and the Central Valley, over half live in single-family homes, 35 percent own their homes.  

Surprised? These new statistics could make a major difference when it comes to developing policies and programs to help the state’s under-resourced families transition from polluting gas appliances to those powered by clean electricity.

Over 12 million people—nearly a third of all Californians—live in low-income households, defined as having 80 percent or less of a region’s median income. Of these, about 77 percent are considered “rent-burdened” which means 30 percent or more of their income is spent on housing costs like rent or mortgage plus utility bills.

Converting to efficient electric appliances can help ease this burden, while also being a core climate strategy. Research shows that retrofitting existing homes with heat pump water heating and space heating lowers total utility bills. Heat pumps, which harvest differences in air temperature rather than burning fuel, can also be used for cooling, potentially reducing energy used for cooling by up to 50 percent compared to an old, inefficient air conditioner. 

All-electric households also will dodge the fee increases sought by utilities for the maintenance of aging, leak-prone gas infrastructure. Finally, on top of the financial benefits, these households will avoid the safety and health hazards associated with burning fossil fuels at home. 

Policymakers must prioritize low-income households for building electrification in California to be effective and equitable. The analysis by Reem Rayef, a graduate student at UC Berkeley who worked with NRDC this past summer, digs into U.S. Census data and provides some clear opportunities for targeting policies and programs.

Often, policy solutions aimed at low-income households focus on multifamily housing. While it's true that under-resourced families disproportionately occupy small and large multifamily buildings as compared to higher-income families (and much more work needs to be done in multifamily buildings), this analysis also highlights that more than half of low-income Californians (over 6 million people) live in single-family homes.

Many of these families own their homes—over 3.5 million low-income Californians live in single-family homes that they own, with the largest numbers of these homes located in the Southern Coast and Central Valley regions. This segment of the population has the decision-making power to choose to do retrofits, and the financial incentive to get them done because they will directly reap the benefits. 

Setting aside building type, being low-income in California increases the likelihood of being rent-burdened from 38 percent to 77 percent. The energy savings that can be derived from electrification could make a huge difference for such families. Over 3 million Californians in the “extremely” low-income category, making 30 percent of the area median income or less, devote over a fifth of household income to energy costs. This level of energy burden is much more common among those in single-family homes, as opposed to multifamily or mobile homes.

Reliable and affordable energy services are essential, not only for comfort during heat waves and cold winters, but also for health and safety. The highest concentration (56 percent) of low-income residents are located in the Southern California (inland and coastal areas), with 22 percent of low income households residing in the Central Valley—all areas where extreme heat, exacerbated by climate change, is increasingly common and where access to air conditioning is essential.

Low-income Californians need help in accessing the benefits of efficient electrification, and this analysis highlights pockets of opportunity where equity-oriented electrification programs should focus resources and assistance. For example, programs could target:

• Extremely low-income, extremely rent-burdened Californians – 2.5 million people
• Households spending greater than 20 percent of income on energy expenses – 1 million people
• Low-income single-family homeowners in the Central Valley and Southern California – 2.8 million people
• Low-income multifamily renters in Southern California – 2.3 million people

While we also need to go all-electric for new affordable housing, this analysis centers on the diverse and sizeable population living in existing homes that need to be upgraded. In the push to meet California’s climate goals, advocates can’t ignore this vast group. By taking into account where people live geographically, the type of home, and which costs hit them hardest, we can design policies that bring yesterday’s construction into the clean energy future while offering critical financial relief to millions of low-income Californians.

This blog describes the work of UC Berkeley graduate student Reem Rayef. For more information, please see this slide deck of the analysis and this webinar recording.