California will give the zero net energy (ZNE) home market a huge kick-start in 2020, when a new state home energy code takes effect. The code’s performance path, used for compliance on most projects, will get 50 percent tougher, requiring homes to be ZNE — in other words, to produce as much energy as they consume.

Although California’s building energy codes are the strictest in the country, they often offer a preview of what builders in other states can expect in the years to come. So it pays for builders and remodelers nationwide to study how pros in California are approaching the new regulations and begin to consider how to adopt these building practices in their own projects.

While California’s new energy code is tough to meet, it offers a lot of flexibility, says David Knight, founder of Monterey Energy Group, a residential mechanical engineering firm based in Carmel, California. And, he says, strategic use of propane for space heating, water heating, and power generation offers a model for meeting the code that’s likely to be successful and popular with clients in the years to come.

Furnace or heat pump?

Knight says he probably gets the question 100 times a month: “Is it more cost-effective to go with propane furnaces and propane water heaters or heat pumps?” The answer in almost all parts of California, he says, is that it’s almost always more cost-effective to go with propane. Compared with California’s expensive grid power, the operating costs of propane furnaces and water heaters are lower, and the features are significantly better.

A project’s individual climate zone and energy price matter, of course. Heat pumps are very inefficient in cold mountain areas and more efficient in areas such as San Diego or Los Angeles. And in parts of the state with upper-tier electric rates, electric space heating “is not even close to being cost-effective against propane,” Knight says. California is also not a natural market for ground-source heat pumps, which don’t offer a huge efficiency boost in California’s mostly mild climate zones.

Modeling a typical, well-insulated house for energy compliance shows the impact of switching to propane for space heating. When Knight plugs in a ductless heat pump as the heat source, the house is 4.8 percent below the energy performance needed to comply with the code. Simply switching to a propane furnace, with no other changes, jumps the compliance margin to positive 16 percent. “Propane has a huge compliance advantage to ductless air-source heat pumps,” he says. Ducted heat pumps perform better, but overall, the energy code is more positive for propane furnaces than for air-source heat pumps.

Water heating that performs

As a mechanical engineer, Knight says he has three main goals for his clients: “We want them to be warm on cool days, cool on hot days, and never run out of domestic hot water.” So he almost always insists on propane or gas water heating for his clients.

Electric heat pump water heaters have received a lot of publicity, Knight says, but he begs his clients not to use them. “They’re noisy, they put out a ton of cool air, they don’t last very long, and they dribble out hot water. These units are temperamental; very few plumbers know how to fix them. They’re just not very good units.”

Propane tankless water heaters, by comparison, have gotten a lot better in the last 15 years, Knight says. “If you put in the right number of them, you can get plenty of domestic hot water. With proper maintenance, they can be plenty reliable. There’s no question propane water heating is a significantly better choice than electric.”

Working with solar

One of the reasons heat pumps are becoming more popular is that solar electricity is more affordable, Knight says. The price of solar panels has dropped from around $4 a watt to 40 cents a watt. On many new homes Knight works on, he’s installed large solar systems with batteries, which can help to smooth out time-of-use price premiums when grid electricity is more expensive. Solar power has become less expensive than grid electricity in California. It’s still not quite as cost-effective as propane or gas for domestic hot water and space heating, but it may become closer if solar power continues to become more affordable.

The rapid rise of solar power has created a new challenge for utilities and their customers, however. Since utilities don’t earn as much income from homes with solar panels, Knight has seen utility hookup fees for many customers rise dramatically. “They charge you up front for the 30 years of electricity that you’re not going to buy,” Knight says. Fees that used to be a few thousand dollars have risen to $20,000, $30,000, or even $50,000 to get electric brought a few hundred feet. Customers of natural gas have encountered similar scenarios.

“Being completely independent of the grid has a lot of appeal for many Californians.”

Many of Knight’s clients have responded by considering going off grid using inexpensive solar, a battery backup system, and, most importantly, a good backup generator, Knight says. “For a few dollars more, especially compared to the costs of a new hookup or a slightly adjusted hookup from the utility, you can be off grid pretty darn fast with every creature comfort you’d like to have. Being completely independent of the grid has a lot of appeal for many Californians.”

The national ZNE conversation

For Knight’s California markets, combining an efficient propane furnace, a propane water heater, and a propane backup generator creates a ZNE home package that’s popular with clients. Is it a package that makes sense for builders and remodelers nationwide?

Although California will be the first state to mandate ZNE home construction, interest in ZNE homes is expanding across the country. A survey performed by Harris Insights & Analytics for the Propane Education & Research Council (PERC) found that 83 percent of homebuyers and 89 percent of builders are likely to consider a ZNE home for their next purchase or build. And about the same number — 81 percent of homebuyers and 84 percent of builders — are very or somewhat willing to pay more for a ZNE home.

The energy price and climate considerations of different parts of the country mean that builders must develop their own strategies for building ZNE homes that thrill clients. But propane can help. Check out our course “Introduction to Net Zero Energy Homes and Opportunities to Leverage High Efficiency Propane Systems” on to learn about how propane can help achieve ZNE and Zero Energy Ready status. Or check out our one-page infographic for a quick look at how to start building your own ZNE strategy.