It’s a movement fueled by consumer desire for affordable energy, environmental agendas, the demand for data centers and AI, and state policies pushing industry away from energy sources like gas.   

It’s also a movement that can be difficult to navigate, especially in an uncertain economy made worse by the ongoing labor shortage. There’s a lot for HVAC contractors to take in, but those willing to adapt can come out ahead of the game.  

The Age of Electricity  

Birol notes that electricity is fueling the most dynamic aspects of the current global economy, such as AI and data centers. He said electricity is also gaining traction in more established sectors, like heat pumps, versus other heating systems.  

According to the U.S. Energy Information Administration, in 2024, 42% of households relied mainly on electricity for heating. Meanwhile, in the last two years, heat pumps have been outselling gas and furnace sales.  

“Already today, more than half of the investment going into the global energy sector each year is going to electricity,” Birol wrote.  

Meanwhile, state and local governments are increasingly creating or amending laws that focus on electrical infrastructure and pushing consumers away from natural gas. In Colorado, newly manufactured residential gas furnaces and water heaters must now either meet ultra-low NOx emissions or comply with Energy Star standards.  

Where Contractors are Struggling  

The push for electrification can leave contractors and customers alike in a bind. For contractors, it’s not so much a lack of motivation as it is a struggle to justify electrification against their risk tolerance and to protect margins.   

Cash-flow strains, especially for small- to mid-sized HVAC contractors, can make the transition more difficult. A 2025 survey from the Air-Conditioning Contractors of America Association shows the average net profit for these companies is 5%. ACCA suggests 10% is needed for sustainable growth.  

“Cost is absolutely a factor,” said Bryan Orr, president of Florida-based Kalos Services and host of the HVAC School Podcast. “On the contractor side, electrification often means panel upgrades, service upgrades, new branch circuits, and in some cases, transformer or utility coordination. That adds complexity and capital cost beyond just replacing an appliance.”

There is also the ongoing issue of labor. Joe Parsons, founder of Resonant Energy Strategies LLC, noted there are training gaps around cold-climate heat pumps, integrated controls, and troubleshooting. The logistics of electrification can be a hassle for contractors as well.  

“Electrification raises the stakes on doing the fundamentals right — load calculation, distribution, controls, and commissioning,” said Parsons. “When any of those are weak, the contractor owns the callback, even if the ‘box’ is fine.”  

As awareness grows, consumers are asking more pointed questions about operating costs, incentives, and carbon claims. These might stump contractors who haven’t kept up to speed.  

“The biggest struggle I see is that electrification has become a policy and marketing buzzword, and in many cases, it is being pushed faster than the technical planning behind it,” Orr said. “We have seen large commercial clients make public electrification commitments without a clear implementation strategy.”  

On the consumer side, customers might not be able to afford to switch utilities, while in other cases, it simply isn’t a feasible or economical choice, depending on the region. A customer may want electric heating but balk at the price tag of having to upgrade their panel.  

To combat this, Chris Czarnecki, ACCA director of government relations and advocacy, emphasized the need for contractors to continually train and educate their workforce, both on the technology front and staying abreast of relevant laws and regulations.  

“Contractors can even educate their customers if they feel comfortable doing so,” he said. “This would be particularly true if a customer was affected by one of these policies and, for example, was unable to install their preferred appliance.”  

Transitioning to Electrical  

It can seem overwhelming, but contractors still have time to strategize. Though state regulations surrounding electrification are increasing, there are 26 states that have enacted fuel and energy choice laws that preempt localities from restricting access to natural gas and other fuel sources.   

What this means is that contractors can adapt and even capitalize on the growing electricity demand. Parsons said the practical move for contractors is to build a repeatable “all-electric readiness” playbook, which includes better load calculations, envelope awareness, duct and distribution fixes, control strategy, and commissioning discipline.  

“On the business side, the winners will be the contractors who can sell outcomes, predictable comfort, predictable bills, and a clear plan for the home or building, rather than selling a single piece of equipment,” he said. “In short, treat electrification as a systems business, not an equipment business.”  

Part of that strategy is diversification. As popular as heat pumps are, contractors shouldn’t overcorrect and go all-in on them. In regions with high electric rates or punitive demand charges, even the best modern solutions can struggle if contractors can’t convey operating costs clearly.  

“That is where load reduction, smart controls, thermal storage, and hybrid approaches can be important stepping stones,” Parsons said. “In regions with lower electric rates and cleaner grids, all-electric solutions tend to pencil faster, and adoption is easier.”  

Parsons suggests becoming fluent in heat pump sizing for cold climates while also offering dual-fuel and hybrid systems. Becoming familiar with basics like electrical coordination, panels, and permitting will also give contractors a leg up.  

Orr said contractors can capitalize by becoming competent system designers rather than box replacers. Electrification works better when contractors understand load calculations, duct design, airflow, building envelope interaction, and control strategies.  

“Ultimately, electrification is not inherently good or bad,” said Orr. “It is a worthwhile initiative. When applied thoughtfully, with proper design and a realistic understanding of climate and infrastructure, it can deliver real efficiency and comfort benefits.  

“When applied as a checkbox without engineering rigor, it creates problems.”   

Sal Brunetto, national sales manager with Bosch, said contractors should work with those companies that can support the “legacy” technology while trusting them to provide state-of-the-art systems.  

“We're trying to earn their business. So as we earn their business and as we feel more comfortable and the contractors more comfortable with Bosch, we try to move them up the range of products into more energy efficient, perhaps more complex and more advanced equipment,” he said. “It’s always important to go at their pace, right? We can’t really dictate our own pace.  

“We want to really fit their needs, identify their needs, and find solutions to their present and slightly future needs.”