Could Smart Homes Make Electrification More Affordable for Californians?

August 2, 2026 - 03:53

Pacific Gas and Electric is launching a pilot program that uses smart home automation to help California households cut their energy costs while shifting away from gas appliances. The utility says the technology could be a key piece in making electrification more affordable for everyday residents, not just wealthy homeowners.

The idea is simple. Instead of just installing heat pumps, induction stoves, and electric water heaters, PG&E wants to connect those devices to a central control system that learns when electricity is cheapest and cleanest. The system can then automatically run the water heater or pre-cool a home during off-peak hours, avoiding the late afternoon and evening when grid demand spikes and prices climb.

For example, a smart thermostat might cool a house a few extra degrees before 4 p.m., then let it drift upward during peak hours. A heat pump water heater could heat a full tank overnight when rates are low, so there is plenty of hot water for morning showers without touching the expensive midday power.

PG&E is partnering with a handful of tech firms on the pilot, which will involve several hundred homes across its service area. The company will pay participants a monthly incentive for letting the system manage their devices. The goal is to see how much demand can be shifted without making residents uncomfortable or disrupting their routines.

The test comes as California pushes hard toward all-electric new construction and encourages existing homes to swap out gas furnaces and stoves. But many residents worry about higher upfront costs and bigger monthly bills, especially if they charge an electric car and run a heat pump at the same time. Smart controls could help by smoothing out the load and taking advantage of time-of-use rates.

Early data from other states suggests that well-designed automation can cut electric bills by 10 to 20 percent in homes that use electric heat and hot water. PG&E hopes to confirm those numbers in its own pilot and then expand the program to more customers within a couple of years.

The utility also sees a broader benefit. If thousands of homes shift their power use away from peak hours, the grid becomes more stable, and PG&E can avoid building expensive new substations or firing up polluting backup plants. That could keep rates lower for everyone, even those who do not participate.

Residents interested in the pilot can sign up through PG&E's website, though the company warns that space is limited. The program runs for 12 months, and participants can drop out at any time without penalty. If the results are strong, the next step would be a wider rollout, possibly bundled with rebates for new electric appliances.

For now, the focus is on proving that smart homes are not just a luxury gadget but a practical tool for cutting costs and cleaning up the grid.