Industry makes almost a third of US energy emissions, yet high electricity prices keep factories on gas. New UC Berkeley and NRDC research and a California bill map ways to close the gap.
High electricity prices are holding US factories back from cleaner heat, Canary Media reported on 27 July. Industrial sites burn fossil fuels to make food, drinks, materials and chemicals, and the sector produces nearly a third of US energy-related carbon dioxide.
The technology already exists. Industrial heat pumps, electric boilers and heat-storing thermal batteries are commercially available. The barrier is cost. In almost every state, electricity is dearer than natural gas for industrial users, which makes switching hard to justify even for willing companies.
“We have to have solutions that are at the very least competitive with the existing cost of fuel,” said Neil Brown, a chemical engineer at Eastman Chemical. He said that in parts of the Southeast and Texas, where the firm operates, competing with the low cost of natural gas is very difficult.
Electrifying low- and medium-temperature processes would add about 250 terawatt-hours to industrial power demand by 2035, roughly 25% more than manufacturers use now, according to the Renewable Thermal Collaborative and the Industrial Heat Pump Alliance. The same groups estimate clean industrial technology could add around $471 billion in economic output over the next decade.
Building power next to the plant
Researchers at the University of California, Berkeley modelled factories installing off-grid solar or wind on-site to run heat pumps and thermal storage. Across nearly 3,600 locations, they found renewable-powered heat could economically supply up to a third of studied industrial heat demand by 2035, in an analysis announced last week.
Below 200C, heat pumps beat gas boilers on cost in the model, covering processes such as brewing, paper and textiles. For hotter work like glass melting and steel, thermal batteries offered competitive or lower costs. Off-grid systems also skip grid connection queues and delivery charges, and avoid competing with data centres for power.
Making grid power cheaper
Most factories will stay on the grid for now, so advocates want cheaper electricity rates. In California, Senate Bill 943 would let the Public Utilities Commission set rates and fees that make it more affordable for large industrial users to switch to electric heat. It passed the state Senate in May and moved to the Assembly’s appropriations committee.
In the Upper Midwest, utility Otter Tail Power created a tariff to support thermal energy systems. The first user is Antora Energy’s 5GWh battery in South Dakota, which turns cheap wind into steam for a Poet ethanol plant. An NRDC study led by senior scientist Lauren Kubiak found that charging factories “marginal” electricity costs made heat pumps cost-competitive with gas boilers in California, and narrowed the gap in Michigan.
“Electric rate reform is a tool in our toolbox that hasn’t been used to its fullest extent just yet,” Kubiak said. For US manufacturers weighing electrification, the message is consistent. The hardware works, and the decisive factor is the price of power. Policy that lowers industrial electricity costs would do more than any single technology to move factories off gas.
