Industrial Electrification in the Southwest States
Authors: Ali Hasanbeigi, Cecilia Springer
The industrial sector accounts for approximately a quarter of energy use and greenhouse gas (GHG) emissions in the U.S. As emissions from electricity generation continue to decline, addressing thermal energy needs in the industry, especially for process heating, becomes a critical challenge in the pursuit of industrial deep decarbonization. Heat represents two-thirds of all energy demand in the industrial sector. Despite this, only 10% of this demand is currently met using renewable energy sources. A significant opportunity lies in decarbonizing the industrial sector by transitioning heat production away from carbon-intensive fossil fuels and towards cleaner alternatives such as electrification, where low- or zero-carbon electricity is utilized.
This report is a follow-up study to our previous reports, “Electrifying U.S. Industry: A Technology- and Process-Based Approach to Decarbonization” and “Industrial Electrification in the U.S. States”. In the previous reports, we studied industrial electrification potential at the national level as well as state level, but the southwest states were not included in our state-level study. In this report, we analyze the electrification potential for 14 industries (aluminum casting, container glass, ammonia, recycled plastic, steel reheating, beer, beet sugar, milk powder, wet corn milling, soybean oil, cheese, meat processing, ethanol, and hydrogen production) in six southwest states: Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming.
The report identifies specific processes that could be electrified in the near term with commercially available technologies and analyzes the expected changes in energy use, CO2 emissions, and energy costs. Understanding which conventional processes could be electrified and how this impacts emissions and costs can help industrial facilities identify which of their processes may be suitable candidates for electrification. In addition, understanding the potential growth in industrial energy demand that will result from electrification can help utilities, grid operators, and electricity generators plan for these changes and ensure equipment and generation resources are available to meet the growing demand for renewable electricity.
Figure 1 shows that electrification could significantly reduce the total final energy use of industry in all states studied (note that negative values in Figure 1 imply reduction). Colorado has the largest energy-saving potential from the electrification of industries included in this study. Differences in energy savings across states are due to different levels of production in the industries studied.
Figure 1. Total change in energy use in different states using electrified processes in eleven industries (all except ammonia, hydrogen, and plastic recycling) (This is the technical potential assuming a 100% adoption rate).
Figure 2 shows the change in industrial CO2 emissions in different states after electrification under a baseline scenario where a zero-carbon grid is achieved in 2050. Because grid emissions factors vary across states, full electrification of these industries in 2030 would result in an increase in CO2 emissions in all states studied except Arizona and Nevada. In these states, the relatively lower grid emissions factor in 2030 helps to achieve CO2 emissions reductions. We also developed a State policy scenario that aligns with the U.S.’s commitment to achieving a zero-carbon grid by 2035 or as stated in each state’s target. The state policy scenario shows a quicker and substantially larger CO2 emissions reduction potential in future years than the baseline scenario because of the more rapid decarbonization of the grid assumed.
Figure 2. Change in industrial CO2 emissions in different states using electrified processes in eleven industries (all except ammonia, hydrogen, and plastic recycling) - baseline scenario (This is the technical potential assuming a 100% adoption rate).
This study also emphasizes the positive impact of electrification on reducing CO2 emissions over the lifetime of the technology by calculating the cumulative change in CO2 emissions from 2030 to 2050 (Figure 3). Colorado demonstrates the largest reduction in cumulative CO2 emissions, while Nevada experiences the smallest reduction. In all states, industrial electrification leads to a net decrease in CO2 emissions over the lifetime of the technologies, assumed to span from 2030 to 2050. This indicates that, even if industrial electrification initially causes an increase in annual CO2 emissions in some states due to the high carbon intensity of the electricity grid, the long-term effect of electrification will result in a net reduction of CO2 emissions. Consequently, this contributes to climate change mitigation efforts and showcases the benefits of adopting electrification technologies.
Figure 3. Cumulative change in CO2 emissions over the lifetime of electrified technologies over the period of 2030 - 2050 in eleven industries studied (all except ammonia, hydrogen, and plastic recycling) (This is the technical potential assuming a 100% adoption rate).
We also compared the energy cost per unit of production for the electrified and conventional process in each industry in 2030 and its projection up to 2050 under different future electricity, natural gas, and carbon price assumptions. Under the baseline energy prices, in many cases, the energy cost per unit of production for an electrified process is higher than that of the conventional process in 2030. However, even under the baseline energy price forecast, in 2050, for more than half of industries, the electrified process can have a lower energy cost per unit of production compared with the conventional process. A scenario with lower electricity prices in 2030 and 2050 can substantially reduce the energy cost of the electrified production processes, making them even more cost-competitive compared with the conventional process in the majority of industries and most states.
It should also be noted that our cost comparison focuses only on energy costs (with assumed prices on carbon from 2030 onward) and does not include capital costs and other cost benefits for electrified technologies (see the methodology section).
Non-energy benefits of electrification projects can result in substantial cost savings in both capital costs and operating costs for industrial companies. Co-benefits of industrial electrification should be quantified for electrification projects based on plant-level information and taken into account in the cost-benefit analysis of electrification projects, which will help to demonstrate electrification’s economic viability.
The electrification solutions examined in this analysis represent just a subset of the potential options for each process and subsector. There may be other electrified heating technologies currently available or emerging that could be applicable to these processes. Furthermore, there could be additional processes within the studied subsectors that have unexplored electrification potential. Consequently, the energy savings and CO2 reduction potentials highlighted in this study only capture a fraction of the total potential achievable through comprehensive electrification of the industrial subsectors in the examined states.
Reducing emissions not only provides worldwide advantages by alleviating climate risks and the impacts of climate change but also yields local benefits. Industrial facilities utilizing fossil fuels on-site contribute to air pollution, which adversely affects nearby communities. In the U.S., low-income communities, both urban and rural, experience greater exposure to air pollution across all states. By adopting industrial electrification, it is possible to decrease localized emissions and enhance the well-being of these communities.
This report suggests six main recommendations for the U.S. government, especially the U.S. Department of Energy, state energy offices, and electric utilities to bolster industrial electrification:
The U.S. DOE should engage with leading industries in these sectors to discuss the opportunities and challenges with electrification and to perform additional detailed feasibility studies.
Support demonstrations of emerging electrification technologies and novel applications of existing technologies, ensuring their practicality and effectiveness in real-world scenarios. The U.S. DOE and state energy offices can support this through its various demonstration programs.
Provide financial incentives for electrification, making the transition to cleaner technologies more affordable and attractive for industries. The U.S. DOE can support this through its financial incentive programs for industrial decarbonization.
Develop training programs in selection, sizing, and process engineering to apply these electrification technologies to these and other industrial sectors. The U.S. DOE can support training programs associated with these technologies through its various grant programs.
Rapidly expand renewable electricity generation capacity to meet the demand for clean electricity in the industrial sector.
Strengthen the electricity grid to ensure reliable and efficient energy transmission as the demand for electricity increases due to industrial electrification.
Engage communities by actively involving them in the decision-making process and highlighting the benefits of industrial electrification for their health and environment.
To read the full report and see complete results and analysis of this new study, download the full report from the link above.