Case study: Industrial heat & high-temp electrification — a city or utility pilot and the results so far

Industrial process heat accounts for approximately 10% of total US greenhouse gas emissions, yet it remains one of the most difficult sectors to decarbonize. Temperatures required for cement calcination (1,450 degrees C), steelmaking (1,600 degrees C), and glass production (1,700 degrees C) have historically been achievable only through fossil fuel combustion. That assumption is now being tested in practice. Three US pilot programs, the Department of Energy's Industrial Demonstrations Program (IDP), the Los Angeles Department of Water and Power's industrial electrification initiative, and Rondo Energy's deployment at Calgren Renewable Fuels in California, collectively represent over $1.2 billion in investment aimed at proving that electric heating technologies can replace fossil combustion at industrial scale. This case study examines their design choices, measured outcomes, and the lessons emerging for utilities, manufacturers, and policymakers.

Why It Matters

US industrial facilities consume roughly 26 quads (quadrillion BTUs) of energy annually, with approximately 70% of that energy delivered as process heat. Natural gas supplies about 42% of industrial heat demand, petroleum products another 28%, and coal 10%. Electrifying this heat supply represents one of the largest remaining decarbonization opportunities in the US economy, with technical abatement potential estimated at 500 to 700 million tonnes of CO2 annually if paired with clean electricity generation.

The economic dynamics are shifting rapidly. Natural gas prices for industrial users averaged $4.80 per MMBtu in 2025, up from $3.20 in 2020, driven by LNG export demand and pipeline constraints. Meanwhile, industrial electricity rates in key manufacturing states (Texas, Ohio, Indiana, Louisiana) have stabilized at $0.06 to $0.08 per kWh, and power purchase agreements for new wind and solar in the same regions now price below $0.03 per kWh. For heat applications below 400 degrees C, which represent roughly 50% of industrial heat demand, electric heat pumps already deliver energy at lower cost than gas combustion when accounting for their 3:1 to 5:1 coefficient of performance.

Federal policy has created unprecedented financial incentives. The Inflation Reduction Act's Section 48C provides 30% investment tax credits for qualifying industrial electrification equipment, with a bonus 10% available for projects in energy communities. The DOE's $6.3 billion Industrial Demonstrations Program funds first-of-a-kind clean energy deployments at industrial facilities. The 45X Advanced Manufacturing Production Credit provides per-unit production incentives for domestically manufactured clean energy components, including electric heating elements and thermal storage systems. Together, these incentives can reduce the capital cost of industrial electrification by 30 to 50%, fundamentally altering project economics.

Key Concepts

Resistance Heating passes electric current through conductive elements (typically silicon carbide, molybdenum disilicide, or metal alloys) to generate heat through ohmic resistance. Modern resistance furnaces achieve temperatures up to 1,800 degrees C with energy conversion efficiencies of 95 to 98%, compared to 40 to 65% for gas-fired furnaces where significant energy is lost in exhaust gases. Resistance heating is the most commercially mature electrification technology, widely used in metals heat treatment and ceramics firing, and increasingly deployed in cement and glass production.

Electric Arc Technology uses high-voltage arcs between electrodes to generate extreme temperatures exceeding 3,000 degrees C. Electric arc furnaces (EAFs) already produce 70% of US steel, melting scrap metal using electricity rather than coal-fired blast furnaces. The technology is now being adapted for primary steelmaking through direct reduced iron (DRI) processes powered by green hydrogen and electric arc melting, a pathway being pursued by companies including Nucor, Steel Dynamics, and the Swedish consortium H2 Green Steel.

Industrial Heat Pumps use vapor compression or absorption cycles to transfer and amplify heat from lower-temperature sources. High-temperature heat pumps reaching 150 to 200 degrees C became commercially available from manufacturers including Vattenfall, MAN Energy Solutions, and Olvondo Technology in 2023 to 2024. Research prototypes at Oak Ridge National Laboratory have demonstrated heat pump operation at 250 degrees C with COPs of 2.5 to 3.0, suggesting that electric heat pumps could cost-effectively serve roughly 30% of total US industrial heat demand within the next decade.

Thermal Energy Storage decouples electricity consumption from heat delivery, enabling industrial facilities to consume electricity during periods of low-cost renewable generation and store it as heat for continuous industrial use. Technologies include Rondo Energy's heat batteries (storing electricity as heat in refractory materials at up to 1,500 degrees C), Antora Energy's solid-state thermal batteries, and molten salt systems adapted from concentrated solar power. Thermal storage addresses the intermittency challenge that has historically been cited as the primary barrier to industrial electrification.

Industrial Heat Electrification KPIs: Benchmark Ranges

Metric	Below Average	Average	Above Average	Top Quartile
Energy Conversion Efficiency	<70%	70-85%	85-95%	>95%
CO2 Reduction vs. Gas Baseline	<40%	40-60%	60-80%	>80%
Capital Cost Premium vs. Gas Equipment	>100%	50-100%	20-50%	<20%
Operating Cost Savings (annual)	<5%	5-15%	15-25%	>25%
System Availability (uptime)	<90%	90-95%	95-98%	>98%
Payback Period (with IRA incentives)	>10 years	6-10 years	3-6 years	<3 years
Heat Storage Round-Trip Efficiency	<70%	70-80%	80-90%	>90%

What's Working

Rondo Energy at Calgren Renewable Fuels, California

Rondo Energy's deployment at Calgren Renewable Fuels in Pixley, California, represents the first commercial-scale thermal energy storage system providing industrial process heat in the US. The Rondo Heat Battery, commissioned in late 2024, converts electricity into heat stored in proprietary refractory brick assemblies at temperatures up to 1,500 degrees C, then delivers that heat as superheated air or steam to Calgren's ethanol production process.

The system replaces approximately 70% of the facility's natural gas consumption for process heating, eliminating roughly 36,000 tonnes of CO2 annually. Measured thermal round-trip efficiency reached 93% in initial operations, exceeding the design target of 90%. The system charges primarily during overnight and midday hours when California grid electricity is cheapest (often below $0.02 per kWh due to solar overgeneration), then discharges continuously to maintain stable process heat delivery. Annual energy cost savings reached approximately $2.8 million in the first full year of operation, against an installed cost of $18 million before IRA tax credits.

Key design decisions that enabled success included sizing the storage capacity for 12 hours of continuous discharge (matching Calgren's overnight production schedule), integrating directly with the existing steam distribution system to minimize retrofit costs, and negotiating a time-of-use electricity rate with Southern California Edison that captured wholesale price exposure during low-demand hours. The project received a $3 million grant from the California Energy Commission and qualifies for the 30% Section 48C investment tax credit.

Los Angeles Department of Water and Power Industrial Electrification Program

LADWP launched its Industrial Electrification Pilot in 2023, targeting 15 manufacturing facilities in the San Fernando Valley and Southeast Los Angeles with combined annual gas consumption of 4.2 million therms. The program provides technical assessments, equipment rebates of up to $150,000 per facility, and preferential industrial electricity rates for qualifying electrification projects.

By the end of 2025, eight facilities had completed electrification retrofits, collectively eliminating 28,000 tonnes of annual CO2 emissions. The most significant individual project converted a glass container manufacturer's melting furnace from natural gas to a hybrid electric-gas configuration, with electric boost providing 40% of melting energy through submerged molybdenum electrodes. The hybrid approach reduced gas consumption by 38% and improved melt quality (measured by defect rates declining from 3.2% to 1.8%) due to more precise temperature control.

LADWP's program demonstrated that utility involvement is essential for managing the electrical infrastructure requirements of industrial electrification. Five of the eight completed projects required transformer upgrades, service panel expansions, or dedicated feeders, infrastructure costs totaling $1.2 million that LADWP absorbed as part of its grid modernization capital plan rather than charging to individual customers. This approach, treating industrial electrification infrastructure as a system-level investment, proved critical for maintaining project economics at the facility level.

DOE Industrial Demonstrations Program: Cement and Steel

The DOE's $6.3 billion Industrial Demonstrations Program selected 33 projects in its first two funding rounds, including several focused on high-temperature electrification. The most significant for this analysis are Sublime Systems' electrochemical cement production facility in Holyoke, Massachusetts, and SSAB Americas' hydrogen-DRI electric arc steelmaking project in Montpelier, Iowa.

Sublime Systems' pilot produces portland cement-equivalent material at ambient temperature using an electrochemical process that eliminates the 1,450 degree C calcination step entirely. The process avoids both fuel combustion emissions and the process emissions from limestone decomposition (which account for approximately 60% of conventional cement's carbon footprint). The DOE awarded $87 million to support construction of a 100,000-tonne-per-year demonstration facility, with first production expected in 2027. Initial pilot results showed that Sublime's cement meets ASTM C150 specifications and achieves 28-day compressive strengths comparable to Type I portland cement, while reducing total CO2 emissions by approximately 90%.

SSAB's Montpelier project adapts technology proven at the HYBRIT pilot in Lulea, Sweden, where fossil-free steel was produced at demonstration scale in 2021 using hydrogen direct reduction followed by electric arc melting. The Iowa facility will produce 500,000 tonnes per year of near-zero-emission steel, using green hydrogen from a dedicated electrolyzer and 100% renewable electricity for the arc furnace. DOE funding of $500 million covers approximately 30% of the $1.7 billion project cost.

What's Not Working

Grid Infrastructure Constraints

The single largest barrier to industrial electrification at scale is not technology readiness but electrical infrastructure capacity. Industrial facilities seeking to electrify process heat typically require 5 to 20 MW of new electrical load, equivalent to adding a small town to the distribution grid. Interconnection studies for industrial electrification projects in the Midwest and Gulf Coast regions reveal average wait times of 24 to 36 months, with some projects facing 48 month queues. Transformer lead times, which stretched to 36 months during the 2023 to 2024 supply chain crunch, have improved to 18 to 24 months but remain a binding constraint.

The problem is particularly acute in industrial corridors along the Gulf Coast, where chemical plants, refineries, and petrochemical facilities represent the highest-density electrification opportunities but face grid capacity limitations. The Texas grid operator (ERCOT) reported 200 GW of interconnection requests in its queue as of mid-2025, with industrial electrification projects competing against data centers and renewable generation for limited transmission capacity.

High-Temperature Process Challenges Above 1,000 Degrees C

While electric heating technologies are commercially proven below 400 degrees C and increasingly viable up to 1,000 degrees C, processes requiring temperatures above 1,000 degrees C continue to face significant technical and economic barriers. Electrode materials for glass melting furnaces operating above 1,500 degrees C degrade faster than expected, with molybdenum disilicide electrodes requiring replacement every 18 to 24 months in continuous operation (compared to 5 to 7 year refractory lifetimes in gas-fired furnaces). Heating element costs for silicon carbide resistance furnaces operating at 1,600 degrees C add $0.8 to $1.2 million annually in maintenance costs for a typical cement kiln, partially eroding the operating cost advantages of electrification.

Rate Design and Utility Tariff Barriers

Industrial electricity rate structures in many US states impose demand charges of $10 to $25 per kW of peak demand, which can dominate the electricity bill for facilities with high but intermittent heating loads. A facility drawing 15 MW for a batch heating process operating 16 hours per day may face monthly demand charges of $150,000 to $375,000, even if its average consumption is modest. Several pilot participants reported that demand charges increased total electricity costs by 40 to 60% above volumetric energy charges, undermining the economic case for electrification.

Solutions are emerging. Some utilities offer time-differentiated demand charges or electrification-specific rate riders. California's proposed Industrial Electrification Rate, under development by the CPUC as of early 2026, would cap demand charges for qualifying electrification loads and provide access to wholesale price exposure for flexible loads paired with thermal storage.

Lessons for Other Jurisdictions

The US pilot experience offers three transferable insights. First, thermal energy storage is the key enabling technology for industrial electrification economics, transforming intermittent low-cost renewable electricity into continuous high-temperature heat. Second, utility engagement must begin before project design, not after, because grid infrastructure constraints can add years and millions of dollars to project timelines. Third, rate design reform is as important as technology development. Utilities and regulators that create electrification-friendly tariff structures will attract industrial investment; those that maintain legacy rate designs built around steady-state gas consumption will not.

Action Checklist

• Conduct a facility-level heat audit mapping all thermal processes by temperature range, duty cycle, and current fuel source
• Assess electrical service capacity and engage the local utility about interconnection requirements and timelines
• Evaluate IRA Section 48C eligibility and state-level incentive programs for industrial electrification equipment
• Model economics including demand charges, time-of-use rates, and thermal storage to optimize electricity consumption profiles
• Identify low-temperature heat processes (below 200 degrees C) suitable for immediate heat pump deployment
• Engage with DOE's Industrial Demonstrations Program for potential cost-sharing on first-of-a-kind deployments
• Develop a phased electrification roadmap starting with highest-ROI processes and building toward full facility conversion
• Monitor state-level industrial electrification rate proceedings and participate in utility tariff design processes

FAQ

Q: What temperature ranges can be electrified with commercially available technology today? A: Electric heat pumps serve processes up to 150 to 200 degrees C with COPs of 2.5 to 5.0, offering the best economics. Resistance heating and induction heating are commercially proven up to 1,800 degrees C, with energy conversion efficiencies of 95 to 98%. Electric arc technology reaches above 3,000 degrees C and is already standard in secondary steelmaking. Thermal energy storage systems can deliver stored heat at up to 1,500 degrees C. The primary gap is in processes requiring both very high temperatures and continuous operation, where electrode and heating element durability remains a challenge.

Q: How do the economics of industrial electrification compare to natural gas in the current US market? A: For processes below 400 degrees C, electrification via heat pumps is already cost-competitive or cheaper than gas in most US regions, with levelized heat costs of $8 to $15 per MMBtu compared to $12 to $20 for gas-fired systems (including boiler efficiency losses). For high-temperature processes (above 800 degrees C), electrification typically carries a 10 to 30% cost premium before incentives, which IRA tax credits and DOE grants can offset entirely. Time-of-use electricity pricing paired with thermal storage can reduce effective electricity costs to $0.02 to $0.04 per kWh, making high-temperature electrification competitive with gas at $5 or more per MMBtu.

Q: What is the realistic timeline for electrifying a typical industrial facility's heat supply? A: A phased approach spanning 5 to 10 years is realistic for most facilities. Phase 1 (years 1 to 2) addresses low-temperature processes with heat pumps and targets 20 to 30% of total heat demand. Phase 2 (years 3 to 5) deploys resistance or induction heating for medium-temperature processes, capturing another 30 to 40%. Phase 3 (years 5 to 10) tackles the highest-temperature processes as technology matures and grid infrastructure catches up. Utility interconnection timelines, not technology availability, typically determine the overall schedule.

Q: How does industrial electrification interact with onsite renewable generation and storage? A: Pairing industrial electrification with onsite or behind-the-meter solar and battery storage can dramatically improve economics by reducing grid electricity purchases during peak pricing and demand charge periods. Facilities with 10 to 30 acres of available land (common in industrial zones) can install 3 to 8 MW of solar PV, covering 15 to 30% of electrified heat demand. Thermal storage is particularly synergistic, absorbing excess solar generation during midday hours and discharging heat during evening and overnight production. Several pilot participants reported that the combination of solar PV, thermal storage, and time-of-use rates reduced effective energy costs by 35 to 50% compared to flat-rate grid electricity.

Q: What workforce training is required for facilities transitioning from gas-fired to electric heating systems? A: Existing maintenance and operations teams require 40 to 80 hours of training on electrical safety, power electronics, and control system operation. Facilities should plan for 2 to 3 specialist hires (or contractor relationships) in power systems engineering and high-voltage equipment maintenance. The DOE's Industrial Assessment Center program provides free energy assessments and workforce training for qualifying facilities. Several community colleges in manufacturing-heavy states (including Ohio, Indiana, and Texas) have launched industrial electrification certificate programs in 2025, supported by DOE workforce development grants.

Sources

• US Department of Energy. (2025). Industrial Demonstrations Program: Project Selections and Technical Summaries. Washington, DC: DOE Office of Clean Energy Demonstrations.
• Rondo Energy. (2025). Calgren Renewable Fuels Deployment: First-Year Operational Performance Report. Oakland, CA: Rondo Energy.
• Los Angeles Department of Water and Power. (2025). Industrial Electrification Pilot Program: Two-Year Progress Report. Los Angeles, CA: LADWP.
• National Renewable Energy Laboratory. (2025). Electrification Futures Study: Industrial Sector Analysis. Golden, CO: NREL.
• Lawrence Berkeley National Laboratory. (2024). Industrial Heat Decarbonization Roadmap for the United States. Berkeley, CA: LBNL.
• International Energy Agency. (2025). Industry Sector Tracking Report: Heating and Process Heat. Paris: IEA Publications.
• Oak Ridge National Laboratory. (2025). High-Temperature Industrial Heat Pump Development: Performance Results and Scale-Up Pathway. Oak Ridge, TN: ORNL.