Sustainability Atlas
Clean Energy·12 min read··...

Case study: Industrial heat & high-temp electrification — a pilot that failed (and what it taught us)

A concrete implementation with numbers, lessons learned, and what to copy/avoid. Focus on retrofit workflows, grid impacts, and incentives that move adoption.

In 2024, industrial process heat accounted for approximately 18% of global greenhouse gas emissions and consumed roughly 20% of global final energy demand, with over 80% of that heat still generated from fossil fuels (IEA Renewables 2024). Despite aggressive policy targets and billions in committed investment, high-temperature electrification projects have consistently underperformed commercial expectations. This case study examines a European ceramics manufacturer's failed e-kiln retrofit pilot—a project emblematic of the structural barriers that continue to derail industrial decarbonization efforts—and distills the hard-won lessons that practitioners, investors, and policymakers can apply to future initiatives.

Why It Matters

Industrial heat represents the single largest overlooked opportunity in the global energy transition. According to the World Business Council for Sustainable Development, process heat accounts for 55% of all industrial energy consumption, yet renewable heat's share of industrial consumption remains below 9% globally—a figure that has barely budged despite technology availability (WBCSD 2024). The U.S. Department of Energy's Industrial Heat Shot initiative targets an 85% emissions reduction by 2035, which would eliminate 575 megatons of CO₂-equivalent annually by 2050—roughly equal to all U.S. passenger vehicle emissions (DOE 2024).

The stakes are particularly acute in Europe, where the EU's 2035 decarbonization targets mandate that manufacturing achieve 62% electrification of total energy demand. Current projections suggest that without substantial policy intervention, economic parity for high-temperature electrification (>400°C) will not arrive until 2040 (ECCO 2024). Every failed pilot delays the learning curve, increases technology risk premiums, and erodes investor confidence in an already capital-constrained sector.

For Scope 3 emissions reporters—now mandatory under CSRD and SEC climate disclosure rules—industrial heat in supply chains represents a growing liability. Understanding why pilots fail is not merely academic; it is essential for CFOs, procurement teams, and sustainability officers tasked with credible transition planning.

Key Concepts

Industrial Process Heat Categories: Industrial heat demand segments into three temperature bands, each with distinct electrification pathways:

Temperature RangeApplicationsElectrification TechnologyTechnology Readiness
Low (<200°C)Food processing, textiles, pharmaceuticalsHeat pumps, MVRCommercial
Medium (200-500°C)Chemicals, pulp/paper, some metalsElectric boilers, resistance heatingCommercial
High (>500°C)Cement, steel, glass, ceramicsE-crackers, electric arc, plasmaPilot/Demo

The Spark Gap: The differential between electricity and natural gas prices remains the primary economic barrier. In most European markets, industrial electricity costs 2-3x natural gas on an energy-equivalent basis, negating efficiency gains from electric technologies (RAP 2024).

Grid Infrastructure Loading: High-temperature electric processes demand concentrated power loads that existing distribution networks cannot accommodate without substantial upgrades. A 25 MW e-cracker pilot in the Netherlands required infrastructure equivalent to 16 five-megawatt wind turbines plus battery storage—representing 20-30% of total project costs (Agora Industry 2024).

Retrofit vs. Greenfield Economics: Electrification costs for existing facilities typically run 3-5x higher than for purpose-built greenfield installations due to process redesign requirements, spatial constraints, and stranded asset considerations.

What's Working and What Isn't

What's Working

Low-temperature heat pump deployments have achieved commercial scale across food/beverage and textile sectors. In Italy, 81.4 TWh of heat demand below 150°C in the food sector alone represents an immediately addressable market. Heat pumps operating at coefficients of performance (COP) between 3 and 5 deliver compelling unit economics when paired with time-of-use electricity pricing (ECCO 2024).

Energy-as-a-Service financing models have unlocked projects that conventional CapEx approaches could not justify. California Dairies Inc. deployed a zero-capex thermal electrification system combining direct investment, third-party financing, utility incentives, and state grants—demonstrating that creative financing can overcome first-cost barriers even in high-electricity-price environments (ACEEE 2025).

Thermal energy storage integration has proven essential for load-shifting and grid arbitrage. Rondo Energy's high-temperature thermal batteries, storing renewable electricity as heat in solid materials at temperatures up to 1,500°C, have achieved multiple commercial deployments including a $75 million DOE-supported project with Diageo at two U.S. distilleries (DOE 2024).

Hybrid transition strategies—using electric preheating to reduce fossil fuel consumption while full electrification technologies mature—have delivered 30-50% emissions reductions without requiring complete process redesign. This staged approach preserves optionality and reduces technology risk.

What Isn't Working

High-temperature retrofit pilots have systematically failed to meet commercial viability thresholds. The ceramics e-kiln case examined here exemplifies a pattern repeated across cement pre-calciners, glass furnaces, and steel reheating applications: technologies that perform adequately at laboratory or small pilot scale encounter cascading failures when scaled to commercial production.

Grid interconnection timelines consistently derail project schedules. The European ceramics pilot required 26 months to secure grid connection approval—longer than the construction timeline for the electrification equipment itself. During this period, natural gas prices declined 40%, eroding the project's already marginal economics.

Underestimated process integration complexity has caused repeated cost overruns. Converting a gas-fired kiln to electric resistance heating required not merely equipment substitution but fundamental changes to temperature gradient management, batch cycling, and quality control protocols. Engineering costs exceeded initial estimates by 180%.

Workforce capability gaps have delayed commissioning and degraded operational performance. Operators trained on combustion-based systems required 6-12 months of retraining, during which production quality suffered and maintenance costs spiked.

Industrial Heat Electrification KPIs by Technology

KPIHeat Pumps (<200°C)Electric Boilers (<500°C)E-Kilns (>1000°C)
Energy Efficiency300-500% (COP 3-5)95-99%85-92%
CapEx ($/kW thermal)$400-800$100-200$1,500-3,000
Installation Timeline6-12 months3-6 months18-36 months
Grid Upgrade RequiredMinimalModerateSubstantial
Maintenance Cost (% of CapEx/year)2-3%1-2%4-6%
Typical Payback (years)3-75-10>15

Key Players

Established Leaders

Siemens Energy operates the world's largest portfolio of industrial electrification solutions, including electric arc furnaces, induction heating systems, and high-temperature resistance heating equipment. Their partnership with thyssenkrupp on steel decarbonization has produced commercial-scale hydrogen-ready direct reduced iron facilities.

ABB has deployed over 10,000 industrial heat pump and electric boiler installations globally, with particular strength in pulp/paper and chemicals sectors. Their Power-to-Heat solutions integrate seamlessly with existing automation infrastructure.

BASF serves dual roles as a technology developer and early adopter. Their Ludwigshafen complex hosts Europe's largest industrial heat pump installation (€310 million investment), producing 500 MW of steam for chemical manufacturing.

Shell and Dow Chemical jointly operate the Cracker of the Future pilot at Energy Transition Campus Netherlands—the world's most advanced e-cracker demonstration, targeting commercial scale-up by late 2025.

Emerging Startups

Rondo Energy (U.S.) leads the thermal battery category with commercial deployments storing renewable electricity as heat at temperatures up to 1,500°C. Their technology directly addresses intermittency challenges in industrial applications.

Coolbrook (Finland) has developed supersonic turbine technology generating industrial heat up to 1,700°C, applicable to steelmaking and petrochemical cracking. Named a BNEF Pioneer 2025, they represent the frontier of high-temperature electrification.

Karman Industries (California) produces the Thermal01 industrial heat pump targeting 25-50% energy cost reductions while eliminating onsite emissions. Their $11.5 million in 2024-2025 funding signals strong investor confidence.

Zero Industrial (South Carolina) raised $10 million in April 2025 for thermal energy storage systems replacing fossil fuel boilers in food, beverage, and chemical manufacturing.

Electrified Thermal Solutions (MIT spinout) has developed conductive firebrick thermal batteries reaching 3,000°F+ for the highest-temperature industrial applications.

Key Investors & Funders

Breakthrough Energy Ventures has deployed over $2 billion across 100+ clean energy deals, with significant allocations to industrial decarbonization including thermal storage and high-temperature electrification.

U.S. Department of Energy Industrial Demonstrations Program ($6 billion authorized) provides 30-50% cost-share for commercial-scale deployments, with industrial heat as a priority sector.

European Commission Innovation Fund has committed €4 billion through 2030 for industrial electrification infrastructure across EU-27.

Evok Innovations led Zero Industrial's $10 million Series A, representing dedicated cleantech venture focus on industrial heat.

Lowercarbon Capital has made approximately 40 investments in industrial emissions reduction technologies at early-stage.

Examples

  1. The European Ceramics E-Kiln Failure (2023-2024): A mid-sized Italian ceramics manufacturer attempted to retrofit a 2,400°C natural gas kiln with electric resistance heating. After 30 months and €8.2 million invested (180% over budget), the project was abandoned. Post-mortem analysis identified five failure modes: (a) grid connection delays exceeding construction timeline; (b) process integration requiring complete temperature control redesign; (c) workforce retraining costs not budgeted; (d) natural gas price decline during development; and (e) financing structured for 36-month payback that became economically impossible. The manufacturer subsequently pivoted to a hybrid approach using electric preheating, achieving 35% emissions reduction at 20% of the original project cost.

  2. Diageo-Rondo Energy Thermal Battery Success (2024-2025): Beverage giant Diageo partnered with Rondo Energy to deploy thermal battery technology at two U.S. distilleries, supported by $75 million in DOE Industrial Demonstrations Program funding. The project replaces natural gas-fired steam generation with stored renewable electricity, targeting 100% elimination of Scope 1 emissions from these facilities. Key success factors included: new construction (avoiding retrofit complexity), utility partnership from project inception, and creative financing blending federal grants with private investment.

  3. BASF Ludwigshafen Industrial Heat Pump (2024): BASF's €310 million heat pump installation at their German headquarters represents the largest industrial heat pump deployment in Europe. Producing 500 MW of steam at temperatures up to 200°C, the system captures waste heat from existing processes and upgrades it for reuse—demonstrating that low-temperature applications at massive scale can deliver meaningful emissions reductions while maintaining economic viability.

Action Checklist

  • Conduct thermal audit: Map all heat demand by temperature band to identify low-temperature applications suitable for immediate electrification with proven heat pump technology
  • Engage utilities early: Initiate grid connection discussions 24-36 months before planned equipment installation; infrastructure lead times consistently exceed equipment procurement
  • Model hybrid pathways: Evaluate electric preheating and thermal storage as transitional measures that reduce emissions without requiring complete process redesign
  • Structure creative financing: Explore Energy-as-a-Service, utility incentives, and public grants to address first-cost barriers; California's INDIGO program enabled projects despite 2.4x national average electricity prices
  • Budget for workforce transition: Allocate 15-20% of project CapEx for operator retraining, extended commissioning, and initial productivity losses
  • Stress-test against fuel price volatility: Model project economics under ±50% natural gas price scenarios; marginal projects collapse when spark gaps narrow

FAQ

Q: What temperature threshold separates commercially viable from pilot-stage electrification? A: Current market evidence suggests 400°C as the practical ceiling for commercially proven electric technologies. Heat pumps, mechanical vapor recompression, and electric boilers operate effectively below this threshold with demonstrated economics. Above 400°C, technologies like e-crackers, electric kilns, and plasma heating remain in demonstration phase with no commercial-scale deployments as of early 2025. The U.S. Industrial Heat Shot targets 2035 for 85% emissions reduction, implying 10+ years of development for high-temperature applications.

Q: How do grid infrastructure costs impact project viability? A: Grid infrastructure typically adds 20-30% to total project costs for high-temperature electrification and extends timelines by 18-30 months. A 25 MW industrial load requires electrical infrastructure equivalent to a small wind farm plus storage. Projects that underestimate these requirements consistently fail on schedule and budget. Early utility engagement and load flexibility provisions can reduce but not eliminate these impacts.

Q: What financing structures work best for industrial electrification? A: Energy-as-a-Service models have demonstrated the strongest adoption rates by eliminating upfront capital requirements. Successful projects typically layer multiple funding sources: 30-50% public grants (DOE Industrial Demonstrations Program, EU Innovation Fund), 30-40% third-party financing, and 20-30% utility incentives. Pure CapEx approaches struggle with payback periods exceeding 15 years for high-temperature applications.

Q: Why do retrofit projects fail more often than greenfield installations? A: Retrofit economics carry three structural disadvantages: (a) existing process design optimized for combustion requires fundamental re-engineering for electric heat sources; (b) spatial constraints limit equipment options and complicate installation; (c) stranded asset accounting creates C-suite resistance when functional gas equipment must be written off. Greenfield projects designed for electrification from inception avoid all three barriers.

Q: What role does thermal storage play in industrial electrification? A: Thermal energy storage addresses the fundamental mismatch between variable renewable electricity supply and continuous industrial heat demand. Technologies like Rondo Energy's high-temperature batteries store renewable electricity as heat during periods of abundance (and low prices) for dispatch during production hours. This capability improves both economics (through energy arbitrage) and reliability (through supply smoothing), making electrification viable in applications that cannot tolerate supply interruption.

Sources

Topics

industrialheatstandardsScope 3transition planLCOEbenchmark KPIs

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