Deep dive: Industrial heat & high-temp electrification — the hidden trade-offs and how to manage them

Industrial heat accounts for approximately 17% of the United Kingdom's total carbon emissions, with processes operating above 500°C responsible for nearly two-thirds of that figure. As the UK pursues its legally binding net-zero target for 2050, electrifying these high-temperature industrial processes represents one of the most technically demanding yet strategically essential frontiers in decarbonisation. This deep dive examines the retrofit workflows, grid impacts, and policy incentives that determine whether electrification projects succeed or stall—and surfaces the hidden trade-offs that practitioners must navigate.

Why It Matters

The urgency of industrial heat decarbonisation has intensified dramatically. According to the UK Climate Change Committee's 2025 Progress Report, industrial emissions fell by only 2.3% between 2023 and 2024, substantially below the 6-8% annual reduction trajectory required to meet the Sixth Carbon Budget. High-temperature processes—including steel production, glass manufacturing, cement kilns, and ceramics firing—remain particularly resistant to decarbonisation because they require temperatures exceeding 1,000°C that conventional electric heating technologies struggle to deliver economically.

The stakes extend beyond environmental compliance. The UK's industrial sector employs over 2.6 million workers and contributes £180 billion annually to GDP. Without credible pathways to electrification, energy-intensive industries face existential threats from carbon border adjustment mechanisms, with the EU's CBAM now applying to steel, aluminium, cement, fertilisers, and electricity imports. The UK's own carbon border adjustment mechanism, announced in December 2024 with implementation scheduled for 2027, creates additional pressure for domestic manufacturers to demonstrate verifiable emissions reductions.

Grid capacity constraints compound these challenges. National Grid ESO's 2024 Future Energy Scenarios project that industrial electrification could add 15-25 GW of demand by 2040, equivalent to approximately 40% of current peak demand. Managing this transition without destabilising grid operations requires sophisticated coordination between industrial retrofit timelines and transmission infrastructure investments.

The financial case for action is simultaneously compelling and complex. While electricity prices in the UK remain 3-4 times higher than natural gas on an energy-equivalent basis, the total cost of ownership equation shifts when carbon pricing, equipment efficiency, and maintenance costs are factored comprehensively. The Industrial Energy Transformation Fund (IETF) has allocated £500 million specifically for energy efficiency and deep decarbonisation projects, with £315 million disbursed across Phases 1 and 2 by January 2025.

Key Concepts

Industrial Heat Categories and Temperature Thresholds

Industrial heat demand segments into three temperature bands with distinct electrification pathways. Low-temperature heat (<150°C) encompasses space heating, drying, and pasteurisation—processes where heat pumps achieve coefficients of performance between 3.0 and 5.0, making electrification economically favourable today. Medium-temperature heat (150-500°C) includes distillation, evaporation, and some chemical reactions, where high-temperature heat pumps and resistance heating compete with hybrid solutions. High-temperature heat (>500°C) covers metal smelting, glass melting, cement production, and ceramic firing—domains where electric arc furnaces, induction heating, plasma torches, and emerging technologies like microwave-assisted heating represent the primary electrification options.

Capacity Factor and Utilisation Economics

Capacity factor—the ratio of actual energy output to maximum possible output over a given period—fundamentally shapes electrification economics. Industrial processes with high capacity factors (>85%) justify substantial capital investment in electrification equipment because fixed costs distribute across maximum production hours. Conversely, batch processes with lower utilisation rates face challenging economics, as expensive electric heating systems remain idle during significant portions of each operating cycle. Understanding this dynamic is essential for prioritising electrification candidates within industrial portfolios.

Traceability and Emissions Verification

Traceability encompasses the documentation systems that track energy inputs, process conditions, and resulting emissions throughout production cycles. As supply chain emissions scrutiny intensifies, manufacturers require granular data demonstrating that electricity consumed derives from renewable sources and that process emissions meet specified thresholds. The Science Based Targets initiative (SBTi) and emerging frameworks like the Transition Plan Taskforce require increasingly rigorous traceability evidence, transforming what was previously an operational consideration into a commercial imperative.

Benchmark KPIs for Electrification Projects

Effective electrification programmes track specific key performance indicators beyond simple energy substitution. Thermal efficiency—the proportion of input energy converted to useful process heat—typically improves from 60-80% for combustion systems to 90-98% for electric alternatives. Specific energy consumption, measured in kWh per tonne of product, provides cross-facility comparison baselines. Grid connection utilisation, carbon intensity per production unit, and total cost of heat (£/MWh delivered) complete the essential KPI framework for retrofit decision-making.

Critical Minerals and Supply Chain Dependencies

High-temperature electrification technologies depend on materials whose supply chains concentrate in specific geographies. Electric arc furnaces require graphite electrodes predominantly manufactured using Chinese natural graphite. Induction heating systems utilise copper windings and silicon carbide components with constrained global production capacity. Plasma heating technologies incorporate rare earth permanent magnets, while advanced refractory linings for electric furnaces depend on magnesia and chromite from limited sources. These dependencies create supply security considerations that extend beyond immediate project economics.

What's Working and What Isn't

What's Working

Electric Arc Furnace Adoption in Steel Recycling

The UK steel sector has achieved meaningful progress in electric arc furnace (EAF) deployment for secondary steel production. British Steel's Scunthorpe facility now operates two EAFs processing over 1.2 million tonnes of scrap steel annually, with electricity consumption approximately 400-450 kWh per tonne—less than 20% of the energy required for primary blast furnace production. Liberty Steel's Rotherham facility has similarly transitioned, demonstrating that EAF technology delivers commercial viability when scrap supply chains are secured and grid connections adequately sized. The critical success factor involves negotiating power purchase agreements that provide price stability while ensuring renewable electricity credentials satisfy customer sustainability requirements.

Hybrid Heating Systems for Phased Transitions

Several UK manufacturers have successfully deployed hybrid heating systems that combine electric and gas-fired elements, enabling gradual decarbonisation while managing capital expenditure and operational risk. Glass manufacturer Encirc, operating Europe's largest glass container plant in Elton, Cheshire, has implemented hybrid furnaces that blend electric boost heating with gas combustion, reducing natural gas consumption by approximately 20% while maintaining production quality. This approach proves particularly effective where complete electrification would require grid reinforcement investments with multi-year lead times, allowing immediate emissions reductions while infrastructure catches up.

Demand Response Integration and Revenue Stacking

Industrial facilities with flexible electrified processes have discovered significant value in grid balancing services. Aggregate Industries, operating multiple UK quarrying and cement operations, has enrolled electrified grinding and processing equipment in National Grid's frequency response programmes, generating revenues exceeding £300,000 annually per participating site. This revenue stacking transforms what might appear marginal electrification economics into compelling business cases, particularly when combined with Contracts for Difference (CfD) arrangements that hedge wholesale electricity price volatility.

What Isn't Working

Grid Connection Timelines Misaligned with Investment Cycles

The most pervasive barrier to industrial electrification involves grid connection lead times that extend far beyond typical capital investment planning horizons. National Grid's 2024 Connection Queue data reveals average wait times of 7-10 years for new industrial connections exceeding 50 MW, with some projects quoted timelines approaching 15 years. This misalignment creates paralysis: manufacturers cannot commit to electrification investments without firm grid connection dates, while network operators struggle to prioritise speculative industrial loads over contracted renewable generation. The June 2024 queue reforms accelerated some contracted projects but have not yet materially reduced timelines for new applicants.

Electricity Price Structures That Penalise Electrification

Despite policy rhetoric supporting electrification, UK electricity pricing structures impose substantial cost penalties on industrial consumers switching from gas. Network charges, Contracts for Difference levies, capacity market payments, and carbon price support mechanisms collectively add approximately £50-70/MWh to wholesale electricity costs for industrial users—burdens that gas consumers largely avoid. The Review of Electricity Market Arrangements (REMA), still pending implementation in early 2026, has yet to deliver the fundamental rebalancing that would neutralise this competitive disadvantage.

Workforce Skills Gaps Constraining Retrofit Capacity

Industrial electrification retrofits require specialised engineering capabilities spanning high-voltage electrical systems, process control integration, and refractory design for electric heating—skills that UK educational institutions and apprenticeship programmes have not adequately developed. The Institution of Engineering and Technology's 2024 Skills Survey identified power electronics and industrial electrification as the fastest-growing capability gaps, with vacancy rates for relevant roles exceeding 25% across surveyed companies. This constraint throttles project delivery even when financing and grid connections align.

Key Players

Established Leaders

Siemens Energy operates major UK manufacturing facilities and has deployed industrial electrification solutions across food processing, chemicals, and metals sectors. Their portfolio spans electric heating systems, process optimisation software, and grid integration technologies.

ABB provides electrification, automation, and digitisation solutions for industrial heat applications, with particular strength in electric arc furnace technology and induction heating systems for metals processing.

AMETEK Land (headquartered in Dronfield, UK) specialises in thermal imaging and process monitoring instrumentation essential for controlling electrified high-temperature processes, enabling the precision required to maintain product quality during technology transitions.

Spirax-Sarco Engineering (Cheltenham) supplies electric thermal solutions including electrode boilers and electric process heaters, serving pharmaceutical, food, and chemicals sectors with steam and thermal fluid systems.

Johnson Matthey (London) develops advanced materials including catalysts and speciality chemicals that enable more efficient electric heating processes, while also transitioning their own manufacturing operations toward electrification.

Emerging Startups

Equilibrion (Bristol) develops novel thermal storage systems that decouple electricity consumption from heat delivery, enabling industrial processes to maximise renewable electricity usage during low-price periods while maintaining continuous heat supply.

Caldera Heat Batteries (Birmingham) manufactures modular thermal energy storage units specifically designed for industrial retrofit applications, using proprietary phase-change materials to store electricity as heat at temperatures up to 500°C.

Rondo Energy (UK operations via partnership) provides Heat Battery systems capable of storing renewable electricity as heat at temperatures exceeding 1,500°C, targeting cement, steel, and chemicals sectors.

Heliogen (UK expansion announced 2024) applies concentrated solar and AI-driven heliostat technology to industrial heat applications, with pilot projects exploring integration with UK manufacturing sites.

Microwave Energy Transmission (Cambridge) develops microwave-based heating systems for ceramics and materials processing, achieving more uniform heating patterns and potentially higher efficiency than conventional electric resistance approaches.

Key Investors & Funders

UK Infrastructure Bank provides long-term debt financing for industrial decarbonisation projects, with £1.5 billion specifically allocated to industrial energy transformation between 2023-2026.

Breakthrough Energy Ventures (Bill Gates' climate technology fund) has invested substantially in industrial heat startups including Rondo Energy and Boston Metal, with increasing UK portfolio allocation.

Scottish National Investment Bank funds industrial decarbonisation projects across Scotland's concentrated manufacturing base, with particular focus on whisky distilleries and food processing facilities.

Innovate UK administers the Industrial Energy Transformation Fund and related grant programmes, co-funding feasibility studies and deployment projects for electrification technologies.

Legal & General Capital has committed £2 billion to UK industrial decarbonisation infrastructure, including investments in grid reinforcement and industrial energy efficiency projects.

Examples

Pilkington UK Glass Manufacturing Retrofit (St Helens)

NSG Group's Pilkington UK glass manufacturing facility in St Helens, Merseyside, initiated a comprehensive electrification programme in 2023 with £17 million IETF funding support. The project targets their float glass production line, where natural gas consumption previously exceeded 800 GWh annually. Phase 1, completed in Q3 2024, installed electric boost heating systems that substitute approximately 15% of gas input with electricity, reducing annual carbon emissions by 22,000 tonnes CO2e. The retrofit required 8 MW of additional grid capacity, secured through a negotiated connection agreement with Electricity North West. Thermal efficiency improved from 28% to 34% as electric heating eliminated flue gas losses present in combustion systems. Phase 2, scheduled for 2026-2027, will expand electric heating share to 40%, contingent on grid reinforcement completing at a nearby primary substation.

CF Fertilisers Ammonia Plant Partial Electrification (Billingham)

CF Industries' Billingham facility—the UK's largest ammonia production site—commenced an electrification pilot in 2024 addressing auxiliary heating and steam generation. While primary ammonia synthesis via the Haber-Bosch process remains gas-based pending green hydrogen availability, the project installed 12 MW electrode boilers replacing gas-fired steam generators for process heating. Capital investment totalled £8.5 million, with projected annual savings of £1.2 million from avoided carbon pricing under the UK ETS. The installation demonstrated that industrial-scale electrode boilers could achieve 99.5% availability across the first operating year, exceeding initial projections. Grid connection was facilitated through an existing high-voltage supply sized for future expansion, illustrating how legacy infrastructure can enable accelerated electrification.

Ibstock Brick Kiln Electrification Trial (Cattybrook)

Ibstock plc, the UK's largest brick manufacturer, initiated an electrification trial at their Cattybrook facility near Bristol in partnership with Innovate UK and Swansea University. The project tests hybrid kiln configurations combining radiant electric heating elements with residual gas firing, targeting the 1,000-1,100°C temperatures required for clay vitrification. Initial results from 2024 trials demonstrated that electric heating could provide 35% of kiln energy input while maintaining product quality specifications. Energy traceability systems verified that 92% of electricity consumed derived from renewable sources via supplier certification, satisfying customer sustainability requirements from major housebuilders. The critical trade-off involved kiln throughput reduction of approximately 8% during electric heating periods, which the company is addressing through process control optimisation in ongoing trials.

Action Checklist

• Commission a thermal demand assessment mapping all heat loads by temperature, duty cycle, and existing fuel sources to identify priority electrification candidates
• Engage with your regional Distribution Network Operator to understand available grid capacity, connection timelines, and reinforcement requirements before committing to electrification projects
• Evaluate hybrid heating configurations that enable immediate emissions reductions while longer-term grid infrastructure develops
• Investigate thermal storage technologies that decouple electricity purchasing from heat delivery, enabling better utilisation of renewable generation periods
• Apply to the Industrial Energy Transformation Fund for feasibility studies and deployment support—Phase 3 applications opened January 2025 with £185 million available
• Develop workforce training programmes addressing high-voltage electrical systems, electric heating controls, and refractory materials for electrified furnaces
• Negotiate power purchase agreements with renewable generators that provide price stability and verifiable carbon credentials for electrified processes
• Register for demand response programmes through National Grid ESO or aggregator partners, creating additional revenue streams from flexible electric loads
• Establish baseline energy and carbon KPIs before retrofit commencement to enable credible performance verification
• Engage supply chain partners regarding critical mineral dependencies for selected electrification technologies to assess procurement risks

FAQ

Q: What temperature threshold makes electrification technically feasible for industrial heat?

A: Electrification is technically feasible across the full temperature spectrum, though economic and practical considerations vary substantially. Below 150°C, industrial heat pumps deliver exceptional efficiency with coefficients of performance of 3.0-5.0, making electrification immediately economical in most applications. Between 150°C and 500°C, high-temperature heat pumps, resistance heating, and induction systems provide proven solutions, though costs depend heavily on duty cycles and capacity factors. Above 500°C, technologies including electric arc furnaces (1,800°C+), induction heating (1,600°C), plasma systems (5,000°C+), and microwave-assisted heating address specific applications. The limiting factor is rarely temperature capability; rather, grid capacity, capital costs, and electricity pricing determine feasibility.

Q: How do UK electricity prices compare with gas for industrial heating, and will this change?

A: Currently, industrial electricity prices in the UK range from £100-150/MWh compared with £25-40/MWh for natural gas (delivered costs including network charges and levies). On a pure fuel-cost basis, this 3-4x differential appears prohibitive. However, several factors alter this calculation: electric heating systems typically achieve 90-98% efficiency versus 60-80% for combustion, partially offsetting the price gap; UK ETS carbon prices of £40-50/tonne add approximately £8-10/MWh equivalent to gas costs; and maintenance costs for electric systems run 30-50% lower than combustion alternatives. The Review of Electricity Market Arrangements (REMA) promises to rebalance policy costs away from electricity, though implementation timelines remain uncertain. Organisations should model scenarios assuming current pricing while monitoring policy developments.

Q: What grid connection timelines should industrial projects realistically expect?

A: Current grid connection timelines for industrial loads exceeding 50 MW range from 7-15 years depending on location and required reinforcement works. The June 2024 connection queue reforms prioritised projects with confirmed planning permission and financial commitments, but new applicants face extended waits. Pragmatic approaches include: securing connections substantially larger than immediate requirements during earlier planning phases; utilising existing connection capacity that may be underutilised; negotiating flexible connection agreements that allow immediate operation at reduced capacity; and exploring behind-the-meter generation or storage that reduces grid requirements. Engaging proactively with Distribution Network Operators during early project development stages is essential.

Q: How can manufacturers verify and communicate the carbon credentials of electrified processes?

A: Robust carbon verification requires several complementary approaches. Power purchase agreements with specific renewable generators provide contractual evidence of electricity sourcing. Renewable Energy Guarantee of Origin (REGO) certificates offer tradeable documentation of renewable electricity, though quality varies—temporal matching (hourly rather than annual) increasingly represents best practice. The GHG Protocol Scope 2 Guidance distinguishes between location-based and market-based accounting methods, with sophisticated customers increasingly requiring market-based evidence. Real-time metering connected to supplier generation data enables granular traceability. Emerging standards from SBTi and the Transition Plan Taskforce will likely mandate increasingly rigorous verification requirements, making investment in measurement and documentation systems prudent preparation.

Q: What role does thermal energy storage play in industrial electrification strategies?

A: Thermal energy storage transforms industrial electrification economics by enabling electricity purchasing during low-price periods (typically when renewable generation peaks) while delivering continuous heat to processes. Technologies span sensible heat storage in materials like crusite or molten salt, phase-change materials that absorb and release energy during state transitions, and thermochemical storage using reversible chemical reactions. For UK applications, thermal storage addresses the fundamental challenge of electricity price volatility—enabling consumption when wholesale prices drop below £30/MWh while buffering processes from peaks exceeding £150/MWh. Storage also provides grid flexibility, qualifying facilities for balancing service revenues. System sizing typically targets 4-8 hours of storage for overnight charging, though optimal duration depends on specific process schedules and tariff structures.

Sources

• UK Climate Change Committee, "Progress in Reducing Emissions: 2025 Report to Parliament" (June 2025)
• National Grid ESO, "Future Energy Scenarios 2024" (July 2024)
• Department for Energy Security and Net Zero, "Industrial Energy Transformation Fund: Phase 2 Outcomes Report" (November 2024)
• International Energy Agency, "Energy Technology Perspectives 2024: Industrial Heat Electrification Roadmap" (October 2024)
• Element Energy and Imperial College London, "Deep Decarbonisation Pathways for UK Industry" (March 2024)
• UK Steel, "Net Zero Steel: The Path to Full Decarbonisation" (September 2024)
• Institution of Engineering and Technology, "Skills for Net Zero: Industrial Electrification Capabilities Assessment" (December 2024)