Deep dive: Industrial heat & high-temp electrification — what's working, what's not, and what's next

Industrial heat accounts for roughly 23% of global CO2 emissions, yet it remains one of the hardest sectors to decarbonize. According to the International Energy Agency's 2025 Industrial Transformation Tracker, only 5% of industrial heat demand above 400 degrees Celsius is currently supplied by low-carbon sources, leaving more than 10 gigatons of annual emissions tied to fossil-fired furnaces, kilns, and boilers. As electrification technologies mature and policy incentives expand, the sector is entering a critical transition period where the gap between proven solutions and deployment reality is narrowing but far from closed.

Why It Matters

Industrial processes consume roughly 50 exajoules of thermal energy globally each year, with cement, steel, chemicals, and glass manufacturing accounting for the bulk of demand above 1,000 degrees Celsius. Fossil fuels, primarily natural gas and coal, supply more than 90% of this heat. The emissions associated with these processes are not marginal: steel production alone generates approximately 2.6 gigatons of CO2 annually, while cement contributes 2.4 gigatons (Global Energy Monitor, 2025).

Electrification of industrial heat has long been dismissed as impractical above medium temperatures (roughly 400 degrees Celsius). That assumption is being challenged by rapid advances in electric arc furnaces, industrial heat pumps, resistance heating elements, electromagnetic induction, plasma torches, and concentrated solar thermal systems. The economics are shifting as well. In regions with abundant renewable electricity, the levelized cost of electric heat is now competitive with natural gas for processes up to 600 degrees Celsius and approaching parity at higher temperatures when carbon pricing is factored in.

The policy environment is accelerating this shift. The EU's Carbon Border Adjustment Mechanism (CBAM), fully operational from 2026, imposes carbon costs on imported steel, cement, aluminum, fertilizers, and hydrogen. The US Inflation Reduction Act's 45X advanced manufacturing production tax credit and 48C investment tax credit provide direct subsidies for clean industrial equipment. China's national emissions trading system expansion to cover steel and cement in 2025 creates additional cost pressure on fossil-fired processes. These converging forces make industrial heat electrification not merely a technical question but a competitive imperative.

Key Concepts

Industrial heat is typically categorized by temperature range: low-temperature (<150 degrees Celsius) for space heating, drying, and pasteurization; medium-temperature (150 to 400 degrees Celsius) for chemical processing, distillation, and food production; high-temperature (400 to 1,000 degrees Celsius) for metals processing and some chemical reactions; and ultra-high-temperature (>1,000 degrees Celsius) for steelmaking, cement clinker production, and glassmaking.

Each temperature tier has different electrification pathways. Industrial heat pumps can efficiently serve low and increasingly medium temperature ranges, achieving coefficients of performance (COP) of 3 to 5, meaning they deliver 3 to 5 units of thermal energy for every unit of electrical energy consumed. Resistance heating and induction furnaces are proven technologies for medium to high temperature ranges. Electric arc furnaces (EAFs) already produce roughly 30% of global steel using scrap feedstock at temperatures exceeding 1,600 degrees Celsius. Plasma torches and microwave heating target specialized ultra-high-temperature applications.

Thermal energy storage (TES) is an enabling technology that bridges the gap between variable renewable electricity supply and the continuous heat demand of industrial processes. Molten salt, crusite (heated rock), and solid-state thermal batteries store electricity as heat at temperatures up to 1,500 degrees Celsius, enabling round-the-clock operation from intermittent power sources.

What's Working

Electric Arc Furnaces in Steelmaking

EAFs are the most commercially mature high-temperature electrification technology. Global EAF steel production reached 615 million metric tons in 2025, representing 32% of total crude steel output, up from 28% in 2020 (World Steel Association, 2025). In the US, EAF production accounts for 71% of domestic steel output, driven by decades of investment in mini-mill capacity by Nucor, Steel Dynamics (SDI), and Commercial Metals Company.

The economics are compelling: EAF steelmaking consumes 400 to 500 kWh per ton of liquid steel versus 5,500 to 6,500 MJ of coal-equivalent energy in blast furnace-basic oxygen furnace (BF-BOF) routes. When powered by renewable electricity, EAF steel achieves carbon intensities of 0.1 to 0.4 tons CO2 per ton of steel, compared to 1.8 to 2.2 tons for BF-BOF production.

The frontier is shifting to direct reduced iron (DRI) produced with green hydrogen, which is then melted in EAFs. SSAB's HYBRIT project in Sweden delivered its first fossil-free steel in 2021 and is scaling to commercial production by 2026. H2 Green Steel is constructing a 2.5 million ton per year DRI-EAF facility in Boden, Sweden, with first production expected in 2026 and offtake agreements already signed with BMW, Mercedes-Benz, and Scania (H2 Green Steel, 2025).

Industrial Heat Pumps

High-temperature industrial heat pumps (HTHPs) have progressed from laboratory curiosities to commercial products delivering steam at 150 to 200 degrees Celsius. Vattenfall deployed a 24 MW HTHP at its Berlin district heating plant in 2024, achieving a COP of 3.2 while supplying 120 degree Celsius heat from waste heat sources. In the chemical sector, BASF piloted a 10 MW HTHP at its Ludwigshafen complex to replace natural gas-fired steam generation for distillation columns, reporting a 70% reduction in energy-related CO2 emissions for the served processes (BASF, 2025).

The temperature ceiling for heat pumps is rising. Olvondo Technology in Norway and Turboden in Italy have demonstrated systems reaching 200 degrees Celsius output temperatures, while Japanese manufacturer Kobelco has commercialized units delivering 165 degree Celsius steam with COP above 3.0. SPH Sustainable Process Heat in the Netherlands reached 200 degrees Celsius output at pilot scale in 2024, with commercial deployment planned for the food and paper industries.

Thermal Energy Storage

Thermal storage is enabling industrial electrification to operate independent of grid conditions. Rondo Energy's "heat battery" uses resistance heating to charge refractory brick storage to 1,500 degrees Celsius and discharges as hot air or steam on demand. Rondo deployed its first commercial system at a Caltech Jet Propulsion Laboratory facility in 2024 and announced a 300 MWh system for Diageo's whiskey distillery in Scotland, replacing natural gas for process heat (Rondo Energy, 2025). Antora Energy takes a different approach, using solid carbon blocks heated to over 1,500 degrees Celsius and delivering heat via thermal radiation to thermophotovoltaic panels or directly as industrial process heat. Antora completed a 2 MW pilot installation with Rio Tinto in 2025.

Electrochemical thermal storage startup Fourth Power, backed by Breakthrough Energy Ventures, demonstrated a system that stores electricity as heat in liquid tin at over 2,400 degrees Celsius and converts it back to electricity via thermophotovoltaic cells at round-trip efficiencies above 40%.

What's Not Working

Ultra-High-Temperature Process Conversion in Cement and Glass

Cement kilns operate at 1,400 to 1,500 degrees Celsius, and roughly two-thirds of cement emissions come from the calcination of limestone (a chemical process releasing CO2 regardless of the heat source) rather than fuel combustion. Electrifying the heat source addresses only one-third of cement emissions, and no fully electric cement kiln has operated at commercial scale. CEMEX piloted an electric kiln module at its Alicante plant in Spain in 2024, but it achieved only 10% of the thermal duty needed for full production, with electrode degradation requiring replacement every 3 to 4 weeks at the operating temperature (CEMEX, 2025).

Glass manufacturing, requiring sustained temperatures of 1,500 to 1,700 degrees Celsius, faces similar barriers. Electric glass melting furnaces exist and are used for specialty glass production (optical fiber, pharmaceutical vials), but they rely on molybdenum or tin oxide electrodes that degrade rapidly in the highly corrosive molten glass environment at these temperatures. Scaling electric melting from 50 to 100 ton per day specialty furnaces to the 500 to 800 ton per day float glass furnaces used for construction and automotive glass remains technically undemonstrated. O-I Glass and Saint-Gobain have both initiated pilot programs, but neither has published results confirming viable electrode life at full-scale production rates.

Grid Constraints and Power Availability

Industrial heat electrification dramatically increases electricity demand. Converting a single 1 million ton per year BF-BOF steel plant to hydrogen-DRI-EAF requires approximately 3 to 4 TWh of clean electricity annually, equivalent to powering 300,000 to 400,000 European homes. The Salzgitter Flachstahl facility in Germany, transitioning to hydrogen-based steelmaking, identified grid connection capacity as the primary bottleneck: the regional transmission grid requires a $400 million upgrade to deliver the 600 MW of firm power needed for continuous operation (Salzgitter AG, 2025).

This challenge is global. India's National Green Hydrogen Mission targets 5 million tons per year of green hydrogen production by 2030, requiring an estimated 125 GW of dedicated renewable capacity, more than the country's total installed renewable base in 2023. The mismatch between industrial heat's constant demand profile and renewable generation's variable output profile means that either massive overbuilding of generation capacity or large-scale storage deployment is required.

Capital Cost and Payback Periods

Despite improving economics, the upfront capital required for industrial heat electrification remains a significant barrier, particularly for retrofit applications. Replacing a natural gas-fired industrial boiler with an equivalent electrode boiler costs 2 to 3 times more on a per-MW basis. For high-temperature processes, the differential is greater: a green hydrogen DRI shaft furnace costs approximately $500 to $700 per ton of annual steel capacity, versus $250 to $350 per ton for a new blast furnace (McKinsey, 2025). At current electricity prices and without carbon pricing, payback periods for many electrification investments exceed 10 to 15 years, beyond the investment horizon of most industrial operators.

Key Players

Established Companies

• Nucor: Largest EAF steelmaker in the US, producing 27 million tons per year with expanding renewable energy procurement
• SSAB: Swedish steelmaker leading hydrogen-based DRI-EAF production through the HYBRIT partnership with LKAB and Vattenfall
• Siemens Energy: Supplier of electric heating systems, industrial heat pumps, and green hydrogen electrolysis for industrial applications
• ABB: Provider of electric arc furnace power supply systems, induction heating equipment, and industrial automation for electrified processes
• Saint-Gobain: Glass manufacturer piloting electric melting furnaces for flat glass and container glass production

Startups

• Rondo Energy: Thermal energy storage using heated refractory bricks delivering temperatures up to 1,500 degrees Celsius
• Antora Energy: Solid-state thermal batteries with thermophotovoltaic conversion for industrial heat and power
• Electra: Electrochemical iron refining that produces iron at near-ambient temperatures without hydrogen or coking coal
• Boston Metal: Molten oxide electrolysis for steel production directly from iron ore using electricity at 1,600 degrees Celsius
• Fourth Power: Ultra-high-temperature thermal storage using liquid tin and thermophotovoltaic energy conversion

Investors

• Breakthrough Energy Ventures: Major backer of industrial decarbonization startups including Boston Metal, Antora, and Fourth Power
• DCVC: Invested in Rondo Energy and other industrial electrification companies
• Temasek: Singapore sovereign wealth fund backing H2 Green Steel and clean industrial infrastructure
• Bill Gates' Breakthrough Energy Coalition: Providing catalytic capital for pre-commercial industrial electrification demonstrations

Action Checklist

• Conduct a thermal energy audit mapping all heat demands by temperature tier, duty cycle, and current fuel source to identify electrification candidates
• Evaluate industrial heat pump feasibility for all processes below 200 degrees Celsius, including waste heat recovery integration
• Assess grid connection capacity and timeline for increased electrical load, engaging transmission operators early in planning
• Model total cost of ownership for electrification alternatives including carbon pricing scenarios, fuel price volatility, and available tax credits or subsidies
• Pilot thermal energy storage systems for processes requiring continuous heat from variable renewable supply
• Engage equipment manufacturers and technology providers for site-specific feasibility assessments on high-temperature conversions
• Establish procurement criteria for low-carbon materials (steel, cement, glass) to create demand signals for electrified production
• Monitor regulatory developments including CBAM, emissions trading schemes, and clean manufacturing incentives that affect the economic case

FAQ

Q: At what temperature threshold does industrial heat electrification become technically difficult? A: Below 400 degrees Celsius, electrification is technically straightforward using heat pumps, resistance heaters, and electrode boilers. Between 400 and 1,000 degrees Celsius, induction heating, resistance furnaces, and thermal storage systems provide viable pathways, though costs are higher than fossil alternatives without carbon pricing. Above 1,000 degrees Celsius, options narrow to electric arc furnaces (proven for steel), plasma torches (used in specialized metallurgy and waste treatment), and emerging technologies like molten oxide electrolysis. Above 1,400 degrees Celsius (cement, glass), commercially proven all-electric solutions do not yet exist at scale.

Q: How does the cost of electric industrial heat compare to natural gas? A: At average 2025 industrial electricity rates of $50 to $80 per MWh in Europe and $40 to $60 per MWh in the US, direct electric heating costs $14 to $23 per GJ of delivered heat, compared to $8 to $15 per GJ for natural gas. However, heat pumps with COP of 3 to 5 deliver heat at $3 to $8 per GJ of thermal output, making them cheaper than gas for applicable temperature ranges. When EU ETS carbon costs of 70 to 90 euros per ton CO2 are included, electric heating becomes competitive up to approximately 600 degrees Celsius, and the crossover point is declining annually as carbon prices rise and electricity costs fall.

Q: What role does green hydrogen play in industrial heat decarbonization? A: Green hydrogen serves as a critical pathway for processes where direct electrification is impractical, particularly in steelmaking (as a reducing agent replacing coking coal in DRI processes), ammonia and fertilizer production (as both feedstock and heat source), and high-temperature industrial burners. Current green hydrogen costs of $4 to $6 per kilogram make it 2 to 3 times more expensive than grey hydrogen, but costs are projected to fall below $2 per kilogram by 2030 in favorable locations with cheap renewable power. Hydrogen combustion delivers temperatures above 2,000 degrees Celsius, making it suitable for the most demanding industrial heat applications.

Q: What is thermal energy storage and why is it important for industrial electrification? A: Thermal energy storage converts electricity into heat during periods of low electricity prices or high renewable generation and delivers that heat on demand for industrial processes. This addresses the fundamental mismatch between variable renewable generation and the continuous heat demand of industrial operations. Current TES technologies store heat at 200 to 2,400 degrees Celsius with round-trip thermal efficiencies of 80 to 95% at costs of $15 to $50 per MWh of stored thermal energy, making them significantly cheaper than battery storage for applications where the end use is heat rather than electricity.

Sources

• International Energy Agency. (2025). Industrial Transformation Tracker: Progress on Industrial Heat Decarbonization. Paris: IEA.
• Global Energy Monitor. (2025). Global Steel Plant Tracker and Cement Plant Tracker. San Francisco: GEM.
• World Steel Association. (2025). World Steel in Figures 2025. Brussels: worldsteel.
• H2 Green Steel. (2025). Boden Plant Construction Update and Commercial Agreements. Stockholm: H2 Green Steel AB.
• BASF. (2025). Ludwigshafen Sustainability Report: Industrial Heat Pump Deployment Results. Ludwigshafen: BASF SE.
• Rondo Energy. (2025). Commercial Deployment Update: Thermal Energy Storage for Industrial Decarbonization. Oakland, CA: Rondo Energy Inc.
• CEMEX. (2025). Electric Kiln Pilot Program: Technical Findings and Next Steps. Monterrey: CEMEX S.A.B. de C.V.
• Salzgitter AG. (2025). SALCOS Program Update: Grid Infrastructure Requirements for Green Steel Transition. Salzgitter: Salzgitter AG.
• McKinsey & Company. (2025). The Economics of Industrial Heat Decarbonization: Cost Curves and Investment Thresholds. Dusseldorf: McKinsey.