Sustainability Atlas
Clean Energy·13 min read··...

Explainer: Industrial heat & high-temp electrification — a practical primer for teams that need to ship

A practical primer: key concepts, the decision checklist, and the core economics. Focus on retrofit workflows, grid impacts, and incentives that move adoption.

Industrial heat accounts for more than 20% of total global energy consumption, yet only 4–5% of industrial process heat is currently electrified. According to the IEA's 2025 Renewables report, this share is projected to triple to 12% by 2030—a seismic shift representing the electrification of an additional 16 exajoules of thermal demand. In 2024, industrial electricity use grew approximately 4% globally, accounting for nearly 40% of total electricity demand growth. Meanwhile, the global industrial electrification market reached $43.95 billion in 2024 and is forecast to more than double to $95.79 billion by 2034 at an 8.1% CAGR. For sustainability teams, procurement leads, and operations directors charged with decarbonizing hard-to-abate sectors, understanding industrial heat electrification is no longer optional—it is the strategic imperative of the decade.

Why It Matters

Industrial process heat is the hidden giant of global emissions. Two-thirds of all industrial energy consumption goes directly to generating heat—from drying food products at 80°C to melting glass at over 1,500°C and producing steel at temperatures exceeding 1,600°C. Approximately 80% of this heat is currently generated by burning fossil fuels, making industrial heat responsible for roughly 10% of global greenhouse gas emissions when accounting for both direct combustion and upstream fuel production.

The decarbonization imperative is intensifying. The EU's Carbon Border Adjustment Mechanism (CBAM) began its transitional phase in October 2023, requiring importers to report embedded carbon in steel, cement, aluminum, and other industrial goods. By 2026, importers will pay for carbon certificates reflecting EU ETS prices—currently fluctuating between €65–90 per tonne. In the United States, the Inflation Reduction Act (IRA) unlocked over $6 billion in tax credits for clean manufacturing, while the DOE's Industrial Efficiency and Decarbonization Office has channeled $38 million into cross-sector electrification technologies in 2024 alone.

The business case is equally compelling. McKinsey's December 2024 analysis found that policy levers—including carbon pricing, tax credits, and low-interest loans—can increase the economically viable scope of heat electrification by more than 20 times. For energy-intensive manufacturers, electrification offers operational benefits beyond carbon reduction: electric heating systems achieve 95%+ efficiency versus 60–80% for combustion systems, eliminate on-site air quality impacts, and reduce exposure to volatile fossil fuel prices.

Key Concepts

Understanding industrial heat electrification requires familiarity with several foundational concepts that shape technology selection, retrofit feasibility, and investment decisions.

Temperature tiers define technology pathways. Industrial processes are typically categorized by temperature requirements: low-temperature heat (<200°C) covers steam generation, pasteurization, and drying; medium-temperature heat (200–600°C) includes distillation, chemical synthesis, and baking; high-temperature heat (>600°C) encompasses cement kilns, glass melting, and steelmaking. Approximately 30% of cumulative process heating demand operates at or below 150°C—prime territory for heat pump electrification using commercially mature technology. Above 400°C, specialized technologies including resistance heating, induction, microwave plasma, and thermal energy storage become necessary.

Coefficient of Performance (COP) measures heat pump efficiency. Heat pumps deliver 3–5 units of thermal energy for every unit of electricity consumed, expressed as a COP of 3–5. This makes them dramatically more efficient than electric resistance heating (COP of 1) or combustion boilers (effective COP of 0.6–0.8 after losses). However, COP decreases as the temperature differential between source and sink increases, limiting practical heat pump deployment to processes below approximately 200°C with current commercial technology.

Thermal energy storage (TES) bridges renewable intermittency. Because solar and wind generation fluctuates, industrial facilities requiring continuous heat supply need storage solutions. Advanced TES systems—including crushed rock, molite salts, and electrically-conductive firebricks—can store heat at temperatures up to 1,800°C and discharge on demand. This enables facilities to absorb low-cost renewable electricity during off-peak hours while maintaining uninterrupted production.

Retrofit versus greenfield economics differ substantially. Converting existing fossil-fired equipment to electric heating typically costs 30–50% more than new construction due to structural modifications, control system integration, and potential production downtime. However, retrofit projects can often leverage existing utility connections, building envelopes, and downstream equipment. The decision framework must account for remaining asset life, production scheduling constraints, and grid connection lead times—which now average 4–5 years in the United States for significant industrial loads.

SectorTemperature RequirementCurrent Electrification Rate2030 TargetKey Technology Pathways
Food & Beverage<200°C15–20%40–50%Heat pumps, electric boilers
Pulp & Paper150–400°C10–15%30–35%Heat pumps, resistance heating, TES
Chemicals200–800°C5–10%15–25%Electric crackers, microwave reactors
Glass>1,500°C3–5%15–20%Hybrid furnaces, hydrogen co-firing
Cement>1,400°C1–3%10–15%Electric calciners, hydrogen kilns
Steel>1,600°C30% (via EAF)50–60%DRI-EAF, hydrogen reduction

What's Working

Several approaches are demonstrating commercial viability across the temperature spectrum.

Industrial heat pumps are scaling rapidly in low-temperature applications. In 2024, heat pump deployments for industrial steam generation accelerated significantly in food processing, pharmaceuticals, and pulp and paper. Systems achieving temperatures up to 160°C are now commercially available from manufacturers including GEA, Oilon, and Johnson Controls. According to the IEA, heat pumps can technically meet 44% of global industrial process heat demands. In the United States, heat pumps outsold gas furnaces by 30% in 2024—a milestone indicating mainstream adoption momentum that will eventually cascade into industrial applications.

Thermal energy storage is proving transformational for high-temperature processes. Rondo Energy's heat batteries, which store electricity as thermal energy in solid media, secured DOE funding in 2024 and are deploying at multiple industrial sites. The technology converts intermittent renewable electricity into dispatchable heat at temperatures exceeding 1,000°C, enabling 24/7 industrial operations without grid dependency during off-peak hours. Independent analyses suggest storage round-trip efficiency exceeds 95%, making TES competitive with natural gas on a levelized cost basis when renewable electricity is available at $20–30/MWh.

Hybrid approaches are bridging the transition. Glass manufacturers are deploying furnaces operating at 80% electric and 20% fossil fuel, reducing emissions while maintaining process stability. This approach allows operators to gain experience with electric heating while preserving fallback capability during grid outages or periods of high electricity prices. Heidelberg Materials is completing the world's first full-scale cement carbon capture facility in Brevik, Norway by end of 2024—demonstrating that CCUS can complement electrification for process emissions that electrification cannot address (such as calcination CO₂ release from limestone decomposition).

What's Not Working

Despite progress, significant barriers impede widespread adoption.

Electricity-to-gas price ratios remain unfavorable in most regions. Industrial electricity prices typically run 3–5 times higher than natural gas on an energy-equivalent basis in the United States and Europe. Without carbon pricing at €45–150/tonne—well above current EU ETS prices—the operating cost disadvantage of electrification remains prohibitive for many applications. Additionally, demand charges for industrial consumers can add 20–40% to electricity costs, penalizing facilities with variable load profiles.

Grid infrastructure constrains large-scale deployment. Interconnection queues in the United States now average 5 years, with over 2,600 GW of generation and storage projects waiting for approval as of late 2024. Industrial electrification projects requiring 10+ MW of new capacity face similar delays. Distribution transformers and high-voltage equipment are backordered 18–36 months due to supply chain bottlenecks. For many facilities, grid limitations effectively cap electrification potential regardless of technology readiness.

Technology maturity gaps persist above 600°C. While low-temperature heat pumps are commercially proven, technologies for cement kilns (1,400°C+), glass melting (1,500°C+), and steel production (1,600°C+) remain at pilot or demonstration scale. Electric calciners, plasma heating systems, and advanced TES above 1,200°C require further validation before manufacturers will commit to full-scale conversion. The ELSE 2 project in Europe is piloting electric limestone calcination at 100 tonnes/day—promising but years from commercial deployment.

Workforce and supply chain readiness lag technology development. Industrial electricians, high-voltage engineers, and process control specialists with electrification experience remain scarce. Equipment lead times for large transformers, switchgear, and specialized heating elements extend 12–24 months, creating project schedule risks that discourage capital commitment.

Key Players

Established Leaders

Schneider Electric provides integrated solutions spanning energy management, industrial automation, and process electrification. Their 2024 analysis projected that industry could increase electricity share from 31% to 45% by 2030, reducing fossil fuel demand by 25%.

Siemens offers electrification solutions across the temperature spectrum, including high-efficiency electric heating systems for glass and ceramics, industrial heat pumps, and grid integration technologies.

ABB delivers industrial electrification equipment including variable frequency drives, transformers, and switchgear essential for converting facilities to electric heating.

GEA Group leads in industrial heat pump technology, with systems achieving temperatures up to 150°C deployed across food, beverage, and pharmaceutical applications.

Emerging Startups

Electrified Thermal Solutions (Boston) raised $19 million in December 2024 from Holcim MAQER Ventures, Vale Ventures, and Breakthrough Energy-backed investors. Their electrically-conductive firebrick technology (Joule Hive Thermal Battery) stores heat at up to 1,800°C for ultra-high-temperature industrial applications, with commercialization targeted for 2026.

Rondo Energy develops heat batteries that convert renewable electricity to high-temperature heat stored in solid media. The company received DOE funding in 2024 and is deploying systems at multiple industrial facilities.

HyperHeat (Germany) raised $3.67 million in November 2024 led by Amadeus Capital and Breakthrough Energy. They manufacture electric heaters for petrochemical, glass, cement, and steel applications reaching high temperatures.

Calectra (Oakland) has raised $2 million including DOE grants to develop thermal energy storage bricks delivering heat up to 1,600°C.

Key Investors & Funders

U.S. Department of Energy allocated $38 million through the Industrial Cross-Sector Technologies program and $5 million via the EPIXC Institute in 2024, funding research into radio frequency heating, microwave plasma, and electric calcination.

Breakthrough Energy Ventures has backed multiple industrial heat startups including investments in HyperHeat and adjacent thermal storage technologies.

Holcim MAQER Ventures (cement) and Vale Ventures (mining) represent industrial corporates investing strategically in electrification technologies relevant to their decarbonization roadmaps.

Clean Energy Ventures and Starlight Ventures are active climate-tech VCs funding the industrial electrification ecosystem.

Examples

1. H2 Green Steel (Sweden)

H2 Green Steel is constructing Europe's first large-scale green steel plant in Boden, Sweden, with production starting in 2026–27. The facility will use green hydrogen from electrolyzers powered by renewable electricity to reduce iron ore directly, eliminating the blast furnace entirely. The downstream electric arc furnace operates at over 1,600°C using 100% renewable electricity. The project has secured offtake agreements with Volvo Group, Scania, and other major manufacturers—demonstrating that demand-side pull can unlock transformational capital investment.

2. Heidelberg Materials Brevik CCS Facility (Norway)

Heidelberg Materials is completing the world's first full-scale cement carbon capture facility at its Norcem plant in Brevik, Norway. The 100-meter facility will capture CO₂ from the cement kiln for permanent storage in geological formations beneath the North Sea. While not pure electrification, this project demonstrates how CCUS can address process emissions (the CO₂ released when limestone decomposes during calcination) that electrification alone cannot eliminate. The facility is expected to be operational by end of 2024.

3. Cemvision (Sweden)

Swedish startup Cemvision has developed a fossil-free cement production process using recycled materials from mining and steel industry byproducts. By eliminating traditional limestone calcination—the source of both fuel and process emissions—the company sidesteps the electrification challenge entirely. Pilot production is underway, demonstrating that circular economy approaches can complement direct electrification strategies.

Action Checklist

  • Conduct a thermal audit to map all heat demands by temperature, duration, and criticality—prioritizing processes below 200°C for near-term heat pump deployment
  • Assess grid capacity by requesting interconnection studies for projected electrical loads; engage utility early to understand lead times and potential infrastructure cost-sharing
  • Model total cost of ownership including carbon pricing scenarios (€50–150/tonne), demand charges, and projected renewable electricity costs through 2030
  • Identify hybrid pathways where 80/20 electric-fossil systems can reduce emissions while managing transition risk
  • Engage equipment vendors for budgetary quotes on heat pumps, thermal storage, and electric heating systems—building internal cost benchmarks
  • Map incentive eligibility for IRA Section 48C manufacturing tax credits, DOE demonstration grants, and state-level clean energy programs
  • Develop workforce plan addressing electrician, controls engineering, and maintenance training requirements for electric heating systems

FAQ

Q: What percentage of industrial heat can be electrified with today's technology? A: Approximately 55% of industrial heat demand operates below 400°C and is technically addressable with commercially available heat pumps, electric boilers, and resistance heating systems. The remaining 45%—including cement, glass, and primary steel production—requires emerging technologies still at pilot or demonstration scale, with commercialization expected between 2026–2030.

Q: How does electrification compare to hydrogen for high-temperature industrial heat? A: Both pathways face infrastructure challenges. Electrification requires grid capacity and potentially thermal storage, while hydrogen requires production facilities, distribution networks, and equipment modifications. For most facilities, electrification offers lower complexity and faster deployment timelines for temperatures below 1,000°C. Above 1,000°C, hydrogen may prove more practical for certain applications—particularly where existing infrastructure can be modified (e.g., steel blast furnaces). Many decarbonization roadmaps incorporate both technologies for different use cases.

Q: What is the typical payback period for industrial heat electrification projects? A: Payback periods vary dramatically based on local electricity prices, carbon pricing, and incentive availability. In regions with carbon prices above €60/tonne and electricity below €80/MWh, low-temperature heat pump projects can achieve 3–5 year payback. Without policy support, payback may extend to 10–15 years—exceeding typical capital approval thresholds. The IRA's 48C tax credit (up to 30% of capital costs) can reduce payback by 2–4 years for qualifying projects.

Q: How do thermal energy storage systems integrate with existing operations? A: TES systems typically operate in parallel with existing heating infrastructure, charging from renewable electricity during low-price periods and discharging to supplement or replace fossil fuel heating during production. Integration requires controls engineering to manage heat dispatch, potentially upgraded electrical service, and physical space for storage modules. Most TES vendors offer modular systems that can scale with facility needs.

Q: What are the key risks of early adoption? A: Primary risks include technology performance below specifications, extended commissioning timelines, and integration challenges with legacy equipment. Grid connection delays—now averaging 4–5 years for significant loads—can strand invested capital. Workforce availability may constrain maintenance capabilities. Mitigation strategies include phased deployment, hybrid systems with fossil backup, and contractual performance guarantees from equipment vendors.

Sources

Topics

industrialheatcompliancetransition planMRVancillary servicesPPA

Related Articles