Industrial Electrification: From Barriers to Breakthroughs – Insights from Jan Rosenow

Jan's interest in energy and electrification stems from the sector's critical role in global emissions and economic activity. He highlighted the immense challenges and opportunities in transforming the energy sector at an unprecedented speed, emphasizing the exciting innovation occurring within the field. The benefits of electrification are twofold: the increasing decarbonization of electricity and the efficiency gains in an electrified industrial sector. However, there's some challenges too. Jan developed a fishbone diagram to structure these:

The Price Challenge:

One of the major barriers to industrial electrification is the economic challenge, particularly the high electricity-to-fossil fuel price ratio. This issue is exacerbated in some regions by higher grid costs for electricity compared to gas. Jan pointed out that the situation varies across Europe, with countries like Sweden and Finland having more favorable price ratios, leading to higher investments in electrified technologies like large-scale heat pumps.

To overcome this barrier, Jan suggested rethinking levies and taxation policies. In many countries, a significant portion of the electricity cost comes from taxes and levies, which could be restructured to improve the business proposition for electrification. Additionally, taking advantage of low-cost electricity during periods of renewable oversupply can help reduce operational costs, though this requires investment in automation and energy storage systems.

Tech and Knowledge Barriers:

The complexity and diversity of industrial processes pose significant technological and knowledge barriers. Unlike the relatively straightforward switch to electric vehicles, electrifying industrial processes involves ensuring the right kind of heat is available without disrupting existing operations.

Practical Challenges and Decision-Making:

Jan discussed a practical example involving a factory producing insulation materials, where the decision between investing in a high-efficiency heat pump system or a less efficient but lower-cost direct electric system was complex. He emphasized the importance of evaluating the long-term operational costs and not just the upfront capital costs, suggesting a tailored approach based on the specific industrial process.

Leading the Way:

Jan shared several inspiring case studies, particularly from the food and drinks industry. He highlighted examples of breweries and distilleries using heat pumps to reuse waste heat, demonstrating innovative solutions in electrification. These examples not only showcase successful implementations but also help make the concept more relatable to the public.

The Role of Flexibility and Dynamic Pricing:

Flexibility in energy use, taking advantage of dynamic pricing and power purchase agreements (PPAs), can significantly enhance the business case for electrification. Jan mentioned emerging instruments in countries like the Netherlands and Germany that help hedge against price fluctuations, providing companies with more confidence in their investment decisions.

Final Thoughts:

The journey towards industrial electrification is fraught with challenges, but also ripe with opportunities for innovation and efficiency gains. Jan's insights underscore the importance of addressing economic and technological barriers, leveraging flexible energy use, and learning from leading examples in the industry. As the sector continues to evolve, such discussions are crucial in driving the transition towards a more sustainable and efficient industrial future.

For companies looking to embark on this journey, gaining knowledge from existing resources and drawing from successful case studies are vital steps. By navigating these complexities thoughtfully, businesses can contribute to the broader goal of decarbonization while enhancing their own competitiveness and operational efficiency.