The challenges of electrification of industry are contemplated on both sides of the English Channel

Based on research by the University of Leeds, the UKERC/Aldersgate report suggests that under a favourable policy scenario, industrial electrification could increase electricity use by 78% between 2024 and 2050. However, this substantial increase in electricity demand, driven by industrial needs as well as other sectors such as heat pumps and electric vehicles, is expected to exert considerable pressure on the distribution network.

Without substantial investments in grid infrastructure, there could potentially be constraints, with 42% of large industrial sites potentially facing power shortages by 2030, escalating to 77% by 2050, the report warns. Sectors such as glass, iron and steel, and food and drink are identified as particularly vulnerable, especially sites that are geographically dispersed.

The report goes on to say that network operators need ‘clarity on industrial electrification and the policies that will support it’. It warns that unless the government takes action to boost grid capacity, industrial decarbonisation will be severely hindered, making it harder for the UK to reach its net zero emissions targets.

The UK’s National Energy System Operator (NESO) has also pointed to the need for substantial investment in the energy system, with its Clean Power 2030 report published late last year calling for a major reform of the grid connections process. In response, the industry regulator Ofgem unveiled a new, fast-track grid connections system last week. Under its proposals, projects that are ‘ready’ and ‘needed’ would see accelerated new offers made by the end of this year, with the first connected and operational from 2026. 

Meanwhile, there are fears that the government’s recently announced plans to invest in energy-intensive data centres and AI may place further pressure on the nation’s power grid.

Call for an Electrification Bank
At the same time, Eurelectric is advocating for the establishment of an Electrification Bank to help accelerate industrial electrification across Europe. The trade association attributes the sluggish pace of industrial electrification in the region to a range of factors. These include high upfront investments, prolonged investment cycles, rising energy costs, unfair taxation and persistent fossil fuel subsidies, which the European Court of Auditors estimates exceed €55bn/y across member states.

Non-electrical alternatives exist to decarbonise industry, such as biomethane, hydrogen, carbon capture, use, and storage (CCUS). However, ‘while all solutions will be needed’, the trade association asserts that ‘direct electrification remains the most energy efficient and cheapest options for industrial processes below 500°C’. However, it points out that ‘the electrification rate remains stuck at 33% when studies currently suggest that it could reach 90% by 2035 with available technologies’.

‘It’s time to find new incentives to boost industrial electrification,’ says Eurelectric.

The trade association’s position paper advocates for the Electrification Bank to be part of the European Commission’s forthcoming Electrification Action Plan, coordinated with the Clean Industrial Deal. The proposed bank would consolidate expertise, funding options and de-risking instruments into a one-stop-shop managed by the European Commission, with support from the European Investment Bank and member states. It would also provide critical capital expenditure compensation and conditional support for operational expenditures during the transition period.

‘Direct electrification can improve industries’ energy efficiency, reduce operational costs over time, and enhance energy security by lowering dependence on imported fossil fuels. The Electrification Bank is the way to add a demand pull to the supply push,’ concludes Eurelectric.