Electricity's share in final energy consumption is projected to rise from 20% today to over 50% by 2050 based on a net zero scenario.
Electrification offers a major opportunity to cut emissions and improve efficiency in industrial processes, especially low- to medium-heat processes (up to 500ºC), which account for about half of all industrial carbon emissions.
However, much of Europe’s industrial electrification potential remains untapped. Developing a clear and compelling business case will elevate the investment opportunity for business leaders, realizing the potential of electrification in different sectors.
Figure 1
Comparison of realized electrification potential across various industries
Source: Schneider Electric Sustainability Research Institute
Agora Industry
Challenges Impeding Progress
Through a series of multistakeholder dialogues facilitated by the World Economic Forum, several key challenges were identified that risk impeding industrial electrification progress:
1. Clean power availability and price
Delays in accessing a reliable grid or system with sufficient capacity remain challenging. In addition, the uncertainty about electricity prices compared to other feedstock alternatives (e.g. natural gas, biogas, etc.) is highlighted as a key concern in decision-making for industrial electrification projects.
2. Limited financing support
High interest rates and lack of risk-sharing mechanisms make it difficult for businesses to secure funding for electrification projects against other alternatives with more immediate returns.
3. Risk aversion for new technologies
Industrial companies are reluctant to invest in newer, less proven technologies, as they are perceived as riskier due to limited case studies to validate their effectiveness or sufficient financial returns. With current assets having long lifecycles, upgrading before these assets near the end of their use is both challenging and costly, even if it promises improved efficiencies.
Strategies for improving the business and economic case for industrial electrificaiton
FIGURE 2
Implementing the actions outlined in this paper will strengthen the business case for industrial electrification, addressing key challenges and driving rapid decarbonization while unlocking significant investment opportunities.
Insights from the World Economic Forum's expert working group on Industrial Electrification.
Future of Power Systems
A World Economic Forum Initiative