How can US factories get cleaner heat? These ideas may help.

Exploring Alternatives to Fossil Fuel Heat Sources in US Manufacturing Facilities

American households have experienced rising electric bills in recent years. Similar cost pressures affect decisions at manufacturing sites that require heat for production processes. Hundreds of thousands of US facilities currently use natural gas or other fossil fuels to generate the temperatures needed for food processing, beverage production, building materials, and consumer goods. US Energy Information Administration data indicate the industrial sector accounts for approximately 23 percent of national carbon dioxide emissions tied to energy consumption.

Technologies including industrial heat pumps, electric boilers, and thermal storage batteries are commercially available. Companies evaluating a shift from natural gas face higher electricity prices in most states. Neil Brown, a chemical engineer at Eastman Chemical, noted during a June webinar organized by the Renewable Thermal Collaborative and Industrial Heat Pump Alliance that solutions must compete with current fuel costs. In regions such as the Southeast and Texas, low natural gas prices create particular challenges for cost parity.

The same webinar presented estimates that electrifying low- and medium-temperature industrial processes could increase annual electricity demand by roughly 250 terawatt-hours by 2035. The groups also projected potential economic output of $471 billion over the decade after subtracting effects on gas-related businesses. These figures originate from the participating organizations and have not been independently verified in the reported analysis.

Researchers at the University of California, Berkeley, modeled on-site renewable installations paired with thermal storage and heat pumps across nearly 3,600 industrial locations. Their analysis, released last week, concluded that such systems could meet up to one-third of the examined heat demand by 2035 where land and solar resources allow. The study found cost advantages for heat pumps below 200 degrees Celsius in locations with favorable solar conditions and higher natural gas prices, such as California. Thermal batteries showed competitive economics for higher-temperature applications including glass and steel production.

Amol Phadke, a co-author and adjunct associate professor at UC Berkeley’s Goldman School of Public Policy, stated that declining solar panel prices have improved economics even in areas with moderate solar resources. The majority of evaluated sites possessed sufficient land for on-site arrays. Off-grid configurations could bypass interconnection queues and certain grid charges, though they require separate capital investment.

Many facilities will continue using grid electricity. Proposals to narrow the electricity-natural gas price differential include rate adjustments. California Senate Bill 943, which passed the Senate in May and awaits Assembly review, would direct the Public Utilities Commission to adjust rates and fees for large customers considering electric heat systems.

Otter Tail Power in the Upper Midwest introduced a tariff intended to support thermal storage projects while maintaining grid stability. The initial application involves Antora Energy’s battery installation in South Dakota supplying steam to a Poet ethanol facility. Lauren Kubiak of the Natural Resources Defense Council led modeling of marginal-cost electricity rates in California and Michigan. The approach charges only the incremental cost of additional generation and delivery rather than embedded expenses such as infrastructure maintenance or wildfire mitigation programs.

In the California analysis, marginal rates improved the operating economics of heat pumps relative to gas boilers, particularly for lower-temperature processes. Michigan showed smaller shifts because baseline rates already contain fewer non-marginal components. The study suggested limiting such rates to new electric equipment replacing fossil fuel systems and aligning usage with periods of lower grid demand.

These proposals remain under discussion among utilities, state regulators, and manufacturers. Implementation would depend on specific rate designs, available renewable resources, and site-level economics at individual facilities.