A new study by Berkeley Lab reviews the possible benefits and barriers to greater electrification in U.S. buildings and industry, the technical and economic potential for electrification, and policy and programmatic approaches for regions that may want to explore beneficial electrification.
In buildings, electrification means substituting electric technologies for combustion-fueled technologies for end uses where other fuels are being used - most notably, space heating and water heating. In industry, electrification means powering a wide range of industrial processes by electricity rather than combustion fuels.
The study, Electrification of buildings and industry in the United States: Drivers, barriers, prospects, and policy approaches, points out promising energy system benefits from electrification. For example, increased electrification offers greater flexibility for managing electric loads and opportunities for customers to provide services that support grid operations. In addition, electrification may foster economic development, boost balance of trade, improve air quality, reduce fuel price risks, reduce consumers' costs in some applications, improve product quality in some industrial processes and quality of some energy services in buildings. At the same time, jurisdictions considering aggressive electrification policies will be interested in potential drawbacks along with possible solutions - for example, ratemaking approaches to address infrastructure costs and distributed resource solutions to mitigate vulnerability to power outages.
For both the buildings and industry sectors, the ultimate barriers to electrification are economic, not technical. Fuel prices and differences in the capital costs of equipment are the chief determinants of the relative economics of electric compared to non-electric technologies.
In buildings, electric alternatives exist for all major energy end uses. For example, space heating with electric heat pumps is economically viable in a wide variety of buildings today. Electrification of end uses tends to be more cost-effective in new (versus existing) buildings, in residential (versus commercial) buildings, in settings where a single heat pump can replace the need for an air conditioning unit as well as a space heating unit, and in areas with milder winters.
Many of the essential technological elements for industrial electrification exist, but much greater diversity of processes and high levels of process integration make solutions more complex. Electrification of process heating can be relatively cost-effective where product quality and manufacturing productivity are improved (e.g., using induction heating for metal processing), or when electricity costs are low relative to combustion fuel costs. Cost-effective electrification of process heating is generally more challenging at very high temperatures (e.g., cement manufacturing), where processes are highly integrated, and where combined heat and power systems are extensively used.
Many policies, programs, and regulations affect the prospects for electrification, including:
- Research, development, and demonstration of electric technologies
- Electricity rate design
- Demand response program and electricity market design
- Financial incentives for adoption of electric technologies
- Energy savings targets
- Building energy codes and appliance and equipment standards
- Educational and outreach efforts
- Energy planning processes
- Air quality regulations
Emerging approaches that hold particular promise include charging lower prices for using electricity off-peak (time-varying rates) and rewarding the grid services that newly-electrified end uses can offer (electricity market designs that reward flexibility).
Berkeley Lab's study offers several use cases and case studies of electrification in buildings and industry: air source heat pumps for space heating, zero net energy buildings, electric water heaters and demand response, electric arc furnaces, and electric boilers. Finally, the study suggests several areas for further research to better understand and advance beneficial electrification.