Electrification key for a cost-effective transformation of the German industry – report

The electrification of industrial processes with renewable energy is the most cost-effective transformation path for the sector, the research consortium IND-E has stated in a report.

The authors said the electrification of heat needed in industrial processes is a key measure on the path to decarbonisation, both for the entire system and for individual companies. Even at high prices for electricity, electrification is usually more cost-effective than hydrogen and offers efficiency advantages, the researchers said.

For processes requiring temperatures up to 200 degrees Celsius, special heat pumps are the dominant technology in scenarios that focus on cost-efficiency. Above 200 degrees, the electrode boiler represents the most cost-optimised transformation option, they argued.

Using green hydrogen would only makes sense where the synthetic gas made with renewable power is needed as a feedstock when much higher-temperature process heat is needed. This concerns industries including steel, chemicals and cement production, where the decarbonisation options are limited, the report said.

Electricity consumption in industry could increase from 201 terawatt hours (TWh) in 2024 to 290-450 TWh in 2045, the report’s modelled scenarios showed. This meant Germany would have to develop the electricity grid accordingly, the researchers added.

Ahead of Germany's upcoming snap election, the competitiveness of the industrial base and future industrial policies are in the spotlight. Most experts and businesses agree that the new government must push forward industry decarbonisation in close cooperation with the EU. A delay would only put long-term competitiveness in future markets at risk, they argue. Ahead election on 23 February, industry association BDI called on the next government to focus on lowering energy prices at the national and the European level.