RTC’s New Utility Engagement Handbook Identifies Win-Win Innovations for Industrial Electricity Customers and Utilities to Unlock Industrial Electrification

Industrial heat is crucial for producing the goods society wants and needs. Globally, industrial heat makes up two-thirds of industrial energy demand and almost one-fifth of total energy consumption. As more and more companies move to modernize their production processes, electrification technologies—such as industrial heat pumps (IHPs), electric boilers and thermal batteries—offer high-impact, near-term opportunities to enhance clean manufacturing and accelerate industrial decarbonization.

While electrification technologies are increasingly commercially available, electricity costs and limited grid capacity still hinder adoption. Many regions lack the grid infrastructure to meet increased demand from industrial electrification. In addition to challenges in accessing electricity, prices often spike during peak hours, while most industrial facilities operate around the clock and cannot easily adjust their energy use without energy storage solutions. Current utility systems and pricing structures are not well aligned with the demand for industrial electrification, making adoption costly and challenging.

The new electricity demand from industrial electrification presents a new business opportunity for the electric utility sector. However, the emerging industrial electrification demand also adds to the increasingly complex challenges and sometimes competing priorities faced by utility companies and Public Utility Commissions (PUCs). 

Therefore, industrial customers must plan ahead and proactively work with their utilities and PUCs to explore incentives and rate structures that support electrification. Some solutions will require approval from PUCs or will need to be driven by state policy. By collaborating with peers, solution providers, and utilities, industrial customers can help unlock the policies and regulations needed for enduring utility solutions for electrification.

The RTC’s new Utility Engagement Playbook for Industrial Customers provides a clear, actionable roadmap to support this effort. It identifies a menu of utility, regulatory, and policy interventions required for industrial customers to secure cost-competitive electricity access to electrify their production processes.  

Key solutions include:

• Utilities can better support industrial electrification during the planning stage by providing better information about grid capacity and system upgrade costs and timeline, forming cross-functional teams for project planning, and offering technical help for heat pump feasibility studies.
• Innovative cost-sharing for grid upgrades can reduce the financial burden for industrial customers. Spreading upgrade costs among all ratepayers through policy changes or incentive programs can further lower costs but must be designed carefully to avoid raising electricity costs for underserved communities.
• High utility electricity costs can be addressed with rate discounts, demand management rates, or special tariffs. Customers can also pursue other on-site and off-site alternatives to utility-supplied electricity, including through power purchase agreements.
• Fuel substitution policies and utility regulatory tools, including multi-year rate plans and performance incentives, can be modified to align utility incentives with electrification goals.

With the menu of utility solutions identified in the Playbook, industrial customers will more effectively collaborate with utilities, participate in utility regulatory dockets, and understand state policy landscape. The RTC will support our Members and Solution Providers to connect with utilities and explore concrete opportunities to implement these solutions. Building on these efforts, the RTC will also explore broader collaborations to scale regulatory and legislative frameworks to create enduring utility solutions and make electrification more accessible and affordable. We invite large industrial customers, electrification solution providers, utilities, and other key market and policy stakeholders to join us in this effort.  

To learn more about the RTC’s utility engagement work, please reach out to Cihang Yuan for details.