For Immediate Release
December 11, 2024 9:00 am ET
The Latest Resource from the Renewable Thermal Collaborative Presents a Menu of Utility and Policy Interventions Industrial Customers Could Pursue in Collaboration with Utilities, PUCs, and State Policymakers to Address Electrification Barriers
WASHINGTON, D.C. – December 11, 2024 – Electrification presents a high-impact, near-term solution to enhance U.S. clean manufacturing and accelerate industrial decarbonization according to a new Utility Engagement Playbook for Industrial Customers produced for the Renewable Thermal Collaborative (RTC) by the World Wildlife Fund (WWF) and Synapse Energy Economics. According to the playbook, industrial electrification represents a major business opportunity for electric utilities; however, industrial customers still face significant barriers to accessing cost-competitive electricity, which is critical for the feasibility and economic viability of electrification projects. The playbook, released today and discussed in a webinar featuring the report authors, presents a menu of utility and policy interventions industrial customers could pursue in collaboration with utilities, public utility commissions (PUCs), and state policymakers to address these barriers.
“This new RTC resource will help industrial customers more rapidly electrify key elements of their operations, increasing efficiency and productivity while decreasing emissions and costs,” declared Blaine Collison, RTC Executive Director.
The Utility Engagement Playbook identifies multiple core challenges industrial facilities encounter in their electrification efforts. First, the utility processes required for electrification projects can be opaque and complicated for industrial customers. Second, uncertainty around available grid capacity and the magnitude of grid upgrade costs pose planning and financial challenges for electrification projects. The most significant obstacle, however, is the high cost of electricity compared to natural gas, which makes electrification financially unfavorable in most cases. Additionally, the utility regulatory framework in many states discourages utility support for electrification.
“Our goal is to provide industrial customers with a practical tool to address power sector challenges in electrification—a set of clear, actionable asks they can bring to their utilities. This Playbook outlines a range of utility and policy interventions, along with strategies for industrial customers to pursue them. We hope it will be a catalyst for collaborative conversations between industrial customers and utilities to co-create win-win solutions for a sustainable electrified future,” said Cihang Yuan, WWF Climate and Renewable Energy Senior Program Officer and a lead author of the report.
The Utility Engagement Playbook recommends several strategies key stakeholders can employ to support the electrification transition:
- Industrial customers: Industrial customers need to: 1) Plan ahead and proactively work with their utilities and PUCs to ensure they can secure access to cost-competitive electricity for their electrification projects; 2) Pursue other on-site and off-site alternatives to utility-supplied electricity, including through power purchase agreements; and 3) Work with utilities to advocate for better fuel substitution policies and utility regulatory tools, including multi-year rate plans and performance incentive mechanisms.
- Utilities: Utilities can enhance support for industrial customers during the planning and design stages of electrification projects by: 1) Developing hosting capacity maps to clarify available grid capacity; 2) Establishing cross-functional electrification teams to assist with project planning; and 3) Offering technical assistance for heat pump feasibility assessments.
- PUCs: PUCs can help reduce cost burdens by: 1) Implementing cost-sharing mechanisms for grid infrastructure upgrades, including through a cluster approach, post-upgrade reimbursements, or proportional interconnections fees; and 2) Offering temporary rate discounts for beneficial electrification load, flexible demand tariffs, or hourly rates to mitigate the high cost of utility-supplied electricity, particularly where it is in the service of meeting state decarbonization goals. In addition, PUCs can modify fuel substitution policies and utility regulatory tools, including multi-year rate plans and performance incentive mechanisms, to align utility incentives with electrification goals.
- State Policymakers: State policymakers can create enabling conditions for industrial electrification by requiring that regulatory agencies and utilities: 1) Investigate alternative cost allocation methods for grid upgrades that support beneficial electrification; 2) revise energy efficiency programs and fuel substitution policies to support beneficial electrification and decarbonization; and 3) ensure that utilities have sufficient financial incentives to prioritize industrial electrification.
“The electrification of industrial process heat is vital to decarbonizing the industrial sector, but it requires collaboration in new ways between utilities, industrial customers, regulators, and state policymakers,” stated Melissa Whited, Synapse Energy Economics Vice President and lead analyst for the report. “This playbook not only identifies the barriers industrial customers face but also provides actionable strategies to overcome them. By working together, we can unlock the significant benefits of industrial electrification.”
Download the Utility Engagement Playbook for Industrial Customers at https://www.renewablethermal.org/utility-engagement-playbook/
About the Utility Engagement Playbook Partners
Renewable Thermal Collaborative (RTC) is a global coalition of companies, institutions, and governments committed to helping reach midcentury climate goals by scaling up renewable heating and cooling technologies at their facilities to dramatically reduce their carbon emissions. The RTC collaborates with its members and sponsors to accelerate industrial decarbonization by addressing and identifying ways to overcome the technology, policy, and market challenges that large thermal energy users face. Visit www.renewablethermal.org to learn more.
World Wildlife Fund (WWF)
WWF is an independent conservation organization, with over 30 million supporters and a global network active in over 100 countries. WWF’s mission is to stop the degradation of the Earth’s natural environment and to build a future in which humans live in harmony with nature, by conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption. Visit www.panda.org/news for the latest news and media resources and follow us on Twitter @WWF_media.
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