Energy Transition in Industry

The energy transition is one of the 17 global goals to which the international community committed itself under international law in 2015 for a better future. This transformation towards greater sustainability worldwide is considered to be the greatest social change since industrialisation. German companies are also in the midst of this profound change in order to make production processes more climate-friendly in the future. The goal is to cover 80 percent of gross electricity consumption from renewable energy sources by 2030 in order to achieve the primary goal of net greenhouse gas neutrality by 2045. This requires an enormous expansion of photovoltaic and wind power plants - combined with a fundamental change in energy procurement and industrial plants.

Sector coupling is seen by many experts as a promising solution for replacing fossil-fuelled heat through the increased use of renewable electricity. This is because: The idea is that if all sectors are networked with each other, CO2 emissions can be reduced with the help of renewable energy. The principle: Energy is preferably purchased when the proportion of renewables in the general supply system is high and the associated electricity price is low. If there are few renewables in the general supply system and the associated high electricity prices, the process heat requirement is covered by self-generation and electricity is fed into the overall grid. The company then has to purchase no or less electricity accordingly.

However, flexible operation that minimises energy supply costs is a potential that has only been exploited by a few companies to date. This is the conclusion reached by the Fraunhofer Institute for Systems and Innovation Research (ISI) together with the Institute for Industrial Furnace Construction and Heating Technology at RWTH Aachen University in a study commissioned by the German Competence Centre for Climate Protection in Energy-Intensive Industries (KEI). Dr Tobias Fleiter and his team focused primarily on the technical, economic and regulatory opportunities and obstacles to greater flexibility in energy use in the industrial sector. The focus of the study is a comprehensive energy system analysis of individual typified companies or use cases. With the results of their research, the researchers intend to offer companies industry-specific orientation for the strategic alignment of their investments. "At the same time, they provide recommendations for action for political decision-makers, for example in the upcoming reorganisation of grid fees," says Flechtner, who heads the business unit Demand Analyses and Projections at the Fraunhofer ISI and coordinated the study.

While earlier studies concentrated mainly on assessing the potential for achieving flexibility in existing production processes, the KEI study focuses much more on the future climate- neutral industrial and energy system. The expected electrification and the conversion to hydrogen are the particular focus here. It takes a forward-looking perspective on the conversion of industrial production that is currently heavily based on fossil fuels, such as the future electrification of processes for supplying process heat. The assessment of industrial flexibility takes place within an energy system that is heavily geared towards renewable power generation.

The study states that energy use and production processes in the industry of primary commodities – which also includes dairies and mills as the first link in the food production chain – have so far rarely been made more flexible. Existing production facilities are used to full capacity and optimised for continuous operation. However, the case studies conducted as part of the study also show that it is technically possible to make today's production processes more flexible and to electrify process heating systems in the future – although this will also incur additional costs. These arise from changes in maintenance and operating costs, investments in additional production and storage capacities or costs for energy transport. Flexible energy procurement can only be competitive if the additional costs incurred are offset by savings. When it comes to energy procurement, industry is faced with the challenge of integrating renewable energy sources such as hydrogen or electricity into existing production processes that have been optimised over decades.

However, full electrification of many process chains is often not possible in the short term. In a first step, for example, electric steam generators can be added to existing natural gas-fired plants. Hybrid systems, which use several energy sources and can switch between them relatively flexibly during operation, also promise great potential for making industry's energy supply more flexible to align it more closely with electricity generation from wind and solar energy. In the long term, hybrid systems using hydrogen and electricity could also make an efficient contribution to the energy system in the food industry.

Fleiter points out further findings: "Our results show that the current regulatory framework hinders the flexibilisation of energy use and production processes in industry. This is because the existing regulations on grid fees create incentives for the highest possible full-load hours and continuous electricity procurement. In the future, electricity grid fees should therefore be more strongly aligned with the requirements of an energy system characterised by wind energy and photovoltaics." The expert also emphasises that load flexibilisation in industry can make an important contribution to the general integration of renewable energies into the energy system. At the same time, it is important to realistically assess the possibilities and to evaluate industrial flexibilities in the context of other options such as storage technologies or cross-regional balancing via the transmission grids.

However, in order for the potential for flexibility to be realised in industry, the researchers believe that a clear political strategy and investment are needed. A strategy for increasing energy flexibility should exploit synergies with other policy areas. These include the transformation to climate-neutral production, the resilience of the energy supply and protection against price fluctuations.