Electrification key for industrial competitiveness finds Eurelectric study

Electrification can help restore competitiveness, cut fossil fuel dependence and unlock economic benefits for European industry, according to a new study commissioned by Eurelectric.

According to the European electricity sector association, while electricity already outcompetes fossil fuels in some sectors, electrifying energy-intensive operations could become cost-competitive by 2030 – with the help of financial support, long-term contracts, and expanded Carbon Contracts for Difference (CCfDs).

The group cites that, in recent years, dependency on fossil fuels imports has undermined Europe’s competitiveness, exposing industries to external volatility and high electricity prices.

In 2024 alone, they say, this cost Europe €350 billion ($399.1 billion), down from €600 billion ($684.2 billion) in 2022 – a burden it can no longer afford if it aims to remain competitive on the global stage.

The Brussels-based association says that tailored approaches for individual manufacturing segments are needed to unlock a new ‘Industrial Age’ powered by clean electricity.

Commenting in a release was Kristian Ruby, Eurelectric’s secretary general: “Electrifying Europe’s industrial sectors is essential to unlocking economic opportunities, cutting emissions, and strengthening the continent’s role as a global innovation leader. To achieve this, we need targeted industrial strategies that reflect each sector’s unique needs.”

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Electrifying industry

Eurelectric’s study explores the cost implications of electrification across three industrial activities: ethylene production, milk powder processing, and battery drying – each representing different levels of energy intensity and temperature requirements.

From their results, Eurelectric cites three main trends:

• Electricity is already competitive

According to the association, for industrial processes operating at less than 500˚C like battery cell manufacturing, electric solutions such as heat pumps were found to already outcompete fossil fuels. The company cites the cases of Sweden and Hungary, specifically, which show strong cost advantages for electrified battery cell manufacturing today and by 2030.

Also, for industries involving low-temperature heat processes, where electrification delivers significant energy efficiency gains (as in battery assembly, where electricity can be up to four times more efficient), electrification is already economically competitive, and its advantages will only grow over time, says the study.

• Electrification can be competitive by 2030 for medium heat processes

According to Eurelectric, for energy-intensive industrial sectors like milk powder production, electrification can reduce the total energy consumption and leverage competitiveness.

For this specific archetype, says the study, the process temperature requirement is low but is very energy intensive. Here, reducing energy consumption through electrification and lowering the electricity price has the biggest impact on competitiveness.

The association adds that, in such industries, the competitiveness gap with fossil fuel solutions is relatively small – making it possible to create a positive path for electrification by 2030.

• More technological progress and innovation needed in energy-intensive sectors with a high temperature process

For more energy-intensive sectors like ethylene production, Eurelectric says that technological advancements and innovation are yet needed to reduce the upfront costs of electric solutions.

This applies to industrial sectors that require both high temperatures and large volumes of energy -such as chemicals, cement, glass, and iron and steel.

Electrification to boost competitiveness: Recommendations

To accelerate the shift from fossil-fuel technologies to electric alternatives, Eurelectric calls for a comprehensive and coordinated approach, combining clear regulations, targeted financial measures and strategic planning.

Specifically, the association makes the following recommendations:

1. Implement policies and remove fossil fuel subsidies

• Swiftly implement agreed policies to provide regulatory stability and predictability,
• Level the playing field via taxes and levies,
• Phase out incentives locking consumers in fossil-based technologies,
• Raise awareness on the competitiveness of electrified solutions with access to adequate information and comparison tools.

2. Financial support for CAPEX and OPEX costs of electrified solutions

• Ensure that the Industrial Decarbonisation Bank adequately supports electrification,
• Support long-term contracts for industry,
• Generalise CCfDs to enhance the bankability of industrial electrification projects and protect the cost-competitiveness of electrification against CO2 and fossil fuel price uncertainty,
• Dedicate a significant portion of ETS revenues for industrial electrification,
• Adjust State Aid rules appropriately.

3. Unlock the potential of all flexibility sources on a level playing field

• Support flexibility uptake, notably demand response by industrial customers,
• Devise an energy storage strategy,
• Use all flexibility potentials of the electric system on a level playing field.

4. Promote tailor-made industrial strategies to support innovation and competitiveness

• Put forth low and high-heat action plans,
• Promote innovation as a key lever for competitiveness.

5. Upgrade grid infrastructure to support industrial electrification and accelerate permitting

Said Andrea Falciai, EMEA Utilities Industry lead at Accenture: “Driving this transformation calls for collective action. Only through steadfast collaboration among utilities and ecosystem partners – by aligning bold ambitions, pooling investments, and accelerating the deployment of groundbreaking technologies – can Europe seize this pivotal moment to deliver a lasting boost to its competitiveness.”

Eurelectric’s study follows the announcement of their new presidency, with Fortum CEO Markus Rauramo taking over the role of president from Leonhard Birnbaum, CEO of E.ON.

It comes as Eurelectric kicks off their annual PowerSummit, taking place in Brussels on 3-4 June.