How industrial players can leverage electrification to achieve flexibility
Electrification and the subsequent flexibilisation to handle constantly changing power prices are very likely to become an important part of the future industrial landscape. Many industrial players are already creating hybrid setups — for example, keeping a gas and electric boiler, which can be switched on and off depending on electricity prices.
These two powerful advancements will entail significant changes, such as lower reliance on base load and more variable sources. Naturally, they will also present new challenges, including the need for grid connections with sufficient capacity, technological uncertainties associated with the shift to electric sources and the consequent difficulty in implementing them in a similar manner.
Organisations will also soon be facing choices such as whether to continue with steam and electrify its production or skip this medium and electrify the process altogether.
In a more flexibility-based production world, industrial processes can no longer focus on steady-state production as organisations depart from fossil fuels and embrace renewables. The latter calls for more flexibility and a mindset change from concentrating on efficiency to considering the bigger picture.
How can organisations embrace electrification to reap flexibility benefits? Here are two best practices shared by leaders we interviewed for our report Full steam ahead: The opportunity for industry in decarbonising its steam grids.
Best practice 1: Build capabilities by starting on smaller projects around electrification and flexibilisation, even if only via simulations or modelling
Electrification and flexibilisation will require new capabilities such as trading on power markets or designing and running processes in a flexible setup. All of this will be happening in a world where industrial players can no longer count on the certainty that baseload powered by fossil fuels provides.
“We see that our customers react very sensitively to changes in electricity prices. Especially when customers are operating in an already difficult market segment. When chemical production plants produce in a stable environment, energy prices are an important but not decisive factor.”
Manager, Utility Provider at Large Chemical Park
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The leaders we interviewed agreed that it is crucial to take small steps to implement these advancements. Installing an E-boiler and running it based on power prices might not have a significant impact on the plant operations immediately. However, it will create a learning curve in the organisation without causing any form of disruption.
Another element of E-boilers mentioned by an interviewee was the impact on condensate use. For natural gas boilers, the focus was often on finding cold condensate streams which could be preheated by exhaust gases, leading to a lower temperature exhaust gas. E-boilers however do not have these gases, so you would want to select higher temperature condensate to feed the boiler with to optimise efficiency.
Small projects let companies develop technical expertise about such systems. This is new for many companies, as indicated by the difference between solutions developed by more generalist companies and those coming from new specialised engineering firms.
Redesigning processes
Another important part relates to process design. Alongside flexibilisation, primary processes will likely see further adjustment to run more flexibly. This is a big step away from today’s steady state, highly efficient processes, and will require significant changes.
Production teams will need to coordinate the planning of production to match availability of energy, historically often seen as unconstrained. Matching the production of most energy intensive products to times of most energy availability might sound simple but will require collaboration between teams that have not worked together as intensely before.
“New bureaucratic regulations are generally more expensive, and even if they make sense to reach any political goal, the efforts to reach those requirements on a company level are not taken into account adequately. E.g., higher investment costs are necessary to meet the demands for PV and e-mobility. As a very small energy network operator, we are also subject to disproportionately high reporting and implementation requirements, which request (non-productive) experts and a new setup for the organisation.”
Manager, Utility Provider at Large Chemical Park
The ability to navigate electricity markets smoothly is crucial, as they’re becoming an increasingly larger share of the energy system and its cost. Industrial companies need to start becoming players in this system instead of just customers. This will inevitably require a detailed understanding of the system, its dynamic operations, and its value pools – ultimately helping industrial players to identify the most valuable opportunities.
Success Story: Shell
Using Digital Twin-based simulations of its steam grid sections, Shell tested the impact of the grid’s development on the company’s decarbonisation objectives. This helped the company identify the optimum future grid layout amidst electrification efforts and the subsequent reduced steam use by electrified parts of the site.
Best practice 2: Collaborate with both private and public players in your ecosystem, matching the pace of the broader transition
In our interviews, multiple leaders highlighted the importance of aligning with the overall pace of the transition by collaborating with other organisations that are part of the wider ecosystem required to deliver the change.
That pace is largely set by others, such as Transmission System Operators who build out electricity networks and developers who add renewable energy sources. Industrial players need to understand that they may not be able to move as quickly as they wish due to becoming part of a much more interconnected setup where others constrain them.
“The first results from the Gradyent Digital Twin of the site’s steam system are truly exciting—showing us how we can operate our steam system smarter, more reliably, and with greater energy efficiency! We're unlocking new potential today, while gearing up for a future with shifting demands and rising CO costs.”
Energy & Utility Manager
This is why it makes sense to look around, see what types of initiatives other organisations are taking, and get inspired or collaborate to match the pace of this transition.
Examples of collaborations include exploring options for temporary electricity grid connections that enable faster connections or bundling energy use under an Energy Hub.
Success Story: Shell and TenneT
Shell and TenneT have signed a connection and transport agreement for connecting the first large-scale hydrogen factory to the high-voltage grid. It starts with a temporary agreement to start H production, with the connection becoming permanent once the new substation is completed.
Frans Everts, President and CEO of Shell Nederland, said: “Green hydrogen, electrification and capturing and storing CO will enable us to make Dutch industry more sustainable. We will be able to make raw materials and products we all use every day in a clean way. This collaboration with TenneT demonstrates once more that the energy transition is a team sport. Together, we can accelerate this necessary transition to cleaner energy."
Success Story: Port of Rotterdam
The Port of Rotterdam Authority has launched a feasibility study to increase cross-industry integration for the efficient use of energy and utilities in the Rotterdam industrial cluster, contributing to ambitious regional decarbonisation targets. A preliminary scan revealed that optimising the use of power and utilities across enterprises could result in cost savings of up to 5%.
Another element of this ecosystem is the suppliers and engineers who create the solutions and applications required to make the transition to physical reality.
Collaborating closely with them will become critical as they nearly simultaneously design and deploy new technologies or applications. It will be crucial to confront them with inquiries such as "Is this outdated technology still appropriate?" and engage in collaborative learning with them.
“Be bold and seize the front-runner's advantage by incorporating innovative technologies. Don't settle for the status quo. Challenge the proposals from OEMs or engineering firms and reject standard designs from the 80s and 90s.”
Industry Advisor, Strategy Consulting Firm
Wrap up
Electrification and flexibility are key strategies for industrial players aiming to adapt to fluctuating energy prices and decarbonise operations. Hybrid setups, such as combining gas and electric boilers, allow companies to switch energy sources based on power costs, but challenges arise from grid capacity, technology uncertainties, and the need for process redesign.
Best practices include starting with small projects to build technical expertise, fostering collaboration within ecosystems, and aligning with the broader energy transition pace. These steps help organisations navigate power markets and adapt to a more flexible, renewable energy-based production model.
Learn more about key strategies for steam grid decarbonisation in our report Full steam ahead: The opportunity for industry in decarbonising its steam grids, which features perspectives from 35 leading European industrial executives.