Industrial electrification and access to electricity at competitive prices - Review of climate and energy policy influence on electricity prices for industry and future implications for industrial electrification

Rapport, 2020

The electrification of industry is driven by the rapidly decreasing price of renewable electricity, together with the need for deep decarbonisation. Electricity can replace fossil fuels in most industrial processes. An important aspect of making electricity attractive to industry is the price, and several of the recently formulated industrial road maps identify access to competitive priced electricity as a key component in a future industrial climate policy. First, w e present an analysis of the electricity prices paid by European industries, and the way in which they have been affected by climate and energy policy during the past 10 years. After that, we also discuss the possible interplay between a future electricity system dominated by renewables and industry and the need for infrastructure development. The combined effect of policy interventions over the past 10 years has reduced the cost of electricity for energy-intensive industries and helped to maintain the electricity cost at an internationally comparable level. The cost of the transition to renewables has been borne by smaller electricity consumers. In the future, industry can play a major and more active role on the electricity market through demand response, sector coupling and storage options. This can be enabled by a concerted effort to repurpose old and develop new infrastructures. The way in which policy is designed will have considerable influence on who bears the cost of this development, and thus on the development of industrial electricity demand and integration.