By Maggie Molina | Thu, July 31, 25
As our region strives to meet ambitious energy efficiency and emissions reduction goals, we will need a diversity of savings opportunities, including those from the industrial sector and other large energy users. These projects also bolster the regional economy, job growth, industrial competitiveness, and energy security. Earlier this month, NEEP attended ACEEE’s Industrial Summer Study to explore opportunities for our region, from the Mid-Atlantic to New England, to expand opportunities in the industrial and large energy user sector.
The good news is that industrial companies continue to show interest in investing capital in energy demand management projects and net zero emissions goals to remain competitive. But they also continue to face stubborn market barriers. Here are a few takeaways from the event’s program and conversations.
Large Amounts of Untapped Energy Savings and Emissions Reductions
The industrial sector comprises a large share of regional energy use and emissions, although it varies across the region. In Pennsylvania, for example, the industrial sector makes up about 30 percent of statewide greenhouse gas emissions.
Cascade Energy’s CEO Dan Brown kicked off the Summer Study’s plenary session, Industrial Growth in a Changing Energy and Market Landscape, using analogies of dinosaurs (a modern-day Decarbosaurus!) and earth science (industrial opportunities as layers of the Earth). Digging through the layers, we can find opportunities from a range of strategies from industrial building upgrades using high-efficiency HVAC systems to manufacturing processes that are optimized to reduce energy waste and improve operational efficiency.
Nationally, energy efficiency strategies make up the largest segment of industrial decarbonization, as shown in the 2022 Industrial Decarbonization Roadmap from US Department of Energy (US DOE). Efficiency is also the lowest cost pathway to get there and can even have a negative cost of carbon abatement (i.e. savings offset the costs).
Industrial heat pumps and electric boilers offer clean and efficient alternatives to inefficient fossil-fueled boilers currently used in industrial processes like steam heating. Low-temperature industrial processes, like those used in food and beverage processing, make up about 30 percent of US industrial thermal energy demands, presenting a relatively easy opportunity for energy and emissions savings through electrification.
Market Barriers
Despite the tremendous opportunity, industrial customers and other large energy users face persistent market barriers to tap into these savings. While company leadership may support these projects, there is often a gap between company strategy and facility actions, which can stem from low trust in overall decarbonization strategy. Projects also face high upfront costs and a challenging business case even when they result in long-term savings.
Speakers in the session on industrial heat pumps shared that operational and financial uncertainty create a key barrier, since price volatility makes operational expenses difficult to predict and there are limited case studies with performance data. To overcome this uncertainty, project teams have an opportunity to collaborate with experienced end users and to leverage energy-as-a-service to stabilize operational costs. Another common barrier is process integration complexity, as many facilities have no room for downtime during installation, and projects may require additional upfront costs to navigate project constraints. Project teams may consider prioritizing the electrification of new facilities over retrofits and conducting detailed feasibility assessments to identify top sites to avoid added complexity.
Strategic energy management (SEM) is a helpful on-ramp to secure buy-in from leadership. SEM is a holistic approach to improving energy performance over time by embedding it in the culture of a facility. For example, Eversource CT presented on their work with Connecticut State Colleges and Universities over the last three years on SEM. They found that successful schools intentionally change the culture around energy use by diversifying their energy committees, which breaks down silos. These committees work across departments and priorities to make lasting change through standard operating procedures (SOPs) and checklists, and share their successes through metrics and stories. SEM creates operational savings as well as a long-term pipeline of projects, which can lead to deeper, more complex projects.
Growing and Readying the Regional Industrial Workforce
Energy efficiency is already a large employer of our regional economy. But the energy workers of the future are not going to be the same as those of the past.
Industrial assessment centers (IACs) help train the workforce, and our region has several centers. Energy management for higher education can accelerate and expand the energy management workforce. Lawrence Berkeley National Laboratory (LBNL) shared curriculum for ISO 50001 (a standardized energy management approach) and 50001 Ready (a US DOE-led program). Higher education institutions can use this curriculum to ensure that an energy management credential is valued and understood by industry. 50001 Ready is a proven pathway for persistent energy savings and energy-based greenhouse gas reductions.
To accelerate the adoption of industrial heat pumps (IHP), workers with IHP experience will be needed from specification and design to installation to operations and maintenance. Training, including hands-on demonstrations at facilities, will be important for building up this workforce. This also presents an opportunity for local jobs and wider economic benefits in the region.
Data Centers
Data centers are a growing source of energy consumption and a topic of several sessions at the event. There are many types of data centers, but cloud data centers, especially hyperscalers run by large technology companies, are driving much of this growth. The level of demand growth from data centers is a subject of debate, including in the PJM region. Some analysts estimate that projected data center growth in the PJM region is spurring capacity prices up by a factor of 10.
Regardless of the actual demand figures, energy efficiency at data centers will be a commonsense strategy to mitigate load growth from these large energy users. At Summer Study, the Energy Trust of Oregon presented on how utility programs can help data centers tap into opportunities for energy efficiency, such as through the ASHRAE Standard 90.4 Energy Standards for Data Centers and beyond.
Regional and State Opportunities
Even as federal grants are being rolled back for industrial clean energy projects in some cases, others are continuing, and states and utilities can step in to do more in the industrial sector.
For example, the Reducing Industrial Sector Emissions in Pennsylvania (RISE PA) program is helping industries of all sizes lower emissions through a $396 million grant from the U.S. Environmental Protection Agency. The PA Department of Environmental Protection (DEP) is administering the program and accepting applications through August 15 for small- and mid-sized manufacturers (for project costs between $50K and $1M) and through August 29 for medium- and large-scale awards.
Utilities across the region also play an important role in achieving industrial and large customer energy savings. Utilities can pursue untapped industrial potential by building lasting relationships with key stakeholders and streamlining program delivery across utilities so that market actors can better access these programs.
A broad group of stakeholders, including states, utilities and others, can do more to support energy efficiency and electrification projects in the industrial sector. A recent poll of the IHP Alliance Working Group from January points to the following as most impactful actions stakeholders can support (in order of greatest to least): market education and information exchange, industrial heat pump demonstrations, utility engagement, policy education & advocacy, and workforce development.
NEEP looks forward to supporting our region in pursuit of larger energy savings and emissions reductions for industrial customers and large energy users.
