The power and transportation sectors tend to dominate headlines when it comes to cutting greenhouse gas (GHG) pollution, but we need to tackle a large and growing emissions source to hit our climate goals: industry.
U.S. industrial facilities are directly responsible for roughly a quarter of the country’s greenhouse gas emissions. Around 84% of energy-related industrial emissions come from burning fossil fuels to provide heat for manufacturing processes like melting metals, forming plastics, and driving chemical reactions. Decarbonizing industrial heat is crucial to meeting the United States’ emissions reduction commitments.
Fortunately, a new clean technology––industrial thermal batteries––may be the solution to cutting industrial greenhouse gas emissions and reducing industrial power costs. These batteries could lower the cost of electricity for industrial heating by 50%-63%, fundamentally changing businesses’ decision-making around electrifying process heat equipment while meeting up to 90% of industrial process heat demands.
A thermal battery converts electricity into heat, stores the heat for hours or days, and can deliver output heat at temperatures up to 1,500-1,700 °C when the heat is needed by the industrial user with 95% round-trip efficiency. The illustration below shows how a thermal battery charges with an electric resistance heater, then releases heat via hot gas or visible and infrared light.
New research from Energy Innovation models the costs, savings, and performance of thermal batteries. The research illustrates that these batteries can provide reliable heat at $35 to $62 per megawatt-hour (MWh) of thermal output, bringing the costs of producing heat from electricity down to a level that is competitive with continuing to operate existing natural gas equipment.
Industrial heat pumps have a similar impact on cost effectiveness, but thermal batteries operate over a much broader temperature range than heat pumps, dramatically expanding the types of heating processes that can be cost-effectively electrified.
To help speed up deployment of thermal batteries, the government should use funding programs (such as the Advanced Energy Project Credit and the Advanced Industrial Facilities Deployment Program), and the IRS should issue guidance confirming that thermal batteries are eligible for the 45X Advanced Manufacturing Production Credit.
Cutting Industry Costs, Balancing Renewables
In 2022, U.S. industries used around 14,000 petajoules of combustible fuels (excluding feedstocks), almost all to deliver heat at temperatures below 1,000 °C for applications such as producing steam or heating equipment such as furnaces or kilns. Thermal batteries are well-suited to provide this heat. Though a few processes pose challenges for thermal batteries (such as primary steelmaking) or require extreme precision (such as oxy-acetylene welding), these make up less than 5% of U.S. industrial energy use. Therefore, industrial thermal batteries have a vast addressable market and greenhouse gas abatement potential.
There are two approaches to operating thermal batteries. Generation-following batteries enable industrial facilities to make better use of off-grid wind and solar generation. Price-hunting thermal batteries allow grid-connected facilities to buy their electricity in the hours when it is cheapest. Hybrids of these approaches are also possible.
Industries purchasing electricity from the grid must pay the retail rate, which covers not only the cost to generate electricity, but associated electricity transmission, distribution, and overhead costs. A facility can purchase electricity more cheaply by working directly with a solar or wind project, using thermal batteries to compensate for solar and wind variability, making low-cost heat reliably available for industrial use.
This reliability is a function of the battery’s hours of heat storage and the electricity curtailment rate, or the willingness to have excess electricity generation in the sunniest and windiest hours so there is enough during extended periods of less generation. The components of the cost of heat delivered by a thermal battery are shown below for a location in California that relies solely on solar and a location in Texas that relies on a mixture of wind and solar. Costs are higher in the location relies entirely on solar because a larger thermal battery (and more curtailment) is needed to supply heat reliably versus the location served by a mixture of wind and solar.
Accounting for thermal batteries’ capital and operational costs, they deliver heat at one half to one third the cost of using grid electricity directly, making them cost competitive with natural gas pricing.
Grid electricity prices can vary by hour based on generation from renewables, transmission constraints, and demand. A facility using a price-hunting thermal battery could take advantage of these price fluctuations. The battery allows the factory to purchase electricity when the cost is low and to avoid purchasing power in high-cost hours. The graph below shows the state of charge of a price-hunting thermal battery (yellow line) as it charges and discharges in response to changes in grid electricity price (blue line).
The ideal battery configuration achieves the lowest possible cost per unit by balancing electricity savings against the higher capital costs associated with a faster charge rate and more capacity. In 2020, an optimized thermal battery could deliver heat reliably while purchasing electricity at an average price of $10.50 per megawatt-hour (MWh), versus an average price of $30.80/MWh without a thermal battery. In 2022, a year of higher electricity prices, the values were $27.18/MWh with the battery versus $62.35 without.
Benefits to Society
Thermal batteries create emissions-free power that can be used for productive purposes without creating increased strain on the existing grid. Price-hunting batteries consume power during hours where it is less attractive for other uses. They also provide flexibility services to the grid by reducing their electricity consumption at times of stress where outages could occur. Making it easier for utilities to operate a high-renewables grid and avoid blackouts benefits everyone, especially low-income areas that are disproportionately affected by power outages.
Smart Policy can Supercharge Thermal Battery Deployment
Enacting new policy is vital to reducing thermal battery costs and accelerating their deployment. The federal government could offer financial incentives for thermal batteries via programs through the Industrial Efficiency and Decarbonization Office, the Office of Clean Energy Demonstrations, the Advanced Energy Project Credit, and the Advanced Industrial Facilities Deployment Program.
The Inflation Reduction Act also authorized the 45X Advanced Manufacturing Production Credit for manufacturers of clean energy-related technologies, including “battery modules” that do not rely on electrochemical “battery cells.” In its forthcoming guidance on the credit, the IRS should confirm that industrial thermal batteries are a covered energy storage technology.
The Federal Energy Regulatory Commission should determine that industrial customers with thermal batteries pay reduced charges to access the electric grid since they offer benefits to power system. Grid operators can be encouraged to recognize the benefits of flexible resources like thermal batteries and, for batteries equipped with renewable generation, to accelerate their connection with the grid.
Finally, state public utility commissions could create a new rate class for flexible loads like thermal batteries and ensure incumbent utilities facilitate and potentially earn from thermal battery deployment.
A Win-Win-Win for U.S. Industry
Thermal batteries can facilitate industrial electrification and a faster transition to clean industry. They supply heat at up to 1,500-1,700 °C, enough to satisfy over 90% of the industrial process heat demand met with combustible fuels.
With the right policy environment, thermal batteries promote clean and competitive U.S. industry, enhance U.S. technological leadership, and reduce conventional and greenhouse gas pollution. Policymakers should seize this win-win-win opportunity to invest in U.S. manufacturing, protect public health, and contribute to the U.S.’s climate goals.
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