Understanding the electrification of industrial energy consumption in Europe

Over the last 20 years, coal consumption and -to a lesser extent- oil consumption have steadily decreased to the advantage of electricity in the European industry. In the meantime the natural gas penetration slowed down, stabilizing during the 2000s. What are the uses of electricity in industry? What are the reasons for this large penetration?

Electricity covers a rising share of industrial energy needs

The share of electricity in industrial energy consumption, namely the electrification rate, grew from 23% in 1990 to 32% in 2011 whereas the share of coal dropped from 25% to 14% and that of oil from 15% to 12%. On the other hand, the share of natural gas dropped from its peak of 32% in 2001 to 27% in 2011. Electricity ranked third behind coal and natural in 1990 and went on to become a leading energy source in industry during the 2000s.

Share of electricity in industrial energy consumption

Source: Enerdata, Global Energy and CO2 Data

The electrification rate increased in all main branches except paper. The largest progression took place in transport equipment (+14 points), food (+11 points), machinery (+9 points) and the steel industry (+8 points).  Non-ferrous is historically the industrial branch with the highest electricity penetration.

Electrification rate by industrial branch in the European Union

Source: ENERDATA, Global Energy and CO2 Data

The change in the industry structure (i.e. an eventual shift to more electricity intensive industries) does not explain the electricity penetration. Calculating the industrial energy consumption in 2010 by assuming the same share of industrial branches as in 1990 does not impact the breakdown by energy in 2010. The diffusion is found to be mainly caused by two factors. Firstly, the development of electric uses in the industry, such as motive power linked to an increase mechanisation, and secondly, fuel substitutions in production processes (electric steel process, electric furnaces for glass making, etc).  

Strong spread of electric motors in industry

The use of electric motors developed strongly over the past 20 years. According to a study carried out by the Fraunhofer ISI institute, the use of electric motors now represents about 70% of the electricity demand in industry.

Breakdown of electricity consumption in industry by uses in the EU

Source: Odyssee from Fraunhofer ISI

There are four main uses of electric motors. Pumps represent a high share of the electricity demand in industry (around 12% for the EU). The paper industry, in particular, has a very high share of pumps in electricity consumption, mainly used for pulp and water pumping. Ventilation represents also an important use for cooling, drying, suction cleaning or for the ventilation of rooms. It accounts for about 9 to 17% of electricity demand. Compressed air represents from 2 to 20% of uses depending on the branch; mainly for pneumatic drives for tools. Electric motors are also used for cold supply but impacts industrial electrification to a lesser extent.

Fuel substitution in process technology for high energy intensive industries

Process technology represent on average about ¼ of the average needs of electricity in industry but corresponds to 40% of the demand for metal processing, steel and rubber industries and exceeds 60% for non-ferrous metals.

Several factors have encouraged industrials to substitute fossil fuels by electricity in their production processes. Firstly, relative prices of electricity with natural gas and heavy fuel oil dropped strongly during the 90’s and this situation still continued with a slow decreasing trend after: electricity price which was about fivefold higher than oil or natural gas price in 1995 was “only” threefold higher during the 2000s.

Relative prices of electricity in European Union

Source : ENERDATA, Global Energy and CO2 Data

Secondly, environmental pressures could explain in part the penetration of electricity in the industrial market. The use of electricity as a substitute of fossil fuels allows industrials to shift their direct CO2 emissions to the electricity sector. The ETS has clearly encouraged such a trend and also leads to a reduction of local pollutants such as NOx or SO2.

The efficiency of the technology is another important factor. To illustrate, two different processes can be used to produce steel: namely blast furnace (coke oven consuming coal), using iron ore, and electric arc furnace (consuming electricity), using direct iron scraps and reduced iron. The second process consumes two to three times less energy than the first one and has been strongly developed since the 1990s. The diffusion of the electric process contributed to the erosion in coal consumption (from 65% of energy consumption in 1990 to 58% in 2009) to the advantage of electricity (21%, from 13%). Consequently, the electric intensity of steel (electricity consumed per ton of steel) has progressed over the period; from 617 kWh/t in 1990 to 783 kWh/t in 2009.

Electricity spread in the steel industry

Source: Enerdata

Finally, other factors such as the security of supply and the ease of use also contributed promoting the diffusion of electricity.

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