Lowering Power Costs Could Unlock Clean Heat for U.S. Factories

Manufacturing facilities in the United States generate roughly a third of the nation’s energy-related CO₂ emissions by burning fossil fuels for heat. While technologies like industrial heat pumps and electric boilers are commercially ready, they remain uneconomical in most regions because industrial electricity rates exceed natural-gas prices. Experts argue that on-site renewable generation—solar or wind paired with thermal storage—could supply up to one-third of industrial heat demand by 2035, especially for processes below 200 °C. Studies also show that charging factories only marginal electricity costs, rather than full retail rates, would narrow the cost gap and make electric heat pumps competitive, particularly in California and, to a lesser extent, Michigan.

Policy initiatives such as California’s Senate Bill 943 and innovative tariffs from utilities like Otter Tail Power aim to institutionalize these rate reforms. Early deployments, including Antora Energy’s battery-driven steam system in South Dakota, illustrate how cleaner heat can become financially attractive when electricity pricing and renewable access improve.