Part 3: Today’s Drivers and Challenges of Electrification

Earlier in this series we talked about the impact that carbon reduction goals have on organizations, specifically the reporting of the reductions and how to develop effective plans to achieve those goals. In this edition of Customer Insights, we’ll provide an overview into one of the options to reduce your organization’s carbon footprint, electrification.

What is Electrification?

Electrification is the replacement of technologies and processes that are powered by fossil fuel sources with alternatives that run on clean electricity. Although electrification seems like a buzz word today, the word itself is old and goes back to the late 19^th century as the world began to switch from oil lamps to lights and steam engines to motors. Today’s version of electrification is really an extension of the earlier conversions with a slight tweak to the financial assessment, the cost of carbon. The first wave of electrification stabilized in the second half of the 20^th century with the original equipment manufacturers (OEMs) determining the most effective total cost of ownership for their products. Now, that total cost of ownership is being reconsidered. As an example, the idea of operating a large boiler with electricity seems ludicrous, but if you must fuel a traditional boiler using green gas, is it?

Organizations today are focused on three main areas for electrification. These are:

1. Heating – Heating applications powered with electricity can be displaced with natural gas. Some examples are boilers, annealers, kilns, driers and ovens.
2. Vehicles – Many organizations are replacing fleet vehicles where electricity is displacing gasoline, diesel or propane used in forklifts.
3. Energy transfer – The last area is to facilitate energy transfer like heat pumps or heat recovery chillers. Space heating is the common example of this type.

From a carbon perspective, the key advantage of electrification is the ability to power a process using carbon-free sources. For example, a boiler typically uses natural gas to fire. The production of Scope 1 emissions cannot be avoided in this case. The carbon can be captured at a high cost or offset through the planting of trees or other approved offsets, but the carbon dioxide is produced. However, if the boiler was electrified, then clean electricity sources can be identified to provide the power and no carbon is produced from operating the boiler.

What’s Driving Electrification?

Electrification is gaining momentum today for a variety of reasons, and is driven by numerous sectors implementing changes, such as:

• The transportation sector represents 28% of the greenhouse gas (GHG) emissions in the United States. Electric vehicles (EV) are arguably the most significant changes to the automobile since the Model T and internal combustions engines won dominance. The shift to EV is one of a very few viable options the sector has to cause an immediate impact on emissions.
• The residential and commercial sector contribute up to 13% of GHG emissions. Electric water heating and space heating presents a viable path for consumers to actively reduce their carbon footprint whereas in many other policy debates, homeowners are limited in participation with only their votes and voices. Through electrification though, consumers can make a direct impact.
• The industrial sector contributes 22% of GHG emissions. Electrification is a means to accomplish near term goals for industrial users.

*Source: Data from Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018 | US EPA

With the technologies available today, there are more cost-effective solutions to reduce Scope 2 emissions than there are to reduce Scope 1 emissions. AEP Energy is uniquely qualified to provide guidance to your organization on the technologies available helping you on your path to electrification.

Challenges of Electrification

On the surface electrification may seem like an easy win for an organization’s long-term or bridge GHG emission plan, but it is not without challenges. Some of these challenges are:

• Cost – Electricity is more expensive than its fossil fuel equivalent. In other sectors like transportation, there are federal policies to motivate the switch, but there are very limited policies to encourage the industrial sector to make similar changes.
• Production changes – Another challenge is continual production process changes with new technologies. The current processes are well understood, and the product quality known. Changes to key equipment present risks to the quality control and production rates.
• Evaluation data – Electric vehicles and home heating have public profiles with well-established data of pros and cons for these technologies. The industrial sector does not have the same large data repositories to draw project evaluations from.
• Competing technologies – In the future, other fuel sources will be available such as hydrogenation or green gas. Currently, these options are not readily available for most organizations today but may need to be considered for long-term investment.

Electrification will impact you. When exploring projects, organizations should be aware of site specific impacts such as changes to the site load factor and bill composition. Some projects may even trigger a rate change. There are also regional impacts to consider.

Electrification will undoubtably change the gird’s load shape. If people plug in their cars at work or during the day, it could increase the grid peaks. If they are encouraged to charge at night, then it may even drive down the unit cost by improving the grid’s load factor.

Considering Electrification?

Electrification is happening now and growing in momentum. Is it a part of your plans?

AEP Energy will develop a roadmap of your overall organization, establish your carbon inventory and provide a winning strategy for your electrification goals. Contact Dean Naillon, Managing Director, Key Account Solutions with AEP Energy by email ldnaillon@aepes.com or call 614-583-6055 to get started on your road to electrification. If you are already working with an AEP Energy Sales Representative, they will happily provide more information about our carbon reduction strategies and electrification.

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