Electrification of the energy-intensive basic materials industry – Implications for the European electricity system

A techno-economic optimization model is developed to evaluate the impacts that the electrification of industry will have on investments in and operation of the European electricity system as well as the impact that the availability of low-cost electricity will have on the spatial distribution of future industrial plants and their production. The modeling includes trading of different types of commodities, including hot-briquetted iron, methanol and hydrogen. The results show that the modeled geographic location of the industry when the export of commodities is allowed coincides with its present-day location, although the commodity production capacity increases for industries sited in regions with access to low-cost electricity. If present-day production levels are maintained in each region a hydrogen pipeline network provides a way to connect regions with access to low-cost electricity to industry-intense regions and can reduce hydrogen production costs by up to 3% as compared with a situation in which all of the hydrogen demand has to be provided on-site. • The electrification of the basic materials industry increases electricity demand in the EU by 44% (by 1200 TWh). • The electricity generation mix depends on the extent to which it is possible to trade commodities. • The optimized geographic localization of industry increases electricity generation from wind and solar power. • Hydrogen trading via a pipeline network would increase the amount of electricity supplied by wind power and reduce costs. • The availability of low-cost electricity determines the location of electrified industries that depend on hydrogen.