Optimizing Industrial Heat Electrification: Balancing Cost and Emissions

The electrification of industrial heat is a promising pathway for decarbonization, yet challenges persist in balancing capital costs, operating costs, and emissions reduction. While previous studies have assessed electrification through heat integration and graphical methods, these approaches do not inherently determine the optimal hybrid technology configuration. This study introduces an optimization-based framework that systematically evaluates the cost-optimal allocation of electrified and conventional heating technologies. Formulated as a Mixed-Integer Linear Programming (MILP) model and implemented in Gurobi, the framework minimizes Total Annualized Cost (TAC) while satisfying heat demand, technology constraints, and emissions targets. Applied to an industrial case study, the model compares three scenarios: a fully conventional system relying on steam boilers and fired heaters, a fully electrified system utilizing high-temperature heat pumps, electrode boilers, and electric heaters, and an optimized hybrid system that strategically integrates both conventional and electrified technologies. The results demonstrate that the optimized hybrid system achieves a 75% electrification rate, reducing TAC by 7% compared to previous graphical electrification assessments. The model selects a combination of a high-temperature heat pump and a steam boiler, highlighting the importance of accounting for heat pump cost savings in economic evaluations. Additionally, a comparison with Carbon Capture and Storage (CCS) reveals that partial electrification results in a lower CO2 abatement cost of 131 $/tCO2, compared to 140 $/tCO2 for CCS, reinforcing the economic viability of industrial heat electrification. This study provides a systematic optimization framework for guiding industrial electrification decisions and emphasizes the role of carbon taxation, electricity pricing, and renewable energy incentives in shaping cost-effectiveness. The findings underscore the importance of integrating process optimization with techno-economic analysis to accelerate industrial decarbonization.