Regulation and market design to foster decarbonation through industry electrification

Xavier POUPART Convenor of Working Group C5.041

Background

Power systems are leading the race to address climate change issues by converting non-electric carbon­ intensive energy usages to low-carbon electricity. For example, European energy roadmaps target a rate of electrification of energy usage reaching 60% in 2050 against 23% in 2020.

 

However, at this stage, many large industrial players investigate alternative technical processes to comply with climate change requirements - especially related to CO2 emissions. Electrification is seen as a greater challenge by these parties, who must change their core processes and adapt the entirety of their installations, engaging large investment plans, and facing consequently a consistent level of industrial and financial risks.

 

To mitigate related risks, investors expect visibility on electricity price and value/quality of services in the long run. Regulatory authorities and market designers are developing electrification frameworks based on e.g. economic incentives, constraints on industrial sectors, or accelerated network connection processes.

 

 

Decarbonation through electrification

Aim & Purpose of Working Group

The Working Group C5.41 aims to achieve a first outlook of the new challenges raised by industrial electrification for power systems, analyze recent initiatives by power system regulatory authorities across the world to support these industrial new needs and identify trends and good practices.

 

Scope

The Working Group C5.41 will investigate regulatory practices and market designs dispositions in different countries to cope with industrial electrification issues, whether related to energy contracting (power, energy savings, services) or service systems (flexibility levers, rather at short term). The analysis will be based on practical cases taken from any part of the industry.

 

The WG will first focus on Identifying and characterizing industrial needs (notably technical requirements - high reliability/supply redundancy, on-site back-up generation vs. network solutions; valuation of flexibility services provided by industrial sites; long-term visibility on electricity prices and regulation), then will investigate the challenges for power systems (e.g. hosting capacity, reliability requirements, security of supply, intermittency of load demand.). From this two preliminary analysis, the WG will investigate practical cases of support mechanisms & regulation (e.g. fast-track connection procedures, long-term pricing of energy and services for industrial loads, grants and subsidies - comparative analysis on different practices such as direct funding, outputs feed-in tariffs for different industrial sectors, surrounding infrastructure support, tax eases, etc.).

Il will finally highlight good practices to accelerate and secure decarbonation through electrification coming from market integration challenges related to regulatory schemes supporting electrification, identifying good practices and formulating recommendations.

 

Next steps

 

The WG C5.41 started in January 2025 and is currently recruiting members until mid-April 2025. It will then begin its work with an international survey on regulatory initiatives and market designs to be circulated in the forthcoming months to national committees.

 

As the topic is particularly wide, the WG will also take care of relying on CIGRE existing expertise notably by building bridges with other WG – for instance on technical and reliability aspects, which might be jointly investigated with C4 colleagues.

 

The WG will finally open perspectives to build a fostering framework for industrial electrification, while aspiring to open new fields of investigation.