The Role of Electrification in the Food & Beverage and Consumer Packaged Goods Sectors

Manufacturing sectors, such as Food and Beverage and Consumer Packaged Goods, stand at a pivotal point in their decarbonization journey. Their high-temperature applications, while vital to our economy, often rely on carbon-intensive energy sources that contribute significantly to climate change. To achieve ambitious Net Zero targets, a fundamental shift is needed.

For many manufacturing processes found in these sectors, the decarbonization of heat and thermal loads creates a challenge when considering the reduction or elimination of steam. Electrification, powered by renewable sources such as solar and wind, offers a compelling pathway to decarbonize high-temperature applications.

By replacing fossil fuels with clean electricity, industrial processes can dramatically reduce their greenhouse gas emissions, mitigating environmental impact while enhancing operational efficiency and competitiveness.

Decarbonizing Thermal Processes

New and proven technologies increasingly support the decarbonization of heat within the F&B sector. The analysis of steam consumption within a process has become imperative to understand what can be solved through hot or warm water replacement.

The heat pump is an example of a technology that makes electrification increasingly viable. These innovative systems offer compelling efficiency gains compared to traditional fossil fuel-based systems. In industrial settings, heat pumps can deliver up to three times greater efficiency, making them an economically viable solution for a wide range of low- and medium-temperature applications. This reduces energy consumption, lowers operational costs, and significantly decreases greenhouse gas emissions.

For manufacturers in the F&B and CPG sectors that are defining their optimal techno-economic pathways, electrification is emerging as a key strategy to reduce their carbon footprint rapidly. However, this transition presents a unique set of challenges that require strategic planning and innovative solutions.

The Electrification Imperative

Manufacturers with ambitious short-term decarbonization goals are increasingly considering electrification versus other decarbonization technologies. This is because electrification often provides a more readily available pathway to reduce emissions, especially when coupled with renewable energy procurement.

Compared to nascent alternatives like green hydrogen or carbon capture, electrification technologies are often more mature and commercially viable, enabling faster implementation and lower total cost of ownership (TCO). This makes it a particularly attractive option for F&B and CPG organizations facing increasing pressure to meet immediate upcoming sustainability targets.

While electrification offers an optimized pathway to decarbonize operations, it's not without its hurdles. Manufacturers can face significant headwinds, including:

• Increased Cost of Business: Electrification often demands significant upfront investment (CapEx) for infrastructure improvements and can lead to a substantial increase in operating costs (OpEx) – sometimes doubling them. This rise in OpEx is primarily due to the generally higher cost of electricity per unit, especially for organizations with multiple locations. However, it's important to remember that electrification typically results in lower overall energy consumption since electricity is generally more energy-efficient than gas. The key factor influencing OpEx is the cost of electricity itself. When the cost of natural gas is significantly higher than electricity (typically 2 to 3 times higher), and sufficient heat can be recovered on-site, OpEx can actually decrease, leading to a lower Total Cost of Ownership (TCO).

The images below illustrate the price ratio of electricity to natural gas. A lower ratio generally indicates greater feasibility for electrification.

• Grid Limitations: Many energy providers are facing challenges with accommodating increased electricity loads to meet the consumption and demand profiles associated with widespread industrial electrification. In addition, grid capacities are slow to change and infrastructure development takes time. Grid reliance and ensuring operational resiliency is a priority consideration for manufacturers to ensure process consistency.
• Green Energy Challenges: Sourcing sufficient renewable energy can be difficult, particularly in regions with limited renewable resources. Relying on RECs or offsets as a primary solution becomes increasingly expensive and less likely to align with corporate strategies under higher electricity consumption scenarios.

Navigating the Complexities of Electrification for Manufacturing

As Net Zero objectives accelerate the adoption of electrification, it's essential to recognize that this transition is a significant undertaking. It's not merely a matter of replacing equipment; it demands a strategic and holistic transformation. This transition, while complex, is far from impossible. There are strategies and technologies that manufacturers can utilize to confidently overcome the hurdles of electrification for the F&B and CPG sectors.

• Renewable Energy Procurement: Negotiating power purchase agreements (PPAs) for renewable energy or investing in on-site renewable generation, such as rooftop solar installations or wind turbines. This could also include exploring innovative financing options like "utility-as-a-service" models, where a third party owns and operates the renewable energy assets, reducing upfront capital expenditure and providing predictable operating expenses.
• Demand-Side Management: Implementing strategies to optimize energy consumption and reduce peak demand charges. This could involve leveraging smart grid technologies and demand response programs to shift energy usage to off-peak hours, potentially integrating battery storage systems to further enhance flexibility and reduce reliance on the grid during peak periods.
• Leveraging Government Incentives: Capitalizing on incentives offered by the Inflation Reduction Act (IRA) to reduce the cost of electrification technologies and accelerate the transition. This could include tax credits for renewable energy investments, grants for energy efficiency upgrades, and rebates for electric vehicle charging infrastructure.
• Strategic Partnerships with Utilities: Manufacturers can significantly benefit from proactive collaboration with utility companies to secure reliable power supply. Partnering with utilities facilitates the integration of new electric technologies into existing operations. Utilities can also provide responsive demand programs to minimize the impact on the grid during peak periods.
• On-site Generation and UaaS: Investing in on-site generation of renewable energy, storage, and even central plant operations, can provide a reliable and sustainable energy source. Additionally, utilizing utility-as-a-service (UaaS) models can help offset upfront costs and operational risks associated with on-site generation. This approach can provide a more flexible and cost-effective solution for manufacturers, enabling them to meet their energy needs while reducing their carbon footprint and staying focused on their core business processes

Beyond Electrification

Many factors influence the feasibility of electrification, including technology maturity, supply chain constraints, geographical limitations, and risk tolerance. When electrification alone cannot meet decarbonization needs, organizations can explore alternative solutions such as:

• Biomass: Harnessing the power of organic matter, biomass offers a renewable alternative to fossil fuels. Advancements in biomass technology are improving efficiency and mitigating concerns related to fuel availability and spatial constraints.
• Solar Thermal: This technology directly converts sunlight into heat, reducing reliance on electricity for certain processes. While capacity, intermittency, and seasonality considerations remain, solar thermal provides a valuable tool for targeted decarbonization efforts.
• Renewable Natural Gas (RNG): Captured from organic waste sources, RNG offers a seamless transition for existing natural gas infrastructure. As production scales and costs decrease, RNG is becoming an increasingly viable option for decarbonizing heat-intensive processes.
• Green Hydrogen: Produced from renewable energy sources, green hydrogen holds immense promise for decarbonizing hard-to-abate sectors. While challenges remain in terms of availability, efficiency, and cost, ongoing innovation is rapidly advancing green hydrogen technologies and unlocking its potential for energy storage and transport.

In today's dynamic landscape, a resilient decarbonization strategy is essential. Relying solely on a single solution can expose organizations to vulnerabilities and hinder long-term progress. Building a diverse portfolio of solutions, with electrification as a cornerstone, enhances resilience and adaptability.

Electrification, while presenting unique challenges, offers manufacturers a powerful lever to dramatically reduce their environmental impact. By embracing a strategic and holistic approach, organizations can confidently navigate the complexities of electrification, leverage a diverse toolkit of complementary solutions, and build a resilient decarbonization strategy that drives long-term value. At ENGIE Impact, we empower manufacturers to accelerate this critical transition, providing the expertise, innovative technologies, and financial solutions needed to forge a sustainable future for the industry.