Market Segment Characterization for Heat Pump Electrification
A significant share of industrial energy use and carbon emissions are from low- and medium-temperature process heat. An efficient pathway to decarbonize these processes is through industrial heat pumps (IHPs). Current IHPs can deliver low-temperature process heat that can cover approximately 44% of the US industrial process heat demand. Emerging higher-temperature IHP designs could address up to 55% of demand. This research examines real-world examples of IHP, which suggest that characterizing successful niche implementations, identifying local barriers, and implementing mitigation measures can all help accelerate IHP deployment and build market confidence. Increasing IHP deployment also reduces overall energy use and operational costs, while lowering greenhouse gas emissions. In Vermont, the benefits of IHPs are particularly relevant for food processing, the beverage industry, lumber, and wastewater sectors. By mapping commercially available technologies to these sectors, this whitepaper provides practical examples of how industrial heat pumps can reduce energy consumption, improve product quality, and support climate goals.
This research suggests that achieving the full impact of IHPs requires coordinated and strategic action that considers barriers such as high energy prices, the up-front costs of IHP systems, the state’s limited workforce expertise with this technology, and the complexity associated with integrating IHPs into existing industrial processes. This research further suggests that utilities and policymakers can support IHP adoption and market transformation through flexible electricity tariff schemes and by enabling demand response programs. This research also finds that incentives, improved marketing (based on successful demonstration projects targeting niche customer segments), and workforce education are critical to scaling IHP adoption. By aligning technical innovation with economic and policy frameworks, Vermont can lead in industrial decarbonization and electrification through IHPs.