On-Site Power Generation to Kickstart the Decarbonization of the Commercial and Industrial Sector, According to Lux Research 

 

The well-known concept continues to evolve with the energy transition and will kickstart the decarbonization journey in various industries

BOSTON, MA, September 1, 2021 – The decarbonization and decentralization of the energy system have spurred on-site power generation at the residential level, with rising deployments of rooftop solar systems and behind-the-meter batteries. In parallel, on-site generation has seen adoption in commercial and industrial (C&I) facilities facing issues related to grid capacity, energy security, process integration, and production of nontradable byproducts. Moving forward, the same factors that have triggered distributed generation to date are poised to play a role in the future when C&I facilities become even larger consumers of electricity, according to new data from Lux Research, a leading provider of tech-enabled research and innovation advisory services.  

Lux’s new report, “Decarbonization of Industry: The Future Role of On-site Power Generation,” explores decarbonization trends across industry, current drivers for distributed power generation, and the role of on-site generation in the future energy system. Producing power on-site is not something new – diesel generators have been widely used to power critical facilities and remote operations like mining or agricultural production. Rather than being a novel solution to meet power consumption, on-site power generation is a well-known concept that continues to evolve with the energy transition. 

“The future role of local generation will be marked by the decarbonization of the industrial sector,” explains Jessica Hernandez, Analyst at Lux Research and lead author of the report. “As major industrial economies like Germany announce carbon neutrality targets, the electrification of this sector will be imminent – resulting in a sharp increase in power consumption and making electricity the primary energy carrier in industry in the future.” 

The future role of electricity will be particularly important in light industry segments. Unlike heavy industries (e.g., petrochemical, steel), light industrial activities like farming, food, and tobacco, or textile production rely on low-to-medium-temperature heat streams below 500 °C. This range of temperatures can be partly achieved using electric boilers, which creates a more relevant opportunity for on-site power generation equipment. Overall, the electrification of the industrial sector combined with the ongoing decentralization of the energy system raises questions about future electricity security and the role of distributed generation in balancing the growing demand for power. 

The energy team at Lux has consistently referred to the energy transition as a movement happening in waves – starting with the built environment, followed by the mobility sector, and ending with the complete decarbonization of industry. The latter not only is the last frontier for global carbon neutrality but remains the most difficult segment to decarbonize. Download the executive summary of the report to learn more.