Cihang Yuan is deputy director of corporate climate and renewable energy for the World Wildlife Fund.
American manufacturers are making long-term investments in an increasingly complex environment: fuel prices remain volatile, global competition is intensifying, domestic supply chains are becoming a renewed priority, and the equipment installed today may shape operating costs for decades. In that context, one opportunity deserves more attention: modernizing the heat systems that power American manufacturing.
Industrial heat — the steam and hot water that process food, the thermal systems behind chemicals and paper, and the heat running through countless manufacturing processes — accounts for a substantial share of manufacturers’ energy costs. Most of it still comes from natural gas, leaving manufacturers exposed every time global energy markets move.
As manufacturers modernize facilities and look for ways to manage costs, industrial electrification should be part of the strategy.
Switching a meaningful share of that heat to electricity, through commercially available technologies like industrial heat pumps, electric boilers, and thermal batteries, could unlock roughly $254 billion in investment, generate $471 billion in economic activity, add $185 billion to GDP, and support 1.66 million jobs by 2035, according to new analysis.
Every dollar invested would support approximately $1.85 in total economic activity. These projects do not stop at the factory gate. They ripple through equipment suppliers, construction firms, engineering services, logistics networks, and local communities in manufacturing-heavy states, while also creating growth opportunities in smaller states with industrial assets of their own.
This is not a projection about some distant energy transition. It is an opportunity already within the nation’s reach, provided policymakers treat industrial electrification as an economic imperative.
For manufacturers, electrification means reducing dependence on a fuel whose price swings with global commodity markets. Long-term electricity procurement, on-site generation, efficiency, and flexible operations give manufacturers more ways to manage their energy bills. For companies competing on tight margins, that kind of stability matters for businesses and consumers alike.
For the grid, flexibility matters too. As rising electricity demand puts upward pressure on costs, policymakers should care not only about how much new demand is added, but also about what kind. Industrial facilities that can store heat and shift some energy use to off-peak hours can help reduce stress on the grid and make better use of existing infrastructure. At a moment when affordability is a top concern for regulators and ratepayers alike, that is exactly the kind of new demand the grid needs.
The barriers are real, but they are not primarily technological. Capturing this opportunity requires three practical moves: make electricity pricing work better for industrial customers, help manufacturers finance projects, and build the domestic supply chains and workforce needed to deploy these technologies at scale.
First, electricity pricing needs to better reflect the value some industrial customers can provide to the grid. In many regions, manufacturers that electrify can face charges that make otherwise promising projects harder to justify, even when those projects could help shift demand away from peak hours. Rate design is mostly a state-level issue, but federal policymakers can help by funding demonstrations, sharing best practices, and supporting analysis that shows how flexible industrial demand can benefit both manufacturers and the grid.
Second, manufacturers need tools to manage upfront costs and prepare sites for investment. Replacing industrial heat systems is not a simple equipment swap. It can involve engineering studies, facility retrofits, utility coordination, and planned downtime. Targeted loans, tax incentives, federal-state cost-sharing, technical assistance, and dedicated funding programs can help early projects prove the economics for the next wave. Clear long-term policy signals also give manufacturers confidence to plan investments that may take years to develop and deploy.
Third, America can build more of the equipment itself and the workforce needed to deploy it. As American factories electrify, more of the equipment used to do it can come from American factories. Capturing this opportunity also requires engineers, electricians, contractors, technicians, and plant operators who understand industrial energy systems. Community colleges, apprenticeships, manufacturer partnerships, and practical supports such as transportation, childcare, and flexible training options can help workers move into these roles.
The political moment is well-suited to this push. Companies are reassessing supply chains, states are competing for industrial investment, and utilities are planning for a new era of load growth. Industrial electrification fits each of those conversations, and the path forward does not depend on speculative technology. The solutions exist. The economic case is documented. What is missing is policy focus.
Competitors abroad are not waiting. Countries in Europe and Asia are investing in industrial electrification, building equipment supply chains, training workers, and positioning themselves to capture manufacturing investment that could otherwise land here. American manufacturers should not lose investment opportunities because other countries offer clearer pathways to modernize industrial energy systems. Keeping that investment here will require better project economics, stronger domestic equipment supply chains, and a workforce ready to deploy these technologies at scale.
America is deciding what kind of industrial economy it wants to build. The answer will not be determined only by which factories are announced or which supply chains are reshored. It will also depend on whether manufacturers can control energy costs, whether the grid can manage new demand affordably, and whether the equipment and workforce behind industrial modernization are built here. Greater energy cost certainty for manufacturers can also help reduce one source of pressure on the cost of food, household goods, and other everyday products.
Industrial electrification belongs in that conversation. If the U.S. wants the next industrial boom to be built here, it needs to modernize not only what factories make but how they are powered.
