Energy Transition

Industrial electrification is a joint venture: why collaboration across sectors is key

Man holding tray steel frame with blue sparks: Industrial electrification can only scale if partnerships are forged involving banks and energy companies.

Industrial electrification can only scale if partnerships are forged involving banks and energy companies. Image: Unsplash/Rob Lambert

Francisco Laverón
Head of Energy Prospective and Policy, Iberdrola SA
Randolph Brazier
Global Head Clean Power Systems, Global Sustainability, HSBC
Natalia Zabolotnikova
Accenture Fellow , World Economic Forum
Xabier Mugarza Zorriqueta
Project Fellow, Clean Power and Electrification, World Economic Forum
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This article is part of: Centre for Energy and Materials
  • The green transition requires more than integrating new technologies into industrial processes; a paradigm shift is needed across the whole electrification value chain.
  • Partnerships and new financial models involving banks can overcome financial barriers to fulfil industries' sustainability journey.
  • Innovative solutions with energy companies can extend to energy storage and heat pumps, self-consumption, electric mobility, process electrification and green hydrogen.

Achieving sustainability in industry can't be a lone venture, including when it comes to electrifying low-to-medium heat industrial processes e.g. drying, pasteurizing, washing, boiling, steam, bleaching, distilling.

Transitioning to greener energy sources is not just about already mature and commercially available technologies – it is a paradigm shift that calls for fresh approaches to partnerships, alliances and shared visions across the entire electrification value chain.

Industrial players are obliged to modernize their energy consumption through an electrification journey, which requires partnerships with banks to overcome financial hurdles and alliances with utilities that go beyond their usual roles.

These partnerships are not one-off case studies but blueprints for other industries. A broader range of collaboration can extend from sharing industry insights to other comprehensive alliances with other industries and electrification equipment makers, for example.

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Financing the marginally bankable

When it comes to low-carbon infrastructure, projects often require new technology, new business models and new tailored commercial structures, which unfortunately pose challenges when trying to access traditional finance structures. Projects can simultaneously be higher risk and too small scale for typical financing models.

By working with an organization such as Temasek to launch Pentagreen, we can help enable the financing of marginally bankable projects; providing financial solutions to innovative and transitional projects that otherwise might not receive them is an important step in advancing the global energy transition.

Pentagreen Capital, a joint venture between HSBC and Temasek is a debt financing platform dedicated to accelerating the development of sustainable infrastructure in Asia, with an initial focus on Southeast Asia.

Scaling sustainable and resilient infrastructure is key to accelerating an orderly and just transition and to helping to mitigate some of the worst effects of climate change. That’s why HSBC and Temasek launched Pentagreen in 2022. Pentagreen recently announced its first financing to accelerate the deployment of solar projects in the Philippines. This partnership is already beginning to help plug financing gaps, address the infrastructure challenges across Southeast Asia and support the region's wider electrification.

From seed to scale

Scaling climate tech is a core tenant of HSBC’s strategy for achieving our net zero ambition and since the founding of HSBC Innovation last year we are working to increase our offering to the climate tech landscape.

Leveraging existing networks can help accelerate the scaling of climate technologies needed for the net zero transition. Connecting our clients, including companies across the supply chain, can not only accelerate the deployment of these critical technologies but can be deployed cross-sector, to help enable carbon reductions in heavy emitting industries too.

One example of this would be our support for AMPD Energy. AMPD Energy aims to help decarbonize the construction industry by replacing traditional diesel generators with battery-powered generators, reducing emissions by an estimated 85%. HSBC’s global network and financing have helped enable AMPD Energy to expand beyond Hong Kong and into other countries globally.

Industrial decarbonization is a joint venture

Energy companies have expertise in digital, intelligent and innovative solutions to give customers the power they need. As industrial customers progressively electrify their operations, they can explore smart and innovative solutions: energy storage and heat pumps, self-consumption, electric mobility, process electrification and green hydrogen.

Initiatives like Q-cero, launched in January 2024 as a collaborative platform for decarbonizing thermal demand in Spain, highlight the importance of collective action in addressing industry-wide challenges. This platform serves as a common forum where stakeholders from across the value chains can come together to clarify the current landscape, collaborate on solutions and strategies for moving forward, identify barriers and share insights and best practices across sectors.

Similarly, global alliances such as the Energy Transitions Commission's Mission Possible Partnership and regional forums, such as the European Roundtable of Industry, promote knowledge-sharing and synergy to advance decarbonization efforts.

Iberdrola's startup programme – PERSEO – further demonstrates a commitment to innovation and sustainability by partnering with startups in the power sector, facilitating Iberdrola's access to cutting-edge technologies while cultivating a global ecosystem of electricity-sector startups focused on sustainability. For example, collaborations with Nordic thermal battery producers Kyoto Group concentrate on accelerating the adoption of renewable electricity and heat storage technologies to decarbonize industrial processes.

Thus, decarbonization and industrial electrification first require that those on the journey recognize that it is a team effort. Through innovative partnerships and collective action across the value chain, industries are not just reducing emissions but shaping a more sustainable future. From financing solutions to technology deployment, each step forward is an advancement towards achieving net zero targets by 2050.

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