Industrial Electric Productivity: Myths, Barriers & Solutions

This research paper by the Rocky Mountain Institute (RMI) analyzes the gap in industrial electric productivity across the United States. It argues that while exogenous factors like electricity prices and state incentives play a role, the primary constraints are internal business barriers. By addressing these barriers through holistic design and policy support, the U.S. industrial sector could save 300,000 GWh annually.

• There is a significant disparity in industrial electric productivity between the top-performing U.S. states and the national average. The national average is approximately $3.80 GDP/kWh, whereas the average for the top ten states is $6.10 GDP/kWh. Closing this gap could save 300,000 GWh per year, which represents 8% of all electric retail sales in the U.S.
• A majority of the industrial electric productivity opportunity can be captured by focusing on three specific electricity end uses: facility HVAC, process heating, and machine drives. Improving efficiency in these three areas would address 62% of the total opportunity, equivalent to over 7% of total U.S. electricity use.
• RMI's analysis suggests that exogenous factors—such as the number of energy efficiency programs, the presence of energy-intensive industries, and electricity prices—are not the primary drivers of the productivity gap. For instance, top-performing states do not necessarily have more efficiency programs, and some states with high concentrations of energy-intensive industry, such as New York and Connecticut, still rank in the top ten for industrial electric productivity.
• Internal 'endogenous' barriers frequently hinder efficiency in new (greenfield) facilities. These include a poor understanding of theoretical efficiency potential, a lack of clear energy targets, reliance on 'fossilized' design paradigms, the use of piecemeal rather than system-wide solutions, capital constraints (such as focusing on 'first cost' over long-term returns), and split incentives between companies and equipment suppliers.
• Retrofitting existing facilities presents additional challenges beyond those found in new builds. These include the potential need to scrap equipment that still has useful life, the risk that major retrofits might temporarily reduce productivity and margins, the tendency to prioritize current operations over long-term efficiency, and compartmentalized organizational functions that prevent stakeholder agreement.
• Case studies across different sectors demonstrate the potential for significant gains: in the high-tech sector, aggressive efficiency in data centers can delay capital outlays and increase capacity; in oil and gas, addressing frictional losses in piping can reveal that 85% of pumping energy is wasted; and in food production, improving facility design can reduce energy use by 35-40% in existing facilities and 40-50% in new ones.
• To accelerate industrial energy efficiency, policymakers should provide access to low-cost capital for 'NPV neutral' measures that benefit society but may not meet a company's internal financial hurdles. Additionally, there is a need for education and training for both internal company staff and external contractors to build the skills required for holistic energy efficiency design.

APA

Doig, S., Bell, M., & Mims, N. (n.d.). Industrial Electric Productivity: Myths, Barriers & Solutions. RMI. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2009-18Industrial-Electric-Productivity-090529.pdf

Chicago

Doig, Stephen, Mathias Bell, and Natalie Mims. Industrial Electric Productivity: Myths, Barriers & Solutions. RMI, n.d. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2009-18Industrial-Electric-Productivity-090529.pdf.

Wikipedia

{{cite report |last1=Doig |first1=Stephen |last2=Bell |first2=Mathias |last3=Mims |first3=Natalie |title=Industrial Electric Productivity: Myths, Barriers & Solutions |publisher=RMI |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2009-18Industrial-Electric-Productivity-090529.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{doigndindustrial, author = {Doig, Stephen and Bell, Mathias and Mims, Natalie}, title = {{Industrial Electric Productivity: Myths, Barriers \& Solutions}}, institution = {RMI}, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2009-18Industrial-Electric-Productivity-090529.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }