Decarbonizing industrial small and medium enterprises: Novel solutions to the challenges

The decarbonization of economies and energy systems requires participation from all end-users including industrial SMEs. This work investigates various development scenarios in 2030 of two different firms, a gravel plant and a food processing factory. The results show that the optimal decisions towards decarbonization highly depend on individual potentials and targets of the firms. For firms with high RE potentials, adopting zero-emission technologies can be economical especially with the rising fossil-fuel prices; vice versa, total costs significantly rise for firms without RE, as renewable electricity and hydrogen imports are expensive. Arguably, the existing fossil-fuel subsidies and levies in electricity prices also deter firms from electrifying and decarbonizing their production. This is especially a problem for heavy transport fleet and very-high temperature heat generation, the so-called hard-to-decarbonize applications. The challenges - expensive upfront investments, energy prices and limited RE potentials - are known from academic and political discussion. This work shows that innovative (local) business models, i.e., RE power purchase agreement and local hydrogen production and storage services, allow firms to cheaply procure and/or produce RE. Regulations aiming to bridge producers and consumers of all energy forms are necessary to facilitate these business models.