The slow electrification of heavy industry — quietly accelerating.
Helen Vass · Director, Industrial EnergyTomás Linde · AnalystPublished 28 Mar 2026Last revised 02 Apr
After two years of flat capital expenditure, electrification investment across steel, cement, and chemicals climbed 14.2% in Q1 — the steepest quarterly rise since 2019. Tariff volatility and a hesitant grid build-out remain the two binding constraints we expect to shape the next four quarters.
01
Demand has decoupled from price.
Industrial electricity demand grew 3.1% YoY despite a 9% rise in average wholesale price. Substitution from gas-fired heat is the primary driver.
02
Three regions are pulling ahead.
Nordics, the U.S. Midwest, and South Korea concentrated 62% of new electrification capacity additions in Q1, supported by long-tenor PPAs.
03
Grid interconnection is now the bottleneck.
Median wait time for >100 MW industrial connections reached 38 months across our sample of 14 operators — up from 26 months in 2023.
Key insights for leadership Q1 2026
UPSIDESteel sector electrification CAPEX up 22% driven by direct-reduced-iron pilots in Sweden and Texas. We expect 6 announced FIDs in H2.
RISKCement sector lags structurally. Kiln retrofits remain economically unviable at current carbon prices below €110/t.
SIGNALIndustrial PPAs lengthened to 17.4 years on average — a five-year extension that reflects buyers locking in price stability.