UPDATING BOLIERS WITH THERMAL ENERGY STORAGE (TES) ININDUSTRIAL APPLICATIONS

Across manufacturing sectors (including food processing, chemical manufacturing, pulp and paper, and mining and minerals processing)industrial heat is the largest energy demand. These manufacturing sector depends heavily on steam and hot water for core operations.​

In Ontario and Quebec, the manufacturing heartland of Canada, industrial facilities are under increasing pressure to reduce carbon emissions while maintaining reliable, cost-effective process heating.​

For decades, natural gas boilers have been the default choice because of their relatively low capital cost, proven reliability, and widespread fuel availability. However, thattraditional advantage is changing. As boiler assets reach end of life, energy costs rise, and decarbonization requirements intensify, natural gas is no longer the automatic replacement choice.​

Both Ontario and Quebec benefit from clean electricity grids, therefore boiler electrification could be a logical path forward. Replacing natural gas boilers with electric alternatives can significantly reduce on-site CO2emissions and support corporate sustainability goals.​

At the same time, unlimited access to low-cost electricity is no longer a given. Demand on the grid is rising due to electrification, AI-related infrastructure, data centres, EV charging, and the broader industrial growth required to support a growing population. ​

In Ontario, industrial power costs are heavily influenced by peak demand and Global Adjustment exposure. ​

In Quebec, electricity supply is clean and cost-competitive, but power availability can still be constrained during winter peak periods, requiring customers to reduce consumption.​

This raises a critical question for industrial processors: How can facilities replace or upgrade existing boiler infrastructure to provide dependable, cost-effective heat today while positioning themselves for long-term growth and decarbonization?​

Thermal energy storage (TES) combined with electrification, is emerging as a compelling long-term solution. It offers reliability, operating flexibility, and lower carbon intensity, particularly in jurisdictions such as Ontario and Quebec where electricity is clean but pricing and availability can vary by time and season.​

TES systems can store heat generated during low-cost electricity periods, or store captured  waste heatfrom industrial processes. That stored heat can then be released on demand to produce steam, hotwater or other forms of process heating. In practical terms, TES enables load shifting, peak shaving, andmore effective interaction with the grid.

Heat Generator Comparison
Category	Natural Gas Boiler	Electric Boiler	TES
Capital Cost	Low	Medium-Low	Medium
Operating Cost	Medium	Medim-High	Medium
Carbon Emissions	High	Low	Low
Electric Grid Impact	None	High	Low
Energy Flexibility	Low	Low	Very High
Future Carbon Compliance	Poor	Good	Excellent

Two Regional Dynamics Driving Change​

Ontario Electricity Market​

Ontario electricity pricing varies with grid demand. Prices are generally lower during off-peak periods and higher during periods of peak demand. This pricing structure encourages customers to shift electricity consumption to lower-demand periods. Large industrial customers can significantly reduce costs by avoiding consumption during system peak events.​

Quebec Electricity Market​

Quebec's electricity supply is dominated by hydroelectric generation. This gives the province a strong advantage for industrial electrification from both a cost and sustainability perspective. Even in Quebec, utilities encourage load management to reduce winter peak demand and maintain system reliability.

Technology Overview​

Most industrial process heat is still produced by natural gas boilers because they offer a relatively low upfront cost, proven reliability, and high-temperature capability. Plant operators are also familiar with natural gas boilers which are relatively simple to integrate into existing systems. Their primary drawbacks are carbon emissions and fuel price volatility.​

Electric boilers use resistive heating elements to generate steam or hot water. They are highly efficient, require less maintenance than combustion-based systems, and eliminate on-site emissions. They also respond quickly to load changes. However, in Ontario and Quebec, operating costs can become high during peak electricity periods, and large electric boilers may require significant upgrades to a facility's electrical infrastructure.​

TES systems can store heat during periods of lower electricity cost, then release that energy later through a heat recovery boiler to generate steam or hot water without using fossil fuels. This enables facilities to charge the system when power is cheaper or when grid demand is lower, and discharge heat when electricity is expensive or constrained or on demand.​

The result is a more flexible heat infrastructure strategy. TES can reduce the need for major grid upgrades by shifting electrical demand to off-peak hours. That is beneficial not only for the facility ,but also for utilities, because it helps smooth system load and improve grid balance.

Installed Cost Comparison

Boilers are foundational plant infrastructure. Like the electricity supply, they are essential to operations. For that reason, investment decisions around boiler replacement should be evaluated as infrastructure upgrades, not simply as standalone equipment purchases. The expected financial thresholds should align more closely with other core plant infrastructure investments, often in the range of a three- to five-year payback.

Natural gas boilers typically have the lowest upfront cost. However, they generally involve higher maintenance than electric systems, and often require additional efficiency measures such as economizers to improve operating performance. They also remain a primary source of process-related CO2 emissions, with operating costs tied directly to fuel price volatility.

Industrial Heat Infrastructure Options Summary (Ontario & Quebec)

Category	Natural Gas Boiler	Electric Boiler	Thermal Energy Storage (TES)
Typical Use Today	Dominant heat source	Emerging electrification option	Advanced electrification infrastructure
Capital Cost	Low	Medium	High
20-yr levelized cost of heat	$65-70 / MWh	$135–$145 / MWh	$45-50 / MWh
Operating Cost Stability	Medium (gas price volatility)	Low (electricity price swings)	High stability (buy electricity off-peak)
Efficiency	80–95%	98–99%	95–97% charging efficiency
Carbon Emissions	High	Low	Very Low
Ontario Carbon Impact	~50 kg CO₂/GJ	~10 kg CO₂/GJ	~10 kg CO₂/GJ
Quebec Carbon Impact	~50 kg CO₂/GJ	~0.3 kg CO₂/GJ	~0.3 kg CO₂/GJ
Energy Price Volatility	Natural gas price risk	Electricity peak price risk	Lowest risk (load shifting)
Electric Grid Impact	None	High peak demand	Low peak demand
Peak Electricity Avoidance	Not applicable	No	Yes
Ability to Shift Energy Use	No	No	Yes – hours or days
Infrastructure Future-Proof	Weak	Moderate	Strong
Best Application	Existing gas plants	Where power is cheap	Variable electricity rates, high process NG use

Electric boilers often require upgrades to site electrical infrastructure, but they are mechanically simpler and typically have lower maintenance requirements than natural gas systems. They also offer fast response times. Their main drawback is that they must operate during peak periods when electricity costs are often highest, which can significantly affect annual operating costs.

Thermal energy storage systems require a higher initial capital investment, but they offer lower levelized cost of heat over its operating lifespan, exceptional reliability and the greatest operating flexibility. A TES system can replace conventional gas or electric boilers, or allow existing boilers to serve as backup systems. TES charging can occur during off-peak electricity periods or during gaps in facility load, effectively spreading electricity demand over time. As a result, TES can often reduce or avoid the need for major electrical infrastructure expansion.

Quebec’s hydroelectric grid is among the lowest-carbon electricity systems in the world. Winter peak demand still creates periods when industrial customers may be asked to curtail usage. This makes Quebec especially well suited for TES, which can shift thermal load away from constrained periods while maintaining reliable process heat.

Ontario also benefits from a relatively low-carbon grid compared with most North American jurisdictions. However, Time-of-Use pricing and Global Adjustment exposure can make electricity costs especially high during peak periods. That also makes Ontario a strong candidate for thermal energy storage.

Many industrial companies have formal sustainability targets, and carbon reduction is often one of the most important. Replacing or supplementing aging natural gas boiler infrastructure is one of the clearest ways to reduce emissions from industrial operations. TES can materially reduce CO2 emissions when integrated with existing systems, and in some cases can enable near-zero-emission heat when paired with a full replacement of natural gas boiler capacity.  

Strategic Outlook

Industrial heat electrification is accelerating across North America. In jurisdictions with clean electricity and variable pricing, such as Ontario and Quebec, thermal energy storage can play a major role in enabling electrification without overloading the grid.

Facilities that deploy TES gain three major advantages:

•Lower long-term energy costs

•Significant carbon reductions

•Protection from future electricity price volatility

Natural gas boilers remain the lowest-capital-cost option for industrial heat production, but their long-term position is increasingly challenged by carbon policy, corporate sustainability commitments, and fuel cost uncertainty. Electric boilers provide a straightforward electrification pathway, but they expose facilities directly to power price volatility, peak demand charges, and infrastructure upgrade requirements.

In both Ontario and Quebec, where electricity pricing and grid demand vary significantly by time and season, thermal energy storage offers the most flexible and future-ready path for industrial heat infrastructure. By decoupling electricity consumption from heat demand, TES allows facilities to capture lower-cost electricity, reduce grid impact, and support long-term decarbonization.