Industrial Heat: A driver for the green transformation

Industrial heat driver for the industrial green transformation
Why the elephant in the room no one talks about deserves laser-focused attention from politicians and industrial leaders

On the path to a zero-carbon emission economy, the EU has decided to increase the use of renewable energies by up to 40% until 2030 as part of the European Green Deal. And while renewable electricity received a lot of attention over the last decade for its ambitious but inevitable path to the decarbonization of energy, there is an elephant in the room that no one talks about. He is huge, he is sluggish, he is rather dirty than green and his name is Heat.

Heat accounts for about half of the final energy consumption in the EU, as much as the transportation and electricity production sectors put together. Unfortunately, most of this heat stems from fossil sources with only a small share being covered by renewables. However, the combination of rising gas and oil prices due to the Russian war in Ukraine and the increasing pressure on companies caused by the introduction of CO2 pricing makes it impossible to ignore the heat and its urgently needed green transformation. While most of us are by now aware of the more sustainable alternatives to provide space heat and warm water in private households, little attention has been given to the other area of heat: industrial process heat. This is even though the latter in the EU economy consumes around 2000 TWh of heat per year, making up for 16% of the final EU energy consumption.1

But which solutions are available to replace the coal, gas, and oil-driven industrial heat?

Here, multiple options ranging from burning green hydrogen to biomass or heating with renewable electricity exist. These all have their legitimate use-case, yet they have the downsides of either being very expensive or being exposed to limited availability, which makes them competitive only in selective applications. Thus, there is a strong urgency for a more scalable solution to decarbonize the massive amounts of industrial heat evident in our economy as quickly as possible.

Vincent Grass, VP of Nestlé called on manufacturers attending ATMO Europe to produce high-temperature hydrocarbon heat pumps2

Luckily, there is no need to look far. Heat pumps have gained a lot of attention as an alternative heat source to provide warmth for private households. They can run on renewable electricity and all you need is a suitable source from which you draw heat at lower temperatures. The heat pump will then pump it to the desired higher temperature e.g. for heating private homes. What many of us do not know, is that modern high-temperature heat pumps (HTHP) can deliver temperatures above 100 °C with the first commercial systems even reaching up to 200 °C. This technological development offers a huge decarbonization potential for the industry, as a full third of industrial processes take place at temperatures below 200 °C. 3 Therefore, this topic has gained increasing momentum and industry leaders such as Nestlé are calling for producers of steam-generating heat pumps to increase their efforts for product availability.4

This is further amplified by the fact that the economic viability has improved due to the European energy crisis and the relative decrease in the price of electricity in relation to gas, making a switch economically and environmentally interesting for many companies. This is why heat pump research in the NORDICS is years ahead because gas has not been as cheap compared to electricity as in other countries.

Electricity-gas price ratio for European countries and its development from 2021 to 2022. For most countries the ratio of electricity-to-gas price dropped between 2021 and 2022, making gas less attractive and heat pumps driven by electricity economically feasible.

But while heat pumps have the same fundamental working principle, compared to private-household heat pumps, there are some key differences.
  1. Technology requirements: higher temperatures as well as very high efficiencies needed for economically viable operation require changes to HTHP components and design.  
  1. Heat source: unlike in household heat pumps, ambient air cannot serve as a viable and constant heat source, as heat sources are highly heterogenous in industrial processes.  
  1. Integration: Industrial HTHPs are not plug-and-play solutions that cannot be installed without large changes to the heating system. A suitable source needs to be identified and the heat pump must be specially designed to meet the source requirements, i.e., the process in which the heat will be used.  

The technology is mainly dependent on two decision factors. First, the choice of an adequate refrigerant as a working medium to operate at higher temperatures. While many traditional refrigerants will be forbidden in the future because of their high greenhouse-warming potential, new synthetic refrigerants are developed as so-called drop-in solutions. Another even more promising option in the long term is using natural refrigerants (e.g., ammonia, CO2) or hydrocarbons (e.g., propane). Second, especially for the efficiency of heat pumps operating in higher temperatures, the selection and design of adequate compressor technology is vital. Here, experts consider oil-free compressors to be the holy grail, achieving the high efficiencies required for profitable industrial applications. In this area, there is critical emergence notable of several technological innovations, such as the oil-free turbo-compressor from Futraheat, a startup from the UK.5

The second and third differentiating aspects cause challenges that need to be overcome to enable the broad market penetration of innovative HTHP products currently being developed by producers. Industrial processes across and even within industries are of a highly heterogeneous nature. Hence, a one-fits-all heat pump solution is not realistic. Instead, the heat pump needs to be adapted to the (waste) heat source and sink in the industrial process selected for application. This customization and integration task is a hindrance to scalability. Here, deep process knowledge is a critical resource for integrators and producers to evaluate potential application scenarios and their economic and technical feasibility.

Thus, our experience shows that the integration of HTHPs into industrial processes currently is one of the most pressing issues that need to be addressed, as the cost of process integration represents almost 70% of the overall cost of an HTHP installation. An innovative solution to the above dilemma is provided by a Norwegian startup that offers CO2 heat pumps as a service, covering everything from the product to the integration into the process to the operation of the heat pump – well-portraying the need to combine product, integration, and operational expertise.6

Furthermore, companies are reluctant to be the first ones to switch from well-known heat supplies to an investment-intensive solution that requires re-engineering of their carefully crafted industrial processes needed to unfold HTHPs' full potential. Most companies are waiting for a pioneering example in their respective industry that inspires bold action. It is the typical chicken-and-egg dilemma: because everybody only wants to be second, there is resistance to starting with the implementation. An effort to inspire decision-makers and collect demonstration cases is currently represented by Annex 58, an initiative of leading research organizations from around the world (Canada, Japan, China, EU). Annex 58 aims to maximize the impact of HTHPs by addressing process integration challenges through the development of lighthouse use cases for heat pump-based process heat supply with the most cutting-edge HTHP products available. Moreover, reflecting on the creation of significant first-mover advantages could help to overcome the abovementioned barriers.

Conclusion

To sum up, our approach to shed light on an emerging market and technology opportunity for industrial HTHP has been based on several interviews with industrial and scientific experts in the field as well as on our very own experience from projects with clients.  

From this perspective, these insights make it imperative to dare for more collaboration mainly between the three key actors. First, industrial companies, whose sharing and disclosure of their highly individual process heat data would mark an essential step towards more market diffusion as it would ease new product development of HTHPs. The second actor is the integrators, whose knowledge and expertise allow to go into process re-design and to exploit the full potential of HTHP, and lastly, the producers are needed to further develop their products, making them more modular and efficient to fit the heterogeneous application areas and economic expectations of different companies and industries.  

Clearly, as the technology becomes more available and as the global energy crisis has increased the economic viability, the next step is to engage in process analysis and define integration points at scale to capitalize on this momentum.

If this insight into an exciting market and technology opportunity has awakened your interest or ignited a spark for discussion, we are happy to be your partner. With our expert knowledge in diverse technological fields, we support you in choosing the right technology for your use case. Furthermore, we provide services centered around process analysis for the application potential of HTHPs or assessments to diversify the corporate innovation portfolio of companies by analysing a potential market entry into the sphere of industrial heat. Our broad customer network can also be leveraged to facilitate an open innovation approach connecting integrators, scientists, producers, and end-users of industrial HTHPs.

References
  1. https://www.isi.fraunhofer.de/content/dam/isi/dokumente/cce/2017/29882_Brochure_Heating-and-Cooling_web.pdf  
  2. https://hydrocarbons21.com/atmo-europe-nestle-needs-high-temperature-hydrocarbon-heat-pumps-for-steam-generation/
  3. Strengthening Industrial Heat Pump Innovation. Decarbonizing Industrial Heat | TNO Publications
  4. https://hydrocarbons21.com/atmo-europe-nestle-needs-high-temperature-hydrocarbon-heat-pumps-for-steam-generation/
  5. https://futraheat.com/
  6. https://www.winnsenergy.no/en  

Let's connect!

Do you want to learn more or talk about industrial heat? Get in touch with us.

Michael Wagner
Senior Innovation Specialist New Energy Systems
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