The dawn of the industrial heat pump age?

There has been a lot of coverage (including from us) on the development of heat pump technologies for home heating. And it's not impossible to see residential heat pumps overtaking gas fired boilers in say the next decade. One approach that might accelerate this is heat as a service. Which is where companies such as the start up Aira are positioning themselves.

But, in some ways the bigger long term win is in industrial heat pumps. Which is why funding from the US Department of Energy caught our eye. The Industrial Efficiency and Decarbonization Office is supporting 49 different projects that help reduce greenhouse gas emissions from industrial sources, with part of the funding aimed specifically at industrial-scale heat pumps.

But what we wanted to really highlight this week is a European report presented at the recent High Temperature Heat Pump Symposium in Copenhagen.

As they say in the report, industrial processes are currently responsible for 20 % of total greenhouse gas emissions in Europe. And industrial heat pumps are a key electrification technology which can replace a large share of fossil fueled industrial process heating.

First the caveat. Heat pumps are seen as a realistic replacement in processes requiring heat up to 200 degrees C. This is c. 37% of Europe's total process heating requirement, which is the yellow and the blue in the chart below. Not yet a total solution. But a really good start.

Within this processes needing heat up to 100 degrees C can already be covered by mature heat pump technologies. But above 100 degrees C, there are only a limited number of suppliers able to provide proven systems. And so governments will need to support R&D efforts to get pilot/demonstration projects up and running, with the aim of breaking down application barriers, and solving problems related to upscaling.

This looks like a potentially really interesting technology. And one where Europe and the US are already well placed. But, there is an additional factor we need to consider. The cost of electricity.

In general, industrial heat pumps will be an attractive option in scenarios where the electricity price is low relative to the cost of the alternative energy source (e.g. natural gas). And this could be a problem.

The research report shows that the price ratio varies significantly across Europe, from less than 2x in the case of Norway, Finland and Sweden to over 4x in the case of Belgium, the UK, Italy and Germany. This variation in electricity and gas prices can be a significant barrier to industrial heat pump uptake.

For instance, applications which have a payback period of 1 year in Norway, may have a payback period which exceeds 10 years in Germany under the current conditions.

Back in August last year, we wrote a longer blog on the global potential for industrial heat pumps. In this we highlighted that a recent World Business Council for Sustainable Development  report identified that c. 45% of global industrial heat use is either classified as ultra low (below 100 degrees C) or low (between 100 and 200 degrees C). So the potential market is material but there are challenges to overcome if the potential is to be realised.

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