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Industrial heat pumps: Five considerations for future growth

Industrial heat pumps-heat pumps with power sizes beyond 200 kilowatts thermal (kWth)-play a crucial role in the ongoing energy transition. These devices utilize electricity instead of traditional fuels like coal or gas, offering the potential to be powered entirely by renewable energy sources. They are also highly efficient, being three to five times more effective at low and medium temperatures than conventional boilers. This enhanced efficiency results in lower energy consumption, costs, and emissions. Though the technology itself isn't new, its advantages are being increasingly recognized, driven by factors such as the push for heat decarbonization, economic considerations, and supportive government regulations. The market for industrial heat pumps is anticipated to grow by more than 15 percent annually until 2030.

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About the Authors

This article is a collaborative effort by Harald Bauer, Johannes Ehrmaier, Luigi Gigliotti, Friederike Liebach, Thorsten Schleyer, and Alessandro Simoncini. They represent views from McKinsey's Platform for Industrial Electrification.

Early market entry is critical for success, despite some technologies like high-temperature industrial heat pumps still maturing. As demand expands in sectors like industrial and district heating, OEMs need to develop new offerings to stay competitive.

We have identified five key considerations for developing new heat pump offerings: different end-user needs, heat pump components, refrigerant requirements, heating and cooling opportunities, and approaches for creating new solutions. Being informed about these areas can help OEMs and their customers collaborate effectively to advance technology, expand the market, and support global decarbonization.

Market Dynamics Today and in the Future

To meet decarbonization targets, the industrial sector must address its heating-related fuel consumption and emissions. The sector contributes to one-third of global CO2 emissions, with about two-thirds of these emissions used for heating. Consequently, industrial heating accounts for over 20 percent of total global CO2 emissions due to the heavy reliance on fossil fuels. More than 85 percent of the energy for industrial heating comes from natural gas, coal, and oil, compared to about 10 percent from biomass.

Despite their economic and environmental advantages, heat pumps are still underutilized, supplying only about 5 percent of global industrial heat. However, they offer immense potential. Industrial heat pumps use electricity and low-temperature heat sources like seawater, sewage, and excess heat to supply heat energy efficiently. They can provide three to five times more heat energy per unit of electricity consumed than traditional heaters and can operate at higher temperature ranges, even up to 200°C, and capacities beyond ten thermal megawatts (MWth).

Food and beverage, pulp and paper, and chemical industries are particularly suitable for heat pump applications due to their high energy demands and significant energy-related emissions. Heat pumps could also play a vital role in district heating. This sector accounts for about 1 percent of total CO2 emissions, with a more than 90 percent fossil-fuel-based energy mix today. Several countries, including parts of China, Russia, and multiple European nations, use district heating extensively. Heat pumps offer significant potential for decarbonization in this area.

With their efficiency and favorable economic prospects, industrial heat pumps are poised for significant growth. Governments are increasingly issuing regulations to support heat decarbonization, and companies are pledging net-zero targets, focusing on decarbonizing their heat supply.

By 2030, industrial heat pumps are expected to supply over 10 percent of industrial and district heating demand at temperatures below 200°C globally. In Europe and the UK, heat pumps are projected to meet 15 percent of district heating and 20 percent of industrial heating demands at these temperatures by 2030.

Significant investments are driving this growth, with global investments expected to reach $12 billion by 2030, a fourfold increase from 2023. The installation focus is shifting towards larger systems with capacities beyond five MWth and temperatures exceeding 100°C, which will become increasingly important in the future.

Five Considerations for the Heat Pump Ecosystem

Stronger adoption of industrial heat pumps is expected in areas where they are feasible solutions for decarbonization, such as the food and beverage and pulp and paper industries, and district heating. Collaboration between heat pump OEMs and end users is essential.

Below are five underdiscussed but crucial topics for the maturation of industrial heat pump technology: varying requirements for industrial and district heating, component considerations, refrigerant types, cooling opportunities, and collaborative structures for solution development.

1. No One-Size-Fits-All Solution for Industrial and District Heating

There isn't a universal solution for industrial and district heating applications. Each has different specifications in terms of temperature, capacity, physical size, and integration with existing systems. For instance, a brewery may require temperatures between 50°C and 120°C with a capacity of less than one MWth, while a chemical process may need steam above 150°C with well beyond a five-MWth capacity. District heating typically needs temperatures from 60°C to about 135°C but must also consider factors like network size and temperature balances.

Collaboration between OEMs and end users is crucial for optimizing reliability and economics. Specialized knowledge is needed to design and install large heat pumps, as OEMs often have limited understanding of end-user applications, while end users may not be familiar with heat pump technology. By building a collaborative ecosystem, both can benefit.

2. High-Performing Industrial Heat Pumps: More Than Just Compressors

A heat pump's performance hinges on several factors: compressors, heat exchangers, and control software. Compressors, accounting for 20-35 percent of hardware capital expenditures, are critical for determining the refrigerant's flow rate and efficiency. Heat exchangers are also vital for efficiency and can be tailored to application needs. Control software, often crucial for meeting stringent coefficient of performance (COP) requirements, provides vital system regulation.

While industrial heat pumps are a mature technology, increased application and scale in specific industries can lead to cost reductions through modularization and standardization. Smart control and optimization can enhance operational performance and reduce maintenance needs, lowering operational expenses.

3. Natural vs. Synthetic Refrigerants

Choosing the right refrigerant is essential, with options ranging between HFCs, HCFCs, and natural refrigerants. The trend, especially in Europe, is moving towards natural refrigerants due to potential environmental regulations. However, each refrigerant type comes with its considerations, such as flammability for propane and toxicity for ammonia. Both offer specific advantages depending on the application.

4. Combined Heating and Cooling Demand

Heat pumps can provide both heating and cooling services, creating optimal business cases by combining these applications. For instance, breweries may need both heating for brewing and cooling for storage. In office buildings, the same heat pump can be used for heating in the winter and cooling in the summer, maximizing utilization and minimizing capital expenditures.

Moreover, linking data centers to district heating networks can create synergies, where heat pumps cool data centers and recycle waste heat into district heating systems. These combined applications make heat pumps more attractive, especially when renewable energy sources increase power supply volatility.

5. Collaboration is Key

The industrial heat pump industry must expand its product offerings, and this requires collaboration between OEMs, end users, and engineering, procurement, and construction (EPC) firms. OEMs need to balance standardization and modularization to provide tailored solutions cost-effectively. End users can benefit from understanding the full potential of heat pumps, and EPC firms can facilitate tailored solution development through their installation expertise. Strong partnerships among these stakeholders can accelerate heat pump adoption and innovation.

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Industrial heat pumps offer a compelling solution for industries seeking to optimize energy use, reduce costs and dependence on fossil fuels, adhere to environmental regulations, and enhance operational efficiency. To seize this opportunity, companies should collaborate with OEMs and EPCs to assess the viability of integrating heat pumps into existing systems.

Pros and Cons of Commercial Heat Pumps

Pros and Cons of Commercial Heat Pumps

The decision to invest in commercial heat pumps is a strategic choice that demands careful consideration. As businesses seek innovative and sustainable solutions, heat pumps emerge as compelling options for efficient heating and cooling. In this blog post, we'll explore the key factors that businesses should weigh when contemplating the adoption of heat pump technology. From the potential advantages to the potential drawbacks, understanding the intricacies of heat pump investments is crucial for informed decision-making.

What is a Heat Pump and How Does it Work?

Before delving into the specifics of investing in commercial heat pumps, it's essential to understand what these systems entail. A heat pump is a versatile HVAC (Heating, Ventilation, and Air Conditioning) system. It transfers heat from one space to another by leveraging the principles of refrigeration. During colder months, the heat pump extracts warmth from the outside air, ground, or water source and transfers it indoors to heat the building. Conversely, in warmer months, the process is reversed, and the heat pump extracts heat from the indoor space, expelling it outside to cool the building. This dual functionality makes heat pumps a highly efficient and environmentally friendly solution for maintaining comfortable temperatures year-round.

The Business Case for Heat Pumps

1. Energy Efficiency: A Game-Changer for Businesses

Businesses are increasingly drawn to the energy efficiency offered by commercial heat pumps. These systems leverage the ambient air or ground temperature to provide heating or cooling, significantly reducing energy consumption compared to traditional HVAC systems. This translates to lower operational costs and a smaller carbon footprint, benefitting both the business and the environment.

2. Cost Savings: A Tangible Benefit

For businesses scrutinizing their bottom line, the cost savings associated with heat pump technology are undeniable. The initial investment might appear significant, but the long-term operational savings, coupled with potential government incentives and grants, make the financial case for heat pumps compelling.

Exploring the Pros of Commercial Heat Pumps

1. Environmental Friendliness: Aligning with Sustainability Goals

Investing in commercial heat pumps allows businesses to align with sustainability goals. These systems generate heat by extracting energy from renewable sources, reducing reliance on conventional heating methods that contribute to carbon emissions.

2. Versatility: Meeting Diverse Business Needs

One notable advantage of commercial heat pumps is their versatility. These systems can provide both heating and cooling, adapting seamlessly to varied climate demands. The flexibility in operation ensures year-round comfort without the need for separate heating and cooling systems.

3. Government Incentives: Fostering Adoption

To encourage businesses to adopt eco-friendly technologies, various incentives and grants for the installation of heat pump systems are available. Understanding and leveraging these incentives can significantly offset the upfront costs, making the transition to heat pump technology more accessible for businesses.

Scrutinizing the Cons of Commercial Heat Pumps

1. Initial Cost: Balancing Investment with Long-Term Gains

While the long-term savings are substantial, the initial investment required for installing commercial heat pumps can be a deterrent. It is crucial to strike a balance between the upfront cost and the anticipated benefits over the system's lifespan.

2. Installation Challenges: Addressing Site-Specific Considerations

Every business premises is unique, and the installation of a heat pump system may pose challenges depending on the site's characteristics. Businesses should carefully assess their property and consult with experienced professionals to overcome any potential installation hurdles.

3. Noise Levels: Managing Workplace Disturbances

Commercial heat pumps, particularly air-source variants, can produce some noise during operation. For businesses where a quiet working environment is crucial, managing potential noise disturbances becomes a consideration.

Making Informed Decisions for Business Comfort

The decision to invest in a commercial heat pump is multifaceted and requires understanding the potential benefits and drawbacks. Energy efficiency, cost savings, and environmental friendliness make heat pumps attractive options. However, businesses must weigh factors like initial costs, installation challenges, and potential noise levels to make informed decisions.

As you contemplate the integration of commercial heat pumps into your business infrastructure, Brooktech Solutions is ready to assist. Our expertise in energy-efficient solutions and tailored installations ensures a seamless transition to heat pump technology. Contact us today to explore how we can enhance your business comfort while aligning with sustainable practices.

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