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In particular, waste heat may be used for heat pumps [11], or absorption
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With most of the world committed to limiting global warming to 1.5°C, many companies have set individual decarbonization targets for 2030 and even 2025. As we approach the end of 2023, we have only six years left to implement many decarbonization levers. But industrial companies are often uncertain about the right technical path to immediately reduce emissions. Technologies that are net present value (NPV) positive and quick to implement, such as various types of energy efficiency measures, can help companies achieve their decarbonization goals.
This article is a collaborative effort by Marcin Hajlasz, Stefan Helmcke, Friederike Liebach, Thorsten Schleyer, and Ken Somers, representing views from McKinsey''s Sustainability Practice.
Recovering waste heat is a potential avenue to effectively reducing emissions. Every year, the world consumes over 418 exajoules (EJ)—or 116,000 terawatt-hours (TWh)—of final energy, mainly by burning fossil fuels and generating heat.1Figures presented are for 2019; Key World Energy Statistics 2021, International Energy Agency, September 2021. Part of this generated heat is harnessed for useful purposes, such as producing electricity or driving chemical reactions, but most is unused. This unused "waste heat" is given off to the surrounding environment in the form of exhausts or effluents at different temperature levels. Recovering this waste heat can greatly reduce the use of primary fuels and, therefore, emissions.
While waste heat has been used in industrial companies for decades (to generate electricity through steam turbines or to provide process heating, for example), this potential remains largely untapped. Despite the benefits and possibilities of waste heat recovery, at least 3,100 thermal terawatt-hours (TWhth) of feasible waste heat is currently not being captured (Exhibit 2).
In this article, we explore how the stage has been set to access waste heat recovery across sectors, and what industrial companies can do to grasp this opportunity.
Over the past decade, gas, electricity, and CO2 prices have been low, and there has been limited incentive to push waste heat recovery to the limits. For one, the payback time of waste heat recovery was long, and industry would typically only consider projects with a payback within one to two years. And, importantly, there wasn''t immediate pressure to act on decarbonization targets to drive action in waste heat recovery, so companies deprioritized energy efficiency in favor of projects with much higher returns. For example, it was financially more attractive to build another production line and burn more gas to run it than to save energy on an existing line—especially if companies were constrained in terms of capital expenditure (capex).
Historically, industry was focused on heat cascading (reusing heat) as the cheapest and simplest option of heat delivery (Exhibit 3). Heat pumps were expensive and not capable of delivering temperatures above 100°C, and conversion of low-grade heat into electricity did not make economic sense when energy prices were low. But times have changed: both in terms of technological developments and incentives.
Heat has become expensive for much of the world—and it does not appear likely that it will become cheap again, at least in the short term. The combination of technology and price developments makes waste heat recovery an opportunity for industrial companies, like refineries and cement manufacturers, to gain a competitive edge.
For example, a refinery can employ heat recovery from stripper overhead condensers from various units, such as vacuum gas oil (VGO) hydrotreaters or diesel hydrotreaters. These sources would usually have temperature ranges of 120°C to 250°C, and duty of five to 25 MWth for a typical refinery. If that heat was used to make medium pressure steam at five barg, then an average ten MW duty equipment would get about seven to eight tonnes of steam per hour—worth anywhere between €0.8 million and €3.5 million per year (Exhibit 4).
Waste heat recovery is not limited to cement or refining—virtually any industry would find some heat that can be recovered. Exhibit 5 shows a typical industrial abatement curve with options for emission reduction.
The NPV-positive options on the left-hand side of the curve, which often make up 10 to 30 percent of the total abatement potential, are almost exclusively from energy efficiency initiatives (typically various heat recovery options). These options require minimal effort and can be implemented quickly (although payback is often still too long to be accepted by industry). They can be categorized in three segments:
Incremental improvements, such as adding a heat exchanger or installing and optimizing advances process controls.
Novel technologies, including heat pumps, mechanical vapor recompression, Q-pinch, thermal energy storage, direct electrification, and waste heat to power.
Process redesign, such as a set point change, additional reboiler, dryer redesign, new reactor design to recover waste heat instead of cooling, and the replacement of condensing turbines by electrical drives.
To fully realize the potential of waste heat recovery, industrial companies can extend the scope beyond a single plant and encompass the entire site, crossing business units and company boundaries. This requires going past the standard list of levers, such as adding a heat exchanger, and delving deeper into the process, challenging all preconceived notions. There are three actions industrial companies can take to capture waste heat recovery potential.
As the world strives toward net zero, companies are setting decarbonization goals and implementing technologies like waste heat recovery to reduce emissions, support the energy transition, and reap economic rewards.
As surging energy prices bolster the need for waste heat recovery, and technological developments open the door, now is the time for industrial companies to capture the potential of waste heat recovery and stay competitive.
Marcin Hajlasz is a knowledge expert in McKinsey’s Wroclaw office, Stefan Helmcke is a senior partner in the Vienna office, Friederike Liebach is an associate partner in the Frankfurt office, Thorsten Schleyer is a partner in the Munich office, and Ken Somers is a partner in the Brussels office.
The authors wish to thank Arthur Kaspar, Ruslan Khaziev, Anna Kluba, Carina Merz, Krzysztof Pajączek, Amir Shamsubarov, Jakob Stöber, and Kai Vollhardt for their contributions to this article.
Waste Heat Recovery areas can be classified into four main groups [1]: (i) energy recycling within the process, (ii) waste heat recovery (WHR) for other on-site processes, (iii) electricity generation with combined heat and power installations, and (iv) district heating systems. Each area of such WHR systems is accompanied by associated barriers. Taking advantage of the waste heat and recovering it in any of the above-mentioned forms could be beneficial for the industrial plant, but it is not really a key factor that concerns the manufacturing industries.
The possibilities of WHR and design of optimal reuse options across industrial zones'' plants were presented by Stijepovic and Linke [2]. The authors used a systematic approach to target optimization in achieving maximum WHR for the industrial zone. The authors then presented a design optimization with a case study that considered economic objectives. The industrial WHR potential from all European Union (EU) countries was discussed by Panayiotou et al. [3], Bianchi et al. [4], and Panayiotou et al. [5], but was also presented and ''mapped'' by Miro et al. [6] and Forman et al. [7] for a more global implementation.
The iron and steel industry, which is identified as the largest heat user, exhibits the highest potential for Low-Grade Heat (LGH) recovery. The aluminum, cement, ceramics chemical, food and drink, glass, and pulp and paper industries are also significant heat users [8]. Waste heat temperatures can be categorized as low (usually, < 100 °C), medium (usually 100–600 °C), and high (usually, > 600 °C). Further information on temperature range of processes and waste heat potential in different types of industries is presented by Panayiotou et al. [3], Bianchi et al. [4], and Panayiotou et al. [5].
The limitations and barriers to the adoption of WHR technologies can be defined in different categories. DECC [9] identified the barriers as (i) commercial, (ii) delivery, and (iii) technical. Additionally, BCS Incorporated [10] introduced and presented key barriers, listed under different limitations, such as (i) costs; (ii) application, heat stream composition, process, and temperature specific constraints; and (iii) inaccessibility and transportability of certain heat sources.
Long payback periods and material constrains are the key limitations on the cost barrier [11]. Moreover, the materials required differ and, in some cases — as stated by the authors — "the overall material costs per unit energy unit recovered increases as larger surface areas are required for more efficient lower temperature heat recover systems." The scale of the heat recovery system favors larger systems, with the authors defining this category as ''economies of scale.'' High operation and maintenance costs are required, depending on the system scale that includes corrosion and fouling. The financial constraint, which is the most common obstacle — as in any technology, is no different in the case of WHR [12].
Heat stream composition also has an effect on the cost of the recovery system, as streams with high chemical activity require costly equipment materials to prevent corrosion. Chemical composition also affects the heat transfer rates, environmental concerns, and product/process control. The last barrier category in the recovery system, discussed by the BCS Inc. Group, is the inaccessibility, transportability, and limited space [10].
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