Utilize solar thermal HaaS to cut industrial emissions

Heineken Spain is committed to reaching net-zero Scope 1 and 2 emissions at its production sites by 2025. These emissions have two primary sources – heat generation (62% of emissions), mainly from brewing, and electricity (38% of emissions).

On the one hand, the company has established a clear path forward to reduce emissions from electricity. Heineken, in fact, entered into a Power Purchase Agreement (PPA) (1) in 2020 that covers all its electricity demand in Spain with 100% renewable electricity produced by solar power plants. On the other hand, tackling the decarbonization of heat generation proved to be a more complex task. Unlike electricity, renewable heat cannot be sourced from a single power plant as it cannot be transported over long distances. The low-carbon sources of heat need to be implemented individually and locally at each brewery.

The brewery in Seville is one of Heineken’s four production sites in Spain and one of two in the Andalusian region. It uses heat up to 160°C in its beer brewing processes, which was previously fully supplied by a natural gas boiler.

Despite the complexities associated with decarbonizing heat, Heineken opened the industrial solar thermal power plant with 30 MW capacity and 68 MWh of thermal storage at its Seville brewery in 2023. The plant, adjacent to the brewery and spanning 40 hectares, uses a series of mirrors to concentrate solar rays and produce heat. It can supply zero-emission hot water at 210°C and 25 bar which can then be fed into the production processes. Today, the plant covers 50% of the brewery’s heat demand and serves as its baseload source of heat. It partially displaces the gas boiler, previously the sole source of heat generation, and leads to a 60% reduction in natural gas consumption as well as 7,000 tons of reduced CO2e annually.

The solar thermal power plant was developed under a Heat-as-a-Service (HaaS) arrangement in partnership with Engie, which financed and owns the asset. Under the heat purchase agreement, Engie will supply heat to Heineken for 20 years until 2043. Afterwards, the ownership will be transferred to Heineken.

There were three important milestones in the project implementation:

1. Internal alignment and technology assessment

Heineken Spain’s commitment to be carbon neutral in its own production by 2025 was the key driver to start the project. Moreover, it helped secure the internal buy-in across the company which was necessary to invest in low-carbon heat technology.

Once the importance of investing in low-carbon heat was internally established, all available technologies were assessed and compared. Heineken had previously used biomass and biogas in its other breweries, but it would not have been able to procure the necessary volume for the plant in Seville. Moreover, an industrial heat pump could have satisfied the heat demand, but it would have required significant changes both to the processing equipment as well as to the factory building itself. The solar thermal plant, on the other hand, could have been seamlessly integrated into current equipment just by adding a heat pipe connection. To further improve the viability of the technology, Seville is located in southern Spain with high solar radiation all year round and there was enough land available adjacent to the factory for the solar thermal plant.

2. Choice of Heat-as-a-Service partner

Finding the right partner was critical due to the long-term nature (20 years) of the heat-as-a-service relationship. Therefore, reputation, trustworthiness, and financial stability were the decisive factors for choosing Engie. Moreover, Engie proactively looked for and was instrumental in securing a subsidy that could improve the financial viability of the project. In the end, the governmental support covered 60% of the investment costs.

3. Heat purchase agreement contracting and construction

In the absence of any standard heat purchase agreement to refer to, the 20-year contract had to be drafted from scratch to cover the operational and financial risks, such as demand uncertainty, technical performance and regulatory changes (see more details about contracting in WBCSD’s report on HaaS), and secure a continuous supply of heat to Heineken’s processes. In the end the negotiations took more than a year. The actual construction, performed by local Andalusian contractors, began in 2022 and was completed in just 12 months.

Sustainability impact

Climate

Scope 1: The solar thermal power plant helps reduce almost 7,000 tons of CO2e per year

Social

The plant's construction created local jobs as it was done by Andalusian contractors and totalled 150,000 working hours.

Business impact

• Reduced natural gas consumption: The brewery reduced its annual natural gas consumption by 60%.

• No investment costs: Heineken did not have to finance the upfront investment costs due to the Heat-as-a-Service arrangement. Instead, the costs are spread into the long-term payments to Engie to supply the heat

• Long-term energy cost stability: The 20-year Heat-as-a-Service contract provides predictability on the cost of heat and decouples heat generation from natural gas as well as electricity price fluctuations.

• Improved brand image: The project represents the biggest solar thermal plant in Europe and its implementation put Heineken at the forefront of decarbonization efforts in the world. The connected publicity was positive for Heineken’s consumer image.

Costs

The project costs were mainly driven by the initial investment in the solar thermal equipment and land acquisition. In comparison, the operation and maintenance costs are negligible as the plant does not use any fuel. Therefore, the costs depended primarily on the capacity and physical size of the plant.

In Seville, the total investment for the solar thermal plant was 20 million euro. This was co-financed with a subsidy of 13.4 million euro from the European Regional Development Fund.

Impact beyond sustainability and business

Potential side-effects

The solar thermal power plant has a large land footprint. The potential impacts on nature and biodiversity must be assessed case-by-case.

Typical business profile

The solar thermal technology is best suited for industries using heat below 200°C, such as food and beverage, paper and pulp, fast-moving consumer goods, and pharmaceuticals. Moreover, it reaches highest efficiencies in low latitude regions with high solar radiation and small seasonal differences.

Approach

The project was implemented using the Heat-as-a-Service approach. Engie, as the energy service company (ESCO), owns and operates the plant and supplies the heat to Heineken under a 20-year heat purchase agreement. The benefits of this approach are that Engie:

• brought its expertise in energy solutions, which made it possible to implement and optimize such an innovative technology like solar thermal,

• proactively found the subsidy and secured it from the authorities,

• took on the initial investment costs,

• provides the required operation and maintenance services, and

• guarantees the performance of the plant and the supply of heat.

Stakeholders involved

• Energy service company experts: found and secured the subsidy, helped with the integration of the technology;

• Internal teams

  • Energy procurement: selected solar thermal as the low-carbon technology, led the project internally;

  • Supply chain: supported the energy procurement team and planned the process integration;

  • Legal: led the drafting of the HaaS agreement together with the other internal teams

Key parameters to consider

• Innovativeness: The solar thermal technology is a novel and innovative solution for industrial heat at this scale. It has only recently been used in several commercial scale projects around the world (eg. Heineken Spain in Valencia, Birra Peroni in Italy, Lactalis in France).

• Land availability: The technology requires a significant amount of available land in proximity of the production plant. For instance, in Seville, the solar thermal solution required more than 1300m2 per 1MW of installed capacity right next to the brewery.

• Temperature required: The technology can supply heat up to 210°C and is therefore not suitable for heavy industries.

• Solar radiation and intermittency: The heat generation by the solar thermal plant is highly reliant on direct sunlight and has lower efficiency during cloudy weather. The intermittency can be partially addressed by thermal storage such as the 68MWh pressurized water tanks in Seville. However, this type of storage can cover heat supply fluctuations only in the range of hours or maximum days. It is not suitable for long-term storage which could solve the difference in heat output throughout the seasons. Therefore, solar thermal has the highest potential in regions with common direct sunlight all year round.

Implementation and operations tips

• Project timeline: Overall the project took six years from the initial assessment until operation. One of the subsidy's conditions was strict adherence to the project timeline. This posed a specific risk surrounding the potential delays in the permitting process. The risk was mitigated by early engagement with the authorities and strong commitment to the project from both Heineken and Engie.

• Novelty: Heineken mitigated the risks coming from the novelty of the technology by relying on Engie’s experience and knowledge in energy solutions and by consulting external experts involved in other similar projects.

• Partner risk: The Heat-as-a-Service arrangement leads to a long-term dependency on the partner, which can lead to reputational and operational risks. Heineken mitigated these risks by choosing an established, trustworthy, and reliable partner.