Opt for electric medium temperature heating systems

The HVAC industry accounts for around 22% of annual global energy-related carbon dioxide emissions, producing approximately 7.8 gigatonnes of CO2 emissions per annum – with renewable energy sources contributing around 11 % of the heat generation capabilities (1).

Industrial heat demand by temperature type divides as follows – low temperature (below 100°C), at 15% medium temperature (100 to 400°C) at 30% and high temperature (above 400°C) at 55%. Net Zero Scenario (by International Energy Agency) requires renewable heat consumption in industry to expand by double by 2030 from 2020 capacity levels of 11 EJ to 22 EJ (2). Renewable heat generation capacity must be doubled over the next decade to meet growing industry demand.

Medium temperature heating systems electrification can be implemented as a feasible solution in processes such as drying, evaporation, distillation, and activation – leveraging lowering electricity prices (2020) and enabling decarbonization opportunities in regions with stricter greenhouse gas (GHG) emissions requirements, assuming wide access to renewable electricity generation sources. In 2017, fuel consumption for energy production accounted for around 45 percent of consumed energy (3).

Lower operating costs, higher efficiency and low maintenance costs are the main advantages for the implementation of electric medium temperature heating systems within industry player’s operations. There is also significant potential to reduce carbon dioxide emissions in regions with a high share of renewables in their power generation mix (e.g. Sweden, Norway).

Image: Industrial energy consumption

Source: McKinsey. Plugging in: What electrification can do for industry

As medium temperature (100 to 400°C) heat demand accounts for roughly 30% – a shift from fossil fuel generated energy or heat to electricity-based solutions (e.g. heat pumps) allows for greater operational cost savings, making up for higher per joule cost than conventional heat sources.

A growing share of renewables in power generation mixes worldwide allows for increasing decarbonization – enabling the electrification of industrial processes to maximize its environmental decarbonization potential. Additionally, operating on zero carbon electricity (e.g. investment into onshore wind or rooftop photovoltaics) enables industry players to further decarbonize beyond the available electricity mix in their operating countries.

The following implementation options are typically considered by companies aiming to adopt electrified medium temperature heating systems:

• Electric boilers for heat generation up to 350°C

• Electric heat pumps for low- and medium- temperature heat demand

• Electrically powered vapor compression (MVR) equipment for evaporation

Image: Low electricity prices, or a signicant CO price, increase the nancial attractiveness of electrication

Source: McKinsey. Plugging in: What electrification can do for industry

Climate impact

Targeted emissions sources

Electric medium temperature heating systems usage for industrial processes targets carbon dioxide emissions on Scope 1, Scope 2, and Scope 3 with a focus on:

• Category 1 (Purchased goods and services)

• Category 3 (Fuel- and energy-related activities not included in Scope 1 or Scope 2)

• Category 10 (Processing of sold products)

• Category 12 (End-of-life treatment of sold products)

Decarbonization impact

Electrified medium temperature heating systems help industry player to achieve increased process efficiency, leading to electricity and heat savings. The decarbonization impact is highly dependent on the electricity generation sources used and share of renewables in a country’s available electricity mix. Operational carbon dioxide emissions can be decreased up to 90% (in regions with highly decarbonized electricity grids e.g. Sweden) per joule or increased (in regions heavily reliant on coal-based electricity generation).

Installing electric heating systems infrastructure can lower Scope 3 upstream CO2 emissions as electrified industrial processes demonstrate less complexity compared to other solutions (e.g. natural gas heating). Exact estimations are challenging, as the baseline infrastructure differs between processes and applications.

End-of-life carbon dioxide emissions are hard to estimate, as component recyclability and components end-of-life value vary between equipment manufacturers.

Business impact

Benefits

Low operating/maintenance cost, same level of infrastructure investment cost, higher energy efficiency, possibility to lower greenhouse-gas (GHG) emissions, increased employee safety, lower infrastructure complexity, lower operating noise.

Costs

• Impact on operating costs

Operational savings due to implementation of electric medium temperature heating systems could be lower, as equipment efficiency is high (compared to other options). Financial feasibility should be analyzed per regional price changes and available market options.

• Investment required

The cost of investment into electric medium temperature heating systems reaches same cost parity with its fossil fuel counterparts. Cost of installation must be assessed on case-by-case basis, as processes complexity and solution profitability is reliant on available market equipment options.

• Eventual subsidies used

Regional and country-specific subsidies or financing options may apply based on location of use.

Indicative abatement cost

Abatement cost for electric medium temperature heating systems (dependent on technology currently in use):

• $ US80 to 140 /tCO2e

Impact beyond climate and business

Co-benefits

Local lower carbon dioxide emissions, increased air quality in industry zones, lower local noise levels.

Potential side-effects

Possibility of increased total carbon dioxide emissions (dependent on available regional power generation mix).

Typical business profile

All industry clients with potential for electrification of medium temperature heating systems in processes from 100 to 400°C, such as drying, evaporation, distillation, and activation.

Approach

Investment and operational cost of electrified medium temperature heating systems should be analyzed for every considered application with relevant specialist to assess available market options.

Key parameters to consider

• Solution maturity: developing, scaling within highly developed regions

• Lifetime: 15-20 years

• Technical constraints or pre-requisites: cost of installation, local electricity or heat cost, market solutions availability

• Additional specificities (e.g., geographical, sector or regulation): regional power generation mix/share of renewables

• Eventual subsidies available: local subsidies and tax breaks may apply

Implementation and operations tips

A medium temperature electric heating system offers great opportunities for the electrification of industry processes in a wide range of applications – delivering greater efficiency and improving the long-term decarbonization potential of the solution (based on the share of renewables in electricity generation). However, the feasibility of electrified heating systems should be analyzed for implementations – as in some infrastructure installations, cost savings may not be realised.